Sweden forecasts stronger growth, promises spending

Sweden plans to boost spending by 3.1 billion krona (S$481 million), with 700 million krona going to the police after this month's deadly truck attack outside a department store in Stockholm (above).
Sweden plans to boost spending by 3.1 billion krona (S$481 million), with 700 million krona going to the police after this month's deadly truck attack outside a department store in Stockholm (above).PHOTO: AGENCE FRANCE-PRESSE

STOCKHOLM • Sweden will enjoy surging growth, strong fiscal surpluses and falling debt in the next few years, the centre-left government said in its spring Budget yesterday, leaving room to boost spending on welfare and security.

While many European nations are mired in debt and struggling to get their economies moving, Sweden's Goldilocks scenario reflects its star performance since the financial crisis.

The centre-left government forecast growth would be better than previously expected, with the economy expanding 2.6 per cent this year and 2.1 per cent next year, an election year. Debt will fall to the lowest level since the 1970s as public finances run healthy surpluses.

"That puts us in a totally new position and gives us the ability to meet the challenges to our society," Finance Minister Magdalena Andersson said in a statement. "The Swedish model can continue to deliver."

The spring Budget generally contains few major measures, but the government said it would boost spending by 3.1 billion krona (S$481 million), with 700 million krona going to the police in the wake of the deadly truck attack in Stockholm this month.

Sweden's military will get 500 million krona, as will schools and obstetric care.

The welfare system has come under increasing pressure in recent years, in part because of soaring immigration. Sweden, with a population of around 10 million, took in 160,000 asylum seekers in 2015.

For next year, the coalition government has said it is planning an airline tax, higher taxes on small businesses and a freeze in the threshold for state income tax, meaning more people will pay. Banks will have to make higher payments into a state insurance fund to cover the costs of any future crisis.

Pensioners and those who have disabilities will get a tax cut and child benefits will increase, according to current plans.

But the main centre-right opposition has said it aims to block planned tax hikes. That risks throwing Sweden into political chaos and strengthening the hand of the anti-immigration Sweden Democrats at a time when the country is still trying to deal with the fallout from the Stockholm attack.

REUTERS

A version of this article appeared in the print edition of The Straits Times on April 19, 2017, with the headline 'Sweden forecasts stronger growth, promises spending'. Print Edition | Subscribe