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ECONOMY

Swedish parliament approves government’s budget

The government's budget and controversial pensions agreement has been passed by parliament after an independent MP, who held the deciding vote, chose to support it at the last minute.

Swedish parliament approves government's budget
Finance minister Mikael Damberg talks to press after the budget debate on June 15th. Photo: Pontus Lundahl/TT

The budget passed by 174 to 173 votes.

As a result, guaranteed pensions for pensioners on low or no incomes will increase by up to 800 kronor a month after tax from August.

Formally, a majority of MP’s voted no to the right-wing opposition’s budget, proposed by the Moderates, the Christian Democrats, the Liberals and the Sweden Democrats, meaning that the budget proposed by the government with the support of the Green Party, the Left Party and the Centre Party was approved.

If the vote had been even on both sides, it could have been decided by drawing lots, giving each budget a 50 percent chance of being passed.

Finance Minister Mikael Damberg thanked the parties supporting the government’s budget in a press conference following the vote.

“I want to thank the parties who contributed to this: the Centre Party, the Left Party and the Green Party,” he said. “In total, a million pensioners will be affected by this proposal as soon as this autumn.”

“It’s a necessary reform which is about equality. After a life spent working in Sweden, everyone has the right to economic security in their old age.”

In an interview with public service broadcaster SVT Nyheter after the vote, leader of the conservative Moderate party, Ulf Kristersson criticised the new budget, stating that pensioners would have been better off under the opposition’s proposal.

“It harms confidence in Swedish economic policy and it’s bad for the pensioners who would have had a better pension under our proposal,” he told SVT.

“It shouldn’t ever go to drawing lots,” he told SVT, “this has been a rather telling end to a term of office which has been completely unsustainable.”

“We need governments who can govern, with a governing foundation and well-thought-out economic policy.”

On the other side of the political divide, Left Party leader Nooshi Dadgostar was happy to see the government’s budget passed, despite the fact that the so-called Nooshi-supplement to pensions which she had lobbied for was not included in the final pension proposal.

“It’s a long time since I was this happy,” she told SVT. “We wanted a raise in the guarantee pension from the beginning – we haven’t raised the guarantee pension by this much in over 25 years.”

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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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