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Swedish budget: Will the government be able to pass its proposals?

Sweden's opposition parties have each presented their own budget motions this week, kicking off the process that will end in Sweden's budget for 2022 being voted on in November. The minority government and complex political situation mean it is very unclear what will happen then.

Magdalena Andersson and Elisabeth Svantesson in Swedish parliament
Finance Minister Magdalena Andersson and Moderate Party economic spokesperson Elisabeth Svantesson debate budget proposals in parliament. Photo: Fredrik Sandberg/TT

The Moderate Party’s economic policy spokesperson Elisabeth Svantesson said that her “goal” was for an alternative to be presented to the government’s budget proposal — which could lead to the centre-left government needing to implement a right-of-centre budget if passed.

This happened previously in 2018, when the Moderates and Christian Democrats’ budget proposal won the most votes, even though Sweden had a centre-left government at the time. That’s because the budget vote took place before the minority government had managed to form an alliance with other parties to allow it to govern. It later did this in the form of the so-called January Deal, agreeing on policy points with former opposition rivals the Centre and Liberal parties.

Now, though, Swedish politics is back in an uncertain position after the January Deal officially collapsed earlier this year and the Liberal Party said it would pursue a right-wing government in the 2022 elections.

That means it’s not certain that the government’s budget proposal will win enough votes to become reality.

In order for this to happen, the government would require support from both the Centre and Left parties, who are far removed on the political spectrum and have refused to work together. The Centre Party has more in common with the right-wing parties on economic policy, but has refused to give the Sweden Democrats influence by siding with a bloc that also includes the far-right party.

Initially, representatives from both the Christian Democrats and Sweden Democrats said they were not pursuing a right-wing budget alternative as was the case in 2018. If the opposition does not put forward an alternative budget, they also have the option of pushing for amendments to specific parts of the government budget. If that happens, one of the most likely policies to be axed is ‘family week’ — an extra six days’ paid leave for parents of school-age children, which is opposed by the Centre Party as well as the right-wing opposition.

But on Tuesday, Moderate leader Ulf Kristersson and Christian Democrat leader Ebba Busch published a joint column in Aftonbladet saying they were “starting the work of gathering support in parliament for another budget”.

They hit out at the Social Democrat-Green Party budget, which they said was “more about solving the government parties’ cooperation problems, than Sweden’s societal problems”.

Some of the ideas of the right include reduced income taxes, scrapping a recently introduced plastic bag tax, and building up nuclear power, but just as on the left, there are also areas of disagreement. For example, the Sweden Democrats’ views on pensions and sickness benefit are closer to those of the centre-left government than their right-wing allies.

Both the Centre Party and Left Party’s votes will be decisive either way; if they vote against or abstain from the vote on the government’s proposals, these are unlikely to pass. Neither has yet confirmed how they will vote. Somewhat surprisingly, one of the issues splitting the parties is forestry: “Strengthened ownership rights for forest owners” was one of the key points in the January Agreement, something which goes against the Green Party’s platform. 

So, what happens if the government’s budget is rejected?

Prime Minister Stefan Löfven has previously said that he would resign if the budget was not passed by parliament. Since then, he has announced his intention to step down anyway, and his successor Magdalena Andersson is poised to take on the role in early November. Currently Finance Minister, failing to get her government’s budget passed would be a big blow so early on in the job, but she has not yet said what she would do in this scenario.

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Sweden facing ‘the highest inflation in 30 years’

Sweden last month saw the highest levels of inflation in more than 30 years, according to the latest figures from Statistics Sweden.

Sweden facing 'the highest inflation in 30 years'

Consumer prices rose 6.4 percent in April, the agency reported in its latest monthly figures, well ahead of the 6.1 percent rise predicted by analysts and up from 6.1 percent in March. 

“This shows high inflationary pressure. It’s in line with consensus, but it’s 0.2 percentage points higher than what the Riksbank has been predicting,” said Olle Holmgren, an economist with SEB. 

Rising prices of meat, vegetables and other groceries were the main reasons for the rise, with the prices of electricity and fuel falling month-on-month. If energy prices are excluded, inflation was 4.5 percent in April, up from 4.1 percent in March. 

“Restaurant prices are rise quite a bit for the second month in a row. That can be linked to grocery prices,” Holmgren said. “Then there are higher prices generally, but grocery prices are increasing rapidly.”

Holmgren predicted that the inflation rate could continue to rise in the coming months, increasing the risk that Sweden’s public bank, the Riksbank, will hike interest by 0.5 percentage points — two slots — in September. 

Fuel prices fell in April compared to March, although diesel remains 56.7 percent higher than a year ago and petrol 36 percent higher. 

The price coffee is higher now than at any time since it joined the consumer price index in 1983, after rising 29 percent so far this year. 

Other groceries which have risen significantly in price this year are cabbage and tomatoes, which rose in price by 43 percent ad 33 percent respectively. 

The price of avocado has fallen by 14 percent this year, while pickled herring has fallen in price by 16 percent.