Government Offices of Sweden, "Sweden’s Convergence Programme 2021"
Summary
Sweden's Convergence Programme 2021, submitted by the Government Offices of Sweden under Council Regulation (EC) No 1466/97, covering the economic policy framework and targets, macroeconomic developments, general government finances, alternative scenarios and the long-term sustainability of fiscal policy. The introduction notes that Sweden delivered its first convergence programme in December 1998. The programme describes Sweden's surplus target, changed in the Budget Bill for 2018 to an average of one third of one per cent of GDP over an economic cycle, and reports on the debt anchor and the expenditure ceiling. It compares results with the 2020 programme and concludes that fiscal policy is judged to be long-term sustainable. Appendix tables list the net lending effects of pandemic tax measures.
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“Government Offices of Sweden, ‘Sweden’s Convergence Programme 2021.’”
Original at www.government.se. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/government-offices-of-sweden-sweden-s-convergence-programme-2021-73a0610e31/
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Sweden’s Convergence
Programme 2021
1
Introduction ......................................................................................... 3
1. Economic policy framework and targets.......................................... 3
1.1 Budgetary policy objectives.............................................................................. 3
1.2 Sweden’s medium-term budgetary objective ................................................. 6
1.3 Monetary policy objective and monetary policy in Sweden ........................ 6
1.4 The Government’s economic policy .............................................................. 9
1.5 Monetary policy and financial economy ...................................................... 21
2. Macroeconomic developments ..................................................... 24
2.1 International economy.................................................................................... 24
2.2 The Swedish economy .................................................................................... 25
2.3 Potential macroeconomic imbalances .......................................................... 29
3. General government finances ....................................................... 30
3.1 Accounting principles ..................................................................................... 30
3.2 Development of general government finances ........................................... 31
3.3 Net financial wealth and consolidated gross debt ...................................... 33
3.4 General government net lending target ....................................................... 34
3.5 Monitoring of the debt anchor ...................................................................... 37
3.6 Monitoring of the expenditure ceiling .......................................................... 37
3.7 Monitoring the requirement of sound financial management in the local
government sector and the local government balanced budget requirement38
3.8 Central government guarantees ..................................................................... 40
4. Alternative scenarios and comparison with Sweden’s Convergence
Programme 2020 .............................................................................. 42
4.1 Alternative scenarios ....................................................................................... 42
4.2 Comparison with the 2020 Convergence Programme ............................... 44
5. Long-term sustainability of fiscal policy ......................................... 45
5.1 Long-term challenges...................................................................................... 45
5.2 What is meant by fiscal policy being sustainable? ....................................... 46
5.3 A scenario for long-term development ........................................................ 47
5.4 Fiscal policy is judged to be long-term sustainable .................................... 52
6. Quality of general government finances ........................................ 52
6.1 Expenditure ...................................................................................................... 52
6.2 Income .............................................................................................................. 54
Appendix A – Technical assumptions ............................................... 57
Appendix B - Comparison with the European Commission’s
calculations of demographically dependent expenditure ................... 64
Appendix C – Tables......................................................................... 66
Introduction
In accordance with Council Regulation (EC) No 1466/97 of 7 July 1997 on
the strengthening of the surveillance of budgetary positions and the
surveillance and coordination of economic policies, Sweden delivered its first
convergence programme to the European Commission in December 1998.
The programme was evaluated and approved by the Council in spring 1999.
Under the Regulation an update of the Convergence Programme has to be
presented annually; as was done from 1999 to 2009.
As of 2010 reporting within the Stability and Growth Pact has been adapted
to the European Semester in order to strengthen the surveillance of economic
policies. The convergence programme and the national reform programme
are therefore delivered each spring. This enables budgetary and structural
policy to be assessed consistently and recommendations to be made to
Member States while their budget proposals are still in the preparatory phase.
Sweden's Convergence Programme for 2021 is mainly based on the Spring
Fiscal Policy Bill for 2021 (Bill 2020/21:100). The Government presented the
Bill to the Riksdag on 15 April 2021. The Parliamentary Committee on
Finance was informed about the Convergence Programme on 27 April 2021.
The Government adopted the Convergence Programme on 29 April 2021.
1. Economic policy framework and targets
1.1 Budgetary policy objectives
The budgetary policy objectives consist of a general government net lending
target, an expenditure ceiling for central government, a local government
balanced budget requirement and a debt anchor.
General government net lending target
The purpose of having a governing target for general government net lending
is to contribute to strengthening control of the long-term development of
general government finances. The net lending target also makes clear the need
to set priorities between different expenditure areas, or to raise taxes. In
addition, fiscal policy has to be capable of contributing to economic stimulus
in contractionary periods and of slowing the economy down in expansionary
periods. Higher net lending in good times is therefore needed to provide scope
for lower net lending when times are worse. This is made possible by
formulating the net lending target as an average over an economic cycle (see
also section 3.4).
