At the same time as the spring sun begins to shine over Sweden, the government declares that winter has arrived in the economy. Sweden is now officially in a recession and it is predicted to be for the next three years. This, together with high inflation, means that the spring budget presented today has few winners but many losers. In kroner terms, the government has designated three priority areas for the next year: the finances of the worst-off families with children are strengthened somewhat through a temporarily increased housing allowance. There will be more training places in vocational training and university of applied sciences. And the defense gets more money. “Missing out on the housing allowance” In practice, it is unclear how far these investments will go: families with children on welfare lose out on the housing allowance because the welfare allowance is automatically reduced if you get higher incomes. Since the grants for educational places were sharply reduced last autumn after having increased grants during the pandemic – today’s increase is not even enough to get back to last year’s level. Those who could be winners are also affected by the high inflation. In the spring budget, the distribution policy analysis shows that the vast majority will have reduced incomes this year if you adjust for inflation. Only the very lowest income group gets a small increase, everyone else loses, and the median income ends up at the same level as in 2017. At this point, it is not unexpected that there is a heated debate about what the government should do. All opposition parties agree that there is some form of paralysis in the Ministry of Finance. The Social Democrats lack crisis measures to mitigate the cost crisis and bring down inflation, the Center speaks of general action paralysis and lost opportunities to protect the countryside and create jobs. “Tidö parties do not agree” The Left Party wants to see a more powerful distribution policy and the Green Party attacks the climate policy, which contains even greater cuts in the future. On the other hand, the opposition is not completely united on what needs to be done: the list of proposed measures runs from reduced food VAT and increased child allowances to paused RUT deductions and reduced employer contributions. Sweden has a tradition since the 90s crisis that budgets should be restrained and finance ministers are measured by that yardstick. In that sense, today’s budget is a success for Elisabeth Svantesson. At the same time, it appears that the Tidö parties are not quite in agreement about the way forward, out of the recession. The Sweden Democrats are prioritizing going forward lowering taxes on fuel and electricity, the finance minister wants to lower taxes on work. One way to avoid making those kinds of priorities can be to make neither. But then you also have to live with criticism for action paralysis in the future as well.
t4-general