“This is a very interesting position to have in an election campaign,” Prime Minister Fredrik Reinfeldt told the foreign press last week.
Meanwhile, Finance Minister Anders Borg said “the sun was shining” on the Scandinavian country’s economy when discussing “elections and the Swedish economy” with reporters.
A year ago, the Swedish economy was undergoing a deep recession and Borg, alluding to Swedish weather, had warned a “long and hard winter” lay ahead. The government at the time forecast an unemployment rate of up to 12 percent in the short term with no clear rebound in 2010.
The industry sector was depressed, the future of Swedish automotive icons Volvo and especially Saab was in danger and the government was under fire by the opposition for its inaction and budgetary caution.
Then, in the span of just a few months, a recovery in exports, a low krona and a return of household consumption and spending suddenly helped turn the situation around.
Today, both Volvo and Saab have been sold, the Swedish economy is among the top performers in Europe, unemployment, which never climbed above 10 percent, is down to 8 percent and Sweden just surpassed the United States in terms of competitiveness.
Recently, revised figures show economic growth reached 4.6 percent in the second quarter.
“Ahead of the election, the [governing] alliance can obviously be satisfied with those numbers,” Gunnar Jonsson wrote in an editorial in daily Dagens Nyheter. “And inversely, the health of the economy is a problem for [the left-wing opposition]: it is just not possible that the government has done everything wrong, as the opposition has been hammering on about for four years.”
Opinion polls show voters shunned the governing alliance at the end of 2008 and the beginning of 2009, when the economic crisis was at its peak.
But support for the government sharply picked up along with the economy’s performance, sending Reinfeldt’s alliance past Mona Sahlin’s opposition bloc, made up of her Social Democrats along with the Green and Left parties.
The secret to Sweden’s success? It was able to use what had been stored away in state coffers during better years, according to the government.
“Contrary to other economies that had deficits, we had a surplus and we could use it for financial stimulus packages…both on infrastructure investments and tax cuts,” Reinfeldt said.
When most European countries adopted austerity measures, Sweden was able to keep spending to support its economy, Borg said. Reinfeldt said “stimuli to the Swedish economy have worked very well.”
However, the Social Democrats’ economic spokesperson Thomas Östros, who would become finance minister if the opposition won, said the government, which came to power in 2006 promising to bring down the then six-percent unemployment
rate, has neglected job creation.
“Failure must be called failure and the right-wing government clearly failed when it comes to jobs,” he wrote in an open letter to Dagens Nyheter, criticising tax cuts in the presence of a deficit. “We have to stop with these tax cuts financed with borrowed money.”