Following a proposal in the Spring Fiscal Policy Bill for 1997, the Riksdag
decided to introduce a surplus target for general government finances of 2%
of GDP on average over an economic cycle. The target was phased in over a
three-year period and full application began from 2000. However, the Riksdag
decided, following a proposal in the Spring Fiscal Policy Bill 2007, to lower
the net lending target from 2% to 1% of GDP on average over an economic
cycle. The reason for the change was that Eurostat had decided that net
lending in the premium pension system would no longer be included in the
general government sector in the National Accounts. This reduced general
government net lending by around 1% of GDP.
In the Budget Bill for 2018 the Government proposed, in accordance with the
proposal of the Surplus Target Committee (SOU 2016:67), changing the
surplus target level to an average of one third of one per cent of GDP over an
economic cycle and supplementing the budgetary policy framework with a
debt anchor for the general government consolidated gross debt (Maastricht
debt). The Riksdag adopted the Government’s proposal (Committee Report
2017/18:FiU1, Riksdag Comm. 2017/18:54).
The Government has also made assessment that monitoring of the surplus
target should be strengthened and that the Swedish Fiscal Policy Council
3
should be assigned a clearer role in monitoring the fiscal policy framework
(Govt Bill 2016/17:100 p. 84 -86).
The Government has given an account of the fiscal policy framework in the
communication Fiscal policy framework (Govt comm. 2017/18:207).
Expenditure ceiling and a stringent budgetary process
The expenditure ceiling covers central government primary expenditure; i.e.
excluding interest expenditure, and expenditure in the old-age pension system.
The Swedish Budget Act (2011:203) requires the Government to propose an
expenditure ceiling for the third budget year ahead in the budget bill. Then it
is the Riksdag that sets the expenditure ceiling. The expenditure ceiling is a
tool for achieving the surplus target Together with the general government
net lending target, the expenditure ceiling governs the total take of taxes and
contributes to preventing a situation in which taxes must be gradually raised
as a result of a lack of control over expenditure, or in which temporary
increases in income are used for permanent increases in expenditure.
The expenditure ceiling is the overarching restriction on the budgetary process
in terms of total expenditure. The principle is that expenditure ceiling levels
decided by the Riksdag are not changed except to make technical adjustments.
The Budget Act also requires the Government to take measures if there is risk
of exceeding an expenditure ceiling adopted. The established practice is to also
have a ‘budgeting margin’ of a certain size under the expenditure ceiling. This
is primarily intended to act as a buffer if macro economic developments lead
to expenditure growth not expected when the level of the expenditure ceiling
was adopted.
A well-organised, stringent budgetary process is of central importance in
achieving the budgetary policy objectives. The budgetary process compares
different expenditures with one another and expenditure increases are tested
in the light of a predetermined total fiscal space defined by the expenditure
ceiling and the net lending target. The main principle is that proposed
expenditure increases in one expenditure area must be matched by proposed
expenditure reductions in the same area. It is also of central importance that
the central government budget is transparent and comprehensive. The
Government’s proposed budget has to include all income and expenditure, as
well as other payments that have an impact on the central government
borrowing requirement (the “completeness principle”). Central government
revenue and expenditure also have to be budgeted and reported gross under
income headings and appropriations (the “gross principle”). This means that
4
expenditure has to be reported on the expenditure side of the budget, while
income has to be reported on the income side. A further main principle is that
expenditure has to be booked in the year when it is expected to arise.
Local government balanced budget requirement
The general government net lending target includes net lending in the local
government sector, which mainly consists of municipalities and regions.
However, it is net income, not net lending, that determines whether
municipalities and regions comply with the balanced budget requirement of
the Local Government Act (2017:725). That requirement states the main rule
that every municipality and region must budget for net income in balance.
Negative outcomes of net income have to be corrected within three years
unless there are exceptional reasons. Municipalities’ and regions’ annual
reports must contain an assessment of whether the balanced budget
requirement has been met.
The Local Government Act requires municipalities and regions to have sound
financial management in their operations. One consequence is that
municipalities and regions have to set their own financial targets and be
accountable for long-term sustainable finances. It has long been a fundamental
principle that each generation has to meet its own costs. The balanced budget
requirement sets a minimum level, but net income generally needs to be higher
to fulfil the sound financial management requirement of the Swedish Local
Government Act.
Debt anchor
The fundamental reasons for the surplus target are sustainable public finances
and scope for action in stabilisation policy. So, essentially it is linked to debt
and wealth levels rather than to net lending at a particular point in time.
However, the level of general government gross debt is a key factor in
assessing a country’s creditworthiness and the scope for active fiscal policy for
stabilisation over the economic cycle. Even though the surplus target is more
suitable as an operational target in the budgetary process, the size of gross
debt and net financial wealth play a central role in decisions about the size of
the surplus target. As a member of the EU, Sweden is also bound by the EU
debt criterion, which states that the Maastricht debt must not exceed 60% of
GDP. The fiscal policy framework has therefore been supplemented with a
debt anchor for the general government consolidated gross debt. The level of
the debt anchor, which is a guideline for the level of the debt, has been set at
35% of GDP.
5
In the spring fiscal policy bill the Government has to give an account each
year of the development of the general government consolidated gross debt.
