"It's still going to be a tough time for personal finances," Länförsäkringar's private economist Emma Persson told TT newswire.
On November 8th, the new government is due to present its budget proposal for 2023. On personal finance issues however, few concrete proposals have been presented in advance.
The budget is a careful balancing act for politicians, private economists say. According to Finance Minister Elisabeth Svantesson, next year's budget will be "slightly constrictive", with the major challenge being how to support households in the coming period of low growth without increasing inflation.
If we look at what we know in advance of the budget announcement, including the subsidy for high electricity prices which is not a part of the budget, households will not be fully compensated for the increases in expenses, Persson said.
"I hope that people have taken that into account and have made adjustments for the fact that it will still be a difficult time for personal finances," she said.
Fuel and travel subsidy
The government has proposed that taxes on petrol and diesel are to be lowered by around one krona per litre from January 1st, but at the same time, tax indexation - the practice of altering tax rates in line with inflation - means that fuel taxes will increase by almost that amount at the beginning of next year.
One litre of petrol is expected to be 14 öre cheaper at the pump, with a litre of diesel expected to be 41 öre cheaper.
"I think that those who are struggling with high fuel expenses would like this to have been higher," Persson said. "But in this situation any decrease is probably welcome."
According to the government, the main change to fuel prices will come from cutting the reduktionsplikt - the law stating that fossil fuels must be mixed with more expensive, more environmentally friendly biofuels to reduce emissions - but this change will first come into effect in 2024, at the earliest.
Those who drive long distances to work will receive support, as the government has decided to keep the current travel subsidy model, scrapping the previous government's proposal to open the scheme up to those travelling by alternative forms of transport such as trains or bicycles.
The subsidy drivers will be eligible for will also increase, from 18:50 kronor per 10km to 25 kronor.
Investment saving accounts
The government also wants to make savings of up to 300,000 kronor held in ISK accounts (investeringssparkonto - investment saving accounts) tax free.
"This might not mean a lot in kronor and öre, but more in the signal it sends," Persson said. "That you're really pushing the value of having your own savings."
"It's a good step in the right direction."
Tax cuts?
Last week, Svantesson presented gloomy figures for the economy going forward, predicting that inflation could reach 5.2 percent next year, that unemployment is likely to grow, and that the economy will shrink slightly rather than grow. And she warned that the situation could get even worse. “The Swedish economy is headed for a rather grim winter,” she said.
The point of this press conference was most likely to lower expectations before the budget proposal, Swedbank private economist Arturo Arques told TT.
Her party, the Moderates, proposed cuts on income tax of around 30 billion kronor. The Tidö Agreement between the government and the Sweden Democrats states that taxes will decrease over the next four years, but it doesn't detail when this will happen or how large the decrease will be.
Arques expects that there will be changes to taxes, but it's not clear yet what they will be.
"They'll be wanting to make sure they're not implementing policy which will work against the Central Bank's monetary policy," he said.
He will be looking closely at support for households with the smallest margins, who are most affected by increasing inflation.
"Child benefit, housing allowance and housing subsidies are the kind of things I'll be looking at when the report comes out on Tuesday morning."
Amortisation requirements
Emma Persson also believes that the government will be holding back on support to households in the budget for 2023. She believes that the government will probably wait until next year before introducing a cut or pause to the current requirement for borrowers to pay off a certain percentage of their mortgage dependent on factors such as household income and size of loan.
"That's my guess, that they'll wait before pausing the amortisation requirement," she said.
"I think they'll probably refer to the Finance Inspectorate's statement that it's not a good idea right now."
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