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ECONOMY

EXPLAINED: What Sweden’s 2022 budget means for you

Sweden has passed the government's 2022 spring amendment budget, which has been clearly affected by war in Ukraine and the later stages of the Covid-19 pandemic. Here's The Local's round-up of some of the key proposals and how they may affect you.

EXPLAINED: What Sweden’s 2022 budget means for you
The Swedish government has presented the spring budget for this year. Photo: Fredrik Sandberg/TT

What’s the spring budget?

The spring amendment budget (vårändringsbudgeten) is usually mainly used to tweak or add bits and pieces to Sweden’s main annual budget, which is presented in autumn.

Sweden’s last main annual budget, approved by parliament in December 2021, is the right-wing opposition’s budget, co-authored by the Moderates, the Christian Democrats and the far-right Sweden Democrats, who are Sweden’s third largest party. This is the first time Sweden is run on a budget co-authored by a far-right party.

In total, the government’s amendment budget represents a list of measures costing 31.4 billion kronor, (€3.04bn) including measures to strengthen healthcare and civil defence. When extra amendment budgets and government agreements on sending aid to Ukraine are included, the total cost amounts to 35.4 billion kronor.

The government and parliament have already made a number of changes to the 2022 budget, in the form of extra amendment budgets like this spring amendment budget.

These include, among other things, a two billion increase in defence spending, compensation for high energy costs, lower taxes on petrol and diesel, and billions of kronor in pandemic-related measures.

The newest round of budget proposals approved on June 22nd adressed pensions – from August, Sweden’s pensioners on a guarantee pension will receive 1000 kronor extra per month (800 kronor after tax).

Here’s how Sweden’s budget proposals may affect you:

Healthcare

Sweden’s budget on healthcare consist of two main posts. The first consists of 500 million kronor to go towards hiring new healthcare workers, with the biggest focus on nurses. 

Aside from this, billions of kronor have already been put aside to strengthen the healthcare sector after the pandemic, shorten waiting times for treatment which grew during the crisis, and assist regions in hiring more healthcare staff. In total, the government has spent almost 600 billion kronor on various pandemic-related measures, a figure Finance Minister Mikael Damberg has previously described as “astronomic”.

The second healthcare-related post in the amendment budget consists of 1.2 billion kronor which will be used to finance a fourth vaccine dose against Covid-19.

“The situation is still uncertain. There is a risk for an increase in the spread of infection,” Damberg said back in April when the budget was proposed, adding that Covid-19 is no longer classified as an illness representing a danger to society.

Defence

The budget also includes a further 800 million kronor, which will go to local government and other organisations to bolster Sweden’s civil defence capabilities.

“This increases our resilience in wartime and in peacetime” Damberg said. “If the worst happens, it’s important that there is physical protection for the population.” 

The government is channelling 91m kronor towards renovating Sweden’s 65,000 bomb shelters, and will also fund the repair the country’s network of emergency sirens, known as Hesa Fredrik, or Hoarse Fredrik, many of which are currently out of order. 

An extra two million kronor will also go to the police, as well as 20 million kronor for Säpo, the Swedish Security Service. In addition to this, SOS Alarm, the authority handling emergency calls, will receive 25 million kronor extra.

Ukraine

The government has also put aside 9.8 billion kronor for the Swedish Migration Agency, in order to increase capacity to accept refugees following Russia’s invasion of Ukraine. On top of this, 500 million kronor will go towards temporary support for those municipalities housing the bulk of refugees.

“Welcoming refugees must occur through a more even spread among municipalities in the entire country. In order to support the important efforts of voluntary organisations, we propose the allocation of additional funds,” the government explained.

In addition to this, 1.1 billion kronor is earmarked for “support for Ukraine”, although the budget does not state what kind of support this entails.

Inflation and energy prices

Finally, the budget includes measures to compensate for high electricity and fuel prices, as well as lowered taxes on fuel. In addition to this, a temporary increase in housing benefit for families with children costing 500 million kronor has been proposed.

Farmers will also receive support: temporary subsidies for farmers growing produce in greenhouses, subsidies for pig and poultry farmers and a temporary tax cut for diesel in the farming, forestry and water sectors.

 

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ECONOMY

Inflation rate dips in Sweden for first time in seven months

The inflation rate in Sweden fell in July for the first time in seven months, according to official data from Statistics Sweden (SCB), indicating that rate rises may be having an impact on rising prices.

Inflation rate dips in Sweden for first time in seven months

“Lower prices for electricity and fuel contributed to the inflation rate sinking for the first time since January,” said Carl Mårtensson, a price statistician at the agency, in a press release.

The official inflation rate for July this year was 8 percent, down from 8.5 percent in June, and below the consensus estimate of economists at 8.3 percent.

The fall was almost exclusively the result of falling prices for electricity and fuel, with the price of electricity falling by 8.3 percent month on month and the price of petrol and diesel falling 5.6 percent. Excluding energy prices, the inflation rate rose to 6.6 percent from 6.1 percent in June. 

Olle Holmgren, Chief Strategist at Sweden’s SEB Bank said that while inflation pressure remained high, the numbers were cause for hope. 

“Inflation pressures remains high, but the composition of price changes gives some hope that the strong upward trend could be losing some steam,” he wrote in a comment

He noted that the fall in fuel and electricity prices had been offset by an “extremely strong upturn in food prices”, 13.5 percent year on year. 

Alexandra Stråberg, chief economist at the Länsförsäkringar insurance company, however, said that she did not think that the dip in headline inflation meant that the risk of rising prices was over. 

“Unfortunately, it probably hasn’t turned the corner yet,” she told TT. “This is only a short pause.” 

In the chart below from SCB’s press release you can see how four out of the agency’s inflation indexes have dipped in July, after a year of steady rises. 

The index which excludes energy prices, however, has been rising steadily since December. 

Source: Statistics Sweden
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