If this debt deviates from the debt anchor by more than 5% of GDP, the
Government has to present a communication to the Riksdag, at the same time
as the spring fiscal policy bill, giving an account of the cause of the deviation
and how the Government intends to handle it. The debt is measured as the
outcome in the national accounts for the preceding year and according to the
forecast for the present year or the budget year.
1.2 Sweden’s medium-term budgetary objective
As a member of the EU, Sweden has to live up to the regulations concerning
general government finances in the Stability and Growth Pact. It includes
provisions that the general government deficit must not exceed 3% of GDP
and general government debt must not exceed 60% of GDP. Each Member
State also has a medium-term budgetary objective (MTO) for its structural
balance, i.e. cyclically adjusted general government net lending, excluding one-
off effects. The level of MTO is decided by each Member State, but it must
be compatible with a minimum level calculated by the European Commission.
Sweden’s medium-term budgetary objective is -1% of potential GDP (see
section 3.4).
A special escape clause in the Stability and Growth Pact has been activated on
account of the economic situation resulting from the spread of the disease
COVID-19. The clause refers to situations when the Union as a whole is in a
severe economic downturn. It allows Member States to make temporary
general departures from the adjustment path towards their medium-term
budgetary objectives, provided that this does not endanger fiscal sustainability
in the medium term. It also remains to be seen how any deficits in Member
States of more than 3 per cent of GDP will be dealt with in the present
economic situation and whether any Excessive Deficit Procedures will be
opened.
1.3 Monetary policy objective and monetary policy in Sweden
The Riksbank is responsible for monetary policy in Sweden. Chapter 9, Article
13 of the Instrument of Government provides that no other authority may
determine how the Riksbank makes decisions on monetary policy issues.
Amendments to the Sveriges Riksbank Act (1988:1385) adopted in 1999 gave
the Riksbank greater independence. Under these provisions, the members of
its decision-making Executive Board must not seek or accept instructions
when fulfilling their monetary policy duties.
6
According to the Sveriges Riksbank Act, the objective of monetary policy is
to maintain price stability. The Riksbank has defined this as a 2% annual
increase in the consumer price index with a fixed interest rate (CPIF).
At the same time as monetary policy is aimed at attaining the inflation target,
it has to support the objectives of general economic policy in order to attain
sustainable growth and high employment. This is achieved by the Riksbank
endeavouring to stabilise production and employment around paths that are
sustainable in the long-term, in addition to stabilising inflation around the
inflation target. The Bank therefore conducts what is termed a flexible
inflation target policy. However, the inflation target has priority over the other
targets.
It takes time for monetary policy to achieve full impact on inflation and the
real economy. Monetary policy is therefore guided by forecasts of economic
developments. The Riksbank publishes its own assessment of the future
development of the repo rate. However, it should be stressed that the interest
rate path is a forecast, and not a promise.
In connection with each monetary policy decision, the Executive Board of the
Riksbank makes an assessment of the repo rate path needed, and any
supplementary measures necessary, for monetary policy to be well balanced.
This trade-off is normally a question of finding an appropriate balance
between stabilising inflation around the inflation target and stabilising the real
economy. There is no general answer to the question of how quickly the
Riksbank aims to bring the inflation rate back to 2% if it deviates from the
target. A rapid return may, in some situations, have undesired effects on
production and employment, while a slow return may weaken the credibility
of the inflation target. In general, the ambition has been to adjust monetary
policy so that inflation is expected to be fairly close to the target in two years’
time.
To illustrate that inflation will not be exactly 2% each month; a variation band
is used that spans between 1 and 3%, capturing around three-quarters of the
historical monthly outcomes of CPIF inflation. The Riksbank constantly
strives to reach 2% inflation, irrespective of whether inflation is initially inside
or outside the variation band.
According to the Sveriges Riksbank Act, the tasks of the Riksbank also include
promoting a safe and efficient payments system. Risks linked to developments
in financial markets are also taken into account in monetary policy decisions.
7
However, with regard to preventing an unbalanced development of asset
prices and debt, well-functioning regulation and effective supervision are of
most importance. Monetary policy only acts as a complement to them.
In some situations, such as during the financial crisis in 2008 and 2009, the
repo rate and the repo rate path may need to be supplemented with other
measures to promote financial stability and ensure the effective impact of
monetary policy.
The Riksbank endeavours to ensure that its communication is open, factual,
comprehensible and up-to-date. This makes it easier for other actors to make
good economic decisions. It is also makes it easier to evaluate monetary policy.
The Executive Board of the Riksbank normally holds five monetary policy
meetings per year, at which it makes decisions on monetary policy. A monetary
policy report is published in conjunction with these meetings. Approximately
two weeks after every monetary policy meeting, minutes from the meeting are
published, in which it is possible to follow the discussion that led to the
decision of that meeting and to see the arguments put forward by the various
executive board members.
The monetary policy decision is presented in a press release at a set time in
the morning of the day after the monetary policy meeting. The press release
also states how each executive board member voted and a main justification
for any reservations. A press conference is also held the same day.
