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ECONOMY

EXPLAINED: What Sweden’s 2022 spring budget means for you

Sweden has presented its 2022 spring 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 spring 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, was historic, as parliament rejected the ruling Social Democrat budget and opted to approve the right-wing opposition’s budget instead. The 2021 opposition budget was co-authored by the Moderates, the Christian Democrats and the far-right Sweden Democrats, who are Sweden’s third largest party, meaning that 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 presented by Finance Minister Mikael Damberg on Tuesday 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 million kronor.

The government and parliament have already made changes to the 2022 budget, in the form of five extra amendment budgets in addition to 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.

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

Healthcare

Sweden’s budget proposals 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 Damberg describes 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, 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.

Will the government’s budget be approved?

The government may face some challenges in getting their budget approved by parliament later in the spring.

The budget presented today contains a proposal to give Sweden’s least well-off pensioners – around half a million people – 1,000 kronor extra per month, starting in August.

This proposal, part of an agreement between the Social Democrats, the Greens and the Left Party, was originally included in the Social Democrats’ 2021 budget proposal, which was rejected by parliament. It has been criticised by the right-wing opposition parties, who believe there are better ways of strengthening pensioners’ finances.

At Tuesday’s press conference presenting the budget, Damberg addressed the question of whether the government’s budget will be approved or not.

“I believe that there is support for the majority of measures,” he said. “But I note that a number of parties are extremely vague in their messages on how we should improve things for the least well-off pensioners.”

“If they were to reject this in parliament, then I will be talking about it a great deal in the lead-up to the election, in any case,” he continued.

For the government’s amendment budget to be rejected in parliament, the Moderates, Christian Democrats and Sweden Democrats would need to agree on an alternative budget proposal supported by the Liberals, and the Centre Party would need to abstain from voting.

What do other parties think of the budget?

We mustn’t forget it’s an election year, so Sweden’s political parties are all keen to criticise the budget and use it as an opportunity to get their views across.

The Liberals were quick to comment on the spring budget, with their economic spokesperson Mats Persson describing it as “a weak budget from a weak government”.

Jakob Forssmed, the Christian Democrats’ economic spokesperson, was also critical of the Social Democrats’ budget proposal, saying it was marked by passivity.

Both Forssmed and Persson mentioned the riots in a number of Swedish cities over the Easter weekend, with Persson saying that the Sweden needs to be “rock-hard against crime, but also the causes of crime”, calling for new funds to increase police presence.

Sweden Democrat economic spokesperson Oscar Sjöstedt was also critical of the budget, calling the two million kronor earmarked for police “coffee money”.

Sjöstedt was critical of the pension proposal, suggesting that the Sweden Democrats were open to presenting an alternative budget proposal.

“Is it possible for the opposition to come to an agreement on presenting a better proposal? I hope so, we’re not there yet, but I hope so,” he said.

The Centre Party wanted more support for renewable energy and an increase in funds going towards farmers, and were also critical of the government’s pension proposal.

“We’ve been extremely clear in stating that Sweden’s least well-off pensioners need better finances. But we are very disappointed that this complicated route has been chosen, with a new amendment that many have criticised,” Martin Ådahl, Centre’s economic spokesperson said.

The government might need the Centre Party’s support to approve their budget if the Moderates, Sweden Democrats and Christian Democrats can agree on a counter-proposal.

Per Bolund, the Green Party’s joint leader, would not give a guarantee on whether his party would approve the government’s budget or not. “We will take a position at a later stage on how we are going to vote on this in parliament,” he said.

Bolund’s reasoning is that his party feels that the budget proposal lacks climate-related measures. “This budget has been completely scraped bare of all forms of climate-related proposals,” he said.

The Left party were happy about the pension proposal, but criticised the budget proposal for not prioritising the climate and increased equality. They appear, however, to be willing to support the proposal in parliament.

The Moderates had not yet commented on the budget at the time of this article’s publication.

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ECONOMY

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. 

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