SHARE
COPY LINK

POLITICS

Swedish parliament passes controversial budget bill for 2020

The Swedish parliament has voted yes to the budget framework for 2020. Here's what that means for you and what happens next.

Swedish parliament passes controversial budget bill for 2020
What does the new budget mean for you? Photo: Fredrik Sandberg/TT

This is a not entirely uncontroversial budget.

It is the first budget created as part of the so-called January Agreement, a cross-bloc collaboration between the Social Democrat-Green coalition government and two of Sweden's opposition parties – the Liberals and the Centre Party – which means that for each party, it includes both sweeteners and bitter pills.

Here are the main points that may be relevant to The Local's readers in Sweden.

The total expenditure framework amounts to 1,062 billion kronor. Of this, around 20 billion kronor is earmarked for various reforms that the government and the two other parties want to implement.

These include increased government grants to municipalities, more money for law and order, cash incentives for industry and municipalities to invest in climate measures, abolishing an austerity tax on high earners and cutting taxes for pensioners earning more than 17,000 kronor a month. And the measures have been both praised and heavily criticized.

The estimated revenues amount to 1,116 billion kronor in the 2020 draft state budget, or in other words a surplus of 47 billion.

The exact details will not be clear until the next step of the long budget approval process, however. Parliament will decide in December exactly how to allocate the money in each of the spending areas.

EDITOR'S PICK:

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

MONEY

Swedish central bank: Cuts to key interest rate in May or June ‘likely’

Sweden's Riksbank on Wednesday left the country's main interest rate unchanged at 4 percent, with cuts in May or June "likely".

Swedish central bank: Cuts to key interest rate in May or June 'likely'

“Inflation is in the process of stabilising at the [2 percent] target, but inflationary pressures are still somewhat elevated,” the bank wrote in a press release accompanying the announcement.

It was widely expected that the bank would choose to keep the key interest rate unchanged at 4 percent, the highest level since 2008.

“It is likely that the [key interest] rate can be cut in May or June if inflation prospects remain favourable,” it added.

According to the bank’s forecast, it expects to lower the key interest rate three times over the next year, reaching 3.2 percent by the first quarter of 2025 – significantly lower than the 4.1 percent prediction from its November 2023 forecast.

The bank also revised its forecasts for GDP and CPI (consumer price index) inflation. GDP is expected to stand at 0.3 percent this year, up from the previous prediction of -0.2 percent, CPI inflation is predicted to stand at 3.5 percent, down from the previous prediction of 4.4 percent, while the prediction for CPIF inflation (consumer price index with a fixed interest rate, the measure favoured by the Riksbank), remains the same at 2.3 percent for 2024.

EDITOR’S PICK:

There are a few possible risk factors which could affect these predictions, it writes, including new supply shocks due to geopolitical unrest, the krona continuing to weaken, or companies’ pricing behaviour not changing as expected.

Experts from major Swedish banks welcomed the decision, adding that the Riksbank may lower the key interest rate more often than suggested in its forecast.

“We think there will be even more drops to the interest rate,” head analyst at Nordea, Susanne Spector, told TT newswire, adding that there is a “high chance” that the rate could be lowered as soon as May.

SEB agreed, predicting four drops to the interest rate and a “slightly higher chance” of a drop to the rate in May rather than June.

“For households under pressure an earlier drop is positive,” SEB interest strategist Amanda Sundström told TT.

SHOW COMMENTS