The Government is responsible for overall currency policy matters and
decides on the exchange rate system, while the Riksbank is responsible for the
application of the exchange rate system.
In September 2003, Sweden held a referendum on the introduction of the euro
as its currency. The result of the referendum, which was “no”, did not lead to
any changes in monetary policy or exchange rate policy. The current monetary
and exchange rate policy regime stands firm. Sweden’s experience of applying
an inflation target and a floating exchange rate is very good. Pegging the
Swedish krona to euro is not under consideration.
On 22 December 2016 the Government decided to appoint a cross-party
committee of inquiry to review the monetary policy framework and the
Sveriges Riksbank Act (terms of reference 2016:114, terms of
reference 2017:57, terms of reference 2017:100 and terms of
8
reference 2019:13). Its remit was based on the positions taken in the Riksdag
Committee on Finance report Evaluation of the Riksbank’s monetary policy
2010–2015 (Utvärdering av Riksbankens penningpolitik 2010–2015,
Committee Report 2015/16:FiU41). The Riksbank Committee, consisting of
representatives of all the parties in the Riksdag (the Swedish Parliament)
presented its final report A new Sveriges Riksbank Act (En ny riksbankslag,
SOU 2019:46) to the Government in November 2019.1
A consultation has been held on the Committee’s proposals, and the ECB has
been given the opportunity to state an opinion on its proposals. Since the
proposals involve amendments to the Instrument of Government, which
requires two decisions by the Riksdag and that a general election is held
between the decisions, a new Sveriges Riksbank Act can enter into force in
2023 at the earliest.
1.4 The Government’s economic policy
Measures taken on account of the pandemic
Since the outbreak of the virus, the Government and the Riksdag have taken
a large number of measures to safeguard people’s lives, health and livelihoods.
In all, the measures for 2020 and 2021 on account of the pandemic and the
green restart amount to more than SEK 400 billion.2
To ensure effective health care and social care, increase the number of tests
and carry out rapid vaccination as well as to address the additional costs
resulting from the spread of COVID-19, considerable resources have been
provided for the local government sector. Funding has also been allocated to
reinforce skills in care of older people. A number of temporary measures have
been taken to limit the spread of infection and protect risk groups.
Viable companies have received financial support to reduce the number of
jobs lost. The costs of hiring have deceased as a result of temporary reductions
of employers’ social security contribution for 19-23 year olds and other
groups. Several measures have been taken to reduce costs, strengthen liquidity
and improve access to financing for business. Considerable amounts of
support and compensation have been paid (figure 1.1). The measures have
mainly been allocated on the basis of how hard the companies have been hit
1
See, for instance, Sweden’s Convergence Programme 2020 for a brief description of the proposals in the
report.
This includes measures linked to the pandemic in the Spring Amending Budget for 2020 and the Autumn
Amending Budget for 2020 and all the measure s in the other government bills containing proposals for
amendments to the central government budget that have been adopted or announced for 2020 and 2021, in
the Budget Bill for 2021 and the further measures now proposed in the Spring Amending Budget for 2021.
9
financially, but some support has been targeted at specific sectors such as
media, culture, sport, public transport and rail, air and sea transport.
Moreover, front-loaded temporary tax reductions for jobs and businesses have
been implemented in 2021. Regions and municipalities have been given
additional general resources to cope with their strained economic situation
and maintain their level of employment. To support people who end up in a
more vulnerable situation, civil society has been given increased resources, and
the housing allowance has been raised temporarily.
Figure 1.1 Support paid, deferrals granted and guarantees issued
SEK billion
60
50
40
30
20
10
0
Reorientation support Reduced social security contributions
Compensation for high sick pay costs Short-time work allowance
Tax payment deferral Government guarantee programme for companies
Note: The temporary reductions of employers’ social security contributions apply as of January 2021 and are for persons
aged between 19 and 23 years. The reduction means that the employer pays a social security contribution of 19.93%
instead of 31.42%. The compensation for sick pay costs refers to full compensation for the period April–July 2020; after
that compensation is paid for sick pay costs that can be assumed to be higher than normal. All information is as on
31 December 2020.
Sources: Swedish Tax Agency, Swedish Agency for Economic and Regional Growth, the Swedish National
Debt Office and own calculations.
Despite the crisis measures taken, many people have been made unemployed
or have been hit in other ways. Temporary changes have been made in
unemployment insurance, health insurance has been changed and
transitioning opportunities have been reinforced. The Knowledge Boost has
been reinforced by providing more places in education and training that better
meet society’s needs (figure 1.2).
10
Figure 1.2 Increased number of places in education and training
Funds provided converted into places in education and training
180 000
160 000
140 000
120 000
100 000
80 000
60 000
40 000
20 000
0
2019 2020 2021 2022
Regional Vocational Training Adult Education College
Higher Vocational Education University College
Sources: Swedish Agency for Higher Vocational Education and own calculations.
To get Sweden out of the recession as quickly as possible, an expansionary
fiscal policy is being conducted in 2021 and 2022. A powerful green economic
restart is being implemented. In the central government budget for 2021 the
Government presented reforms for green investments, additional resources
for welfare provision and tax reductions on jobs, business and investment as
well as better transitioning opportunities in the labour market.
Many countries around the world have, just like Sweden, taken extensive
measures to alleviate the economic consequences of the pandemic. In
international comparisons financial support is often divided up into two
categories. First, support that has direct budgetary effects, such as short-time
working and, second, support that improves the liquidity situation of
households and businesses, such as loans and guarantees. These comparisons
are associated with uncertainty, partly because countries had different systems
in place before the pandemic and may use different definitions of support
measures. The IMF’s estimate of countries’ financial support measures
suggests that Sweden’s measures are well in line with those of some
comparable countries.
11
Figure 1.3 Financial support measures
Per cent of GDP
9
8
7
6
5
4
3
2
1
0
Denmark Finland Norway Sweden The Netherlands
Budgetary effects Other measures
Note: The estimate of measures with budgetary effects refers to action until the end of 2020, which may have budgetary
effects in the same year or later. The estimate of other measures refers to equity injections, loans and guarantees, but
not, for example, to deferrals of tax payments, which may be of a considerable size in certain cases.
Source: International Monetary Fund (Fiscal Monitor Reports, January 2021).
Combined budgetary effects of Government policy in 2019–2024
Table 1.1 presents the budgetary effects of all proposals for and
announcements of reforms and financing that the Government has submitted
and given an account of to the Riksdag and that the Riksdag has either adopted
or approved the estimates for. The budgetary effects are reported in relation
to the preceding year and are part of the analysis of the change in structural
balance and the direction of fiscal policy.
12
Table 1.1 Combined budgetary effects of Government policy 2019–2024 in relation to
the previous year
Changes in expenditure and income in relation to preceding year of measures and financing adopted
and announced and measures and funding now proposed and announced 1. Budgetary effect on
general government net lending.
SEK billion unless otherwise stated.
2019 2020 2021 2022 2023 2024
Change in ceiling-restricted expenditure 11.9 190.3 76.5 -158.6 -27.6 -3.6
Adjustment for differences between the
accounting principles in the central government
budget and the National Accounts 4.4 -8.6 4.3 0.3 1.0 -1.1
of which, capital contributions, state-owned -0.2 -9.1 7.9 1.4 0.0 0.0
companies
of which, infrastructure investments funded by 3.2 3.6 0.2 -1.3 -1.7 -1.1
borrowing3
Total expenditure changes2 16.3 181.7 80.8 -158.3 -26.6 -4.6
Taxes, gross -20.5 -45.1 -8.8 13.4 16.1 1.8
Indirect impact of taxes 0.5 8.8 -4.4 -1.0 -1.6 0.0
Other revenue reforms -0.1 1.4 -0.2 0.2 0.0 0.0
2
Total revenue changes, net -20.1 -34.9 -13.4 12.6 14.5 1.8
Changes in expenditure and revenue, impact
on general government net lending2, 4 -36.3 -216.6 -94.1 170.9 41.1 6.4
Per cent of GDP -0.7 -4.4 -1.8 3.1 0.7 0.1
Note: The amounts are rounded off and thus do not always agree with the total.
1
The table includes the budgetary effects of measures proposed by the government in the Spring Amending
Budget for 2021 (Govt Bill
2020/21:99) that the Riksdag will consider in June 2021.
2
For the expenditure side, a minus sign reflects a decrease in an appropriation or the cessation or reduction in
scope of temporary programmes. For the revenue side, a minus sign reflects a decrease in tax revenues. For the
combined budgetary effects of measures on the expenditure and revenue sides, a minus sign indicates a
weakening of general government finances compared with the preceding year.
3
This item shows the change in net borrowing for road and rail work. Net borrowing is the diffe rence between
new borrowing and amortisation.
4
Excluding indirect effects on the revenue side of measures on the expenditure side.
Source: Own calculations.
The Government’s further reform ambitions
The spread of the disease COVID-19 has confronted Sweden and the whole
world with a situation unparalleled in modern times. In addition to the serious
consequences for life and health, the spread of infection has hit jobs and
business hard. After an unexpectedly strong economic recovery in the third
quarter of 2020, the spread of infection accelerated again at the end of the year
and activity in the economy decreased, but not as distinctly as it did in spring
2020.
Sweden is going to be affected by the pandemic for a long time, but the record
pace of vaccine development brings hope. First and foremost, the vaccines
save lives and health, but they also save jobs and companies. The faster
restrictions can be phased out, the sooner society and the economy can
recover and unemployment can be pushed back.
13
The pandemic puts society under great strain. Deficiencies in Sweden’s welfare
provision have been made visible, including in care of older people. School
closures and distance teaching risk having an adverse effect on pupils’ learning
and health. Moreover, the situation in the labour market is serious. People
who already had a weak attachment to the labour market before the pandemic
risk getting stuck in long-term unemployment. Industry is back at the same
levels of activity as before the crisis, while many sectors in services are still
hard hit by restrictions and recommendations about physical distancing.
Further reforms are required to solve the societal problems that Sweden had
before the pandemic. Global warming is continuing; one result is that extreme
weather conditions are becoming ever more common. Climate emissions are
decreasing too slowly, and the threats to biodiversity remain. More needs to
be done for better learning outcomes and greater equity in the Swedish school
system. Work to reduce and counter segregation must continue. Poverty and
overcrowding risk worsening children’s living conditions. Vulnerable areas
must be lifted. Serious organised crime creates insecurity and division. The
gap between urban and rural areas must be closed, especially concerning jobs
and business.
Since the outbreak of the virus, the Government and the Riksdag (the Swedish
parliament) have taken a large number of measures to safeguard people’s lives,
health and livelihoods. A lack of financial resources must not prevent work to
limit the spread of infection and to care for the sick. Municipalities, regions
and government agencies have therefore received major additional funding.
Extensive financial support and front-loaded temporary tax reductions have
been put in place to alleviate the negative financial consequences of the
pandemic for jobs and business but also for other actors and for individuals.
Unemployed people have been given stronger financial security and more
opportunities of transitioning. Special action has been taken for schools and
civil society. A powerful green economic restart is being implemented. The
total expenditure for the measures taken since the spread of the infection
began is now estimated at more than SEK 400 billion.
On 6 April 2021 the Government adopted the Additional Amending Budget
for 2021 – Extended compensation in the area of health insurance, support
for companies, culture and sport and other measures on account of the
COVID-19 virus (Government Bill 2020/21:166). The Spring Amending
Budget for 2021 (Govt Bill 2020/21:99). These two government bills
amending the central government budget contain further measures to work
14
Sweden out of the crisis and build a better and more sustainable Sweden than
before the pandemic.
Both the Spring Fiscal Policy Bill for 2021 and the proposed amendments to
the budget are based on a political agreement between the Swedish Social
Democratic Party, the Centre Party, the Liberal Party and the Green Party.
Limit the spread of infection and carry out vaccination
Rapid and safe vaccination is of fundamental importance for bringing Sweden
out of the pandemic. At the same time, work to limit the spread of infection
and to care for the sick must continue. The whole of society – the State,
government agencies, regions, municipalities and private parties – has a
common responsibility to combat the spread of infection and make rapid and
large-scale vaccination possible.
The vaccination programme that has now been started is the most extensive
ever in Sweden. The State undertakes to pay for vaccines and vaccinations,
and the regions carry out the vaccinations in accordance with the
recommendations of the Public Health Agency of Sweden. The Government
proposes allocating a further SEK 1.7 billion to ensure the resources necessary
for vaccine costs and for compensation to the regions. Under the agreement
made by the Government and the Swedish Association of Local Authorities
and Regions (SALAR), everyone in Sweden who is 18 years or older and
individuals under 18 years who belong to a risk group will be rapidly offered
vaccination against COVID-19. Sweden is cooperating in the European
Union to produce an internationally accepted certificate of vaccination against
COVID-19.
The pressure on health care remains high. The Government is therefore
proposing additional funding of SEK 2 billion for the regions, over and above
the SEK 4 billion so far allocated in 2021, to cover costs of deferred care and
care for patients with COVID-19. The Government is carefully following
developments in health care due to the spread of infection and is prepared to
revert to the Riksdag when needed.
Continuing to limit the spread of infection reduces the risk of health care being
overburdened. It is also of the utmost importance to continue to protect risk
groups. To meet the need for continued large-scale testing and tracing, the
Government is proposing additional funding of SEK 1.65 billion. The
Government has also proposed extending a number of temporary measures
until and include 30 June 2021; they include compensation for the sick pay
15
standard deduction and the exemption from the requirement of a doctor’s
certificate as well as forms of compensation to risk groups. The Government
intends to extend these measures until the vaccination target has been reached.
An extension has also been proposed of the special provisions regarding
sickness benefit when health care and rehabilitation are deferred, as well as of
the government grant for protective equipment for personal assistants. For
infection protection reasons, there is a continued need to be able to get to
work without using public transport. An extension has therefore been
proposed of the temporary tax and charge exemption for free parking benefit
in connection with workplaces that was introduced in 2020.
Measures to alleviate the consequences of the pandemic
In addition to its impacts on life and health, the pandemic has also caused
serious consequences for the whole of society. The extensive support
measures have alleviated the consequences for many, but more must be done.
The pandemic has led to a clear decrease in demand in the economy, with
serious consequences for jobs and business throughout the country. In order
to continue supporting viable companies and reducing job losses, the
Government has proposed extending several of the temporary measures. They
include the compensation scheme for undertakings faced with turnover losses,
the reinforced compensation scheme for undertakings faced with turnover
losses affected by specific bans and recommendations, the turnover-based
support for sole traders, the support for trading partnerships and the rent
rebate, as well as the support to employers for sick pay costs above the normal
level The Government has also proposed a number of temporary tax
reductions. It will be possible to grant deferrals of payments of tax to tax
accounts for more reporting periods, and the level of the deferral charge will
be reduced. To support various industries in local business, the possibility for
an employer to make tax-free-gifts is being expanded and extended. Several
of the industries hit hardest have many young employees. The Government
has announced that employers' social security contributions for young people
will be reduced for June–August 2021 to make it easier for young people to
find work. The Government makes the assessment that there is a need for
further measures for rural areas and is therefore proposing a reinforcement of
the Rural Development Programme. Funding is proposed for Visit Sweden to
promote the visitor industry and for Business Sweden to reinforce regional
export advice services. The culture sector and sports movement have also
suffered negative impacts. The Government has therefore proposed an
extension of crisis support for culture and sports, and the provision of funding
16
for several charge-financed museums and certain performing arts institutions.
Additional funding is also proposed for media subsidies to enable continued
distribution of printed newspapers throughout the country and to provide
compensation for increased expenditure for operational subsidies. Event
support consisting of a guarantee and expanded grants is also being
introduced.
Children and young people risk being adversely affected in several ways by the
restrictions introduced; examples include long periods of distance teaching
and cancellations of leisure activities. The consequences have been particularly
keenly felt by those who were in need of various forms of support even before
the pandemic. There is a need to catch up on knowledge lost in all school
years, and the Government therefore proposes additional funding for schools
for extra teaching and other measures. For instance, the possibility for pupils
in Year 3 of upper secondary school to take part in holiday school is expanded
so as to avoid pupils leaving upper secondary school without sufficient
knowledge. To contribute to good living conditions for all children and young
people, the Government’s proposal contains funding for municipalities to
arrange free, infection-proof activities in school holidays and funding to
support the work of the municipalities on creating more summer jobs for
young people. Many households have incurred or risk incurring severe
reductions of their disposable income on account of the economic downturn.
The Government therefore proposes temporary supplementary allowance to
reinforce the housing allowance for families with children.
Continued green economic restart
A temporarily expansionary fiscal policy is needed so as to bring Sweden out
of the recession as soon as possible. The Government is implementing
extensive green investments, increased resources for welfare services and
reductions of taxes on jobs and business. At the same time, the transitioning
opportunities in the labour market are being improved. The Government
proposes allocating additional funding to the climate transition and to getting
more people in work throughout the country.
The climate transition and work for biodiversity have priority in the recovery.
Sweden aims to be a fossil-free pioneer. The transition to a fossil-free and
circular economy is necessary to enable Sweden to achieve both its
environmental and climate objectives and the Global Goals in the 2030
Agenda. Making investments in reductions of carbon dioxide emissions,
reduced environmental impacts and additional circular solutions strengthens
competitiveness and lays the foundation for new and future jobs. The
17
Government is proposing a range of measures to continue the climate
transition, including reinforced environmental compensation or goods
transport by rail and funding to the regions for maintained public transport
capacity during the pandemic. A further measure proposed is to go ahead with
the next step in the introduction of a national ticketing system for all public
transport throughout Sweden. To limit society’s vulnerability as a result of
climate change, funding is proposed for climate adaptation through
knowledge-enhancing and preventive measures concerning climate change
and its effects. The Government proposes a reinforcement of the county
administrative boards’ climate work at regional level. Additional funding is
proposed for support for solar cells. Action against littering and an initiative
for nature-centred jobs for young people are proposed to safeguard Sweden’s
nature and provide more paths to jobs.
More people are to find work and share in the freedom that comes from
having a job and their own income. At the same time as many people have
lost their jobs, new jobs have been created and more will be created when the
economy turns round. In a recession, however, the risk of getting stuck in
long-term unemployment or leaving the labour force altogether can be
particularly great for people who already had a weak foothold in the labour
market, such as young people without upper secondary education and women
born abroad. A broad expansion of places in education and training is now
under way to enable people who are unemployed to seek new jobs that
emerge. The Government is also proposing targeted education and training
initiatives, including more vocational training in combination with Swedish for
Immigrants and Swedish as a second language. The possibilities of studying
part time alongside participation in the job and development guarantee have
been expanded. In addition, funding is proposed to increase the number of
summer courses at universities and other higher education institutions. The
Government also proposes that additional funding be provided to enable
more people who are far from the labour market to participate in action that
leads to work, such as introduction jobs, extra jobs and matching services.
Increased resources for matching services reinforce work on reforming
Arbetsförmedlingen [the Swedish Public Employment Service]. Increased resources
for employment preparation activities are proposed by the Government so
that unemployed people with disabilities will find work or start studies. The
Government also proposes that funding be allocated to the start-up of the
state transition organisation that follows from the agreement between the
social partners on employment protection and transition.
18
Sweden to be a secure country for everyone
Crime and the causes of crime must be combated. Serious crime hits the whole
of society and has a particularly hard impact on people living in socially
vulnerable areas. The Government proposes several measures to intensify
action against criminal gangs and networks and to break the recruitment of
young people to criminal activities. An expansion is proposed of previous
reinforcements of the law enforcement chain with new additional funding for
the Swedish Prosecution Authority, the Swedish Economic Crime Authority,
the Swedish Courts Administration, the National Board of Forensic Medicine,
the Swedish Prison and Probation Service and the Swedish Customs. The
Government proposes that additional funding be provided to spread the Stop
shooting project to more places since cooperation between different actors has
proved to be successful. The Government also proposes allocating funds to
the Swedish Prison and Probation Service to strengthen work to prevent
reoffending, in which there will be a special focus targeted on sentenced young
adults. Some of this work will be done in socially vulnerable areas (see table
1.2).
The ongoing pandemic has worsened the situation of women, children and
LGBTQI people subjected to domestic violence and honour-related violence
and oppression. To increase the support for victims, a reinforcement is
proposed of the government grant to civil society. Additional funding is
proposed for preventive work against domestic violence, especially men’s
violence against women, and to support young people who are subjected to
this in their relationships. The pandemic has also had a negative impact on
children and adults in socially particularly vulnerable situations. To alleviate
the consequences of increased mental ill health among children and young
people and of homelessness, a reinforcement is proposed of the government
grants to civil society organisations conducting activities targeted at these
groups.
19
Table 1.2 Proposals in the Spring Amending Budget (SAB) for 2021 and the Extra
Amending Budget (EAB) for 2021 – Extended compensation in the area of health
insurance, support for companies, culture and sport and other measures on account
of the COVID-19 virus
SEK billion
2021
Limit the spread of infection and carry out vaccination
Reinforcement of resources for rapid vaccination 1.7
Deferred health care and additional costs 2.0
Continued large-scale testing and tracing 1.7
Extension of compensation for the sick pay standard deduction 0.8
Extension of exemption in sickness benefit on account of deferred health care 0.3
Extension of compensation to risk groups and certain relatives of risk groups 0.1
Extension of tax and charge exemption for free parking benefit 0.1
Extension of exemption from requirement of a doctor’s certificate 0.1
Other measures for vaccination and limiting the spread of infection 0.3
Measures to alleviate the consequences of the pandemic
Extension of compensation scheme for undertakings faced with turnover losses 6.2
Reinforcement of compensation scheme for undertakings faced with turnover
losses affected by specific prohibitions 2.3
Extension of turnover-based support for sole traders 2.0
Extension of turnover-based support for trading partnerships 0.6
Extension of the rent rebate 3.0
Extension and increased costs for compensation for sick pay costs 5.1
Increased number of persons in short-time work 3.2
Reduced employers' social security contributions for young people in the
summer months1 1.5
Reinforcement of Rural Development Programme 0.4
Extension of support for culture sector and sports movement 2.0
Event support 3.5
Holiday school 0.4
Measures for children and young people 0.4
Increased housing allowance for families with children 0.6
Other measures to alleviate the consequences of the pandemic 0.3
Continued green economic restart
Extension of support for public transport 1.0
Compensation to forest owners with subalpine forests 0.4
Reinforcement ofenvironmental compensation for goods transport by rail 0.2
More places in education and training etc. 1.3
Increased funding for extra jobs, matching services, etc. 0.4
Other measures for a powerful green restart 0.3
Sweden to be a secure country for all
Further reinforcement of the judicial system 0.3
Funds for civil society and to counter men’s violence against women 0.2
Other unavoidable items 2.5
Total 44.8
1
Announcement of proposal in coming additional amending budget.
Source: Own calculations.
20
The Government’s view of the Council’s recommendations from 2020
The Council adopted country-specific recommendations to the Member
States on 20 May 2020. The formal Council Decision recommends that
Sweden take the following action in 2020 and 2021:
1 In line with the general escape clause, take all necessary measures to
effectively address the pandemic, sustain the economy and support the
ensuing recovery. When economic conditions allow, pursue fiscal
policies aimed at achieving prudent medium-term fiscal positions and
ensuring debt sustainability, while enhancing investment. Ensure the
resilience of the health system, including through adequate supplies of
critical medical products, infrastructure and workforce.
2 Foster innovation and support education and skills development. Front-
load mature public investment projects and promote private investment
to foster the economic recovery. Focus investment on the green and
digital transition, in particular on clean and efficient production and use
of energy, high-tech and innovative sectors, 5G networks and
sustainable transport.
3 Improve the effectiveness of anti-money laundering supervision and
effectively enforce the anti-money laundering framework.
The Government welcomes the reviews conducted within the framework of
the European Semester. The Government shares the assessment that
necessary measures should be taken to address the pandemic, sustain the
economy and support the recovery. The Government also consider it
important to return the structural balance to the surplus target and ensuring
debt sustainability when economic conditions so permit. In addition, the
Government shares the assessment that necessary measures should be taken
to increase resilience in health care. The Government also considers that the
areas of investment identified in the country-specific recommendations are
important areas in order to support the recovery and if Sweden is to continue
to be competitive in the future. Combating money laundering is also a very
important issue for the Government, which has also taken a number of
measures to further strengthen the legislation in the area and to sharpen
supervision. The Council’s recommendations are considered further in section
3 of the Sweden’s National Reform Programme 2021.
1.5 Monetary policy and financial economy
The Riksbank lowered the repo rate in stages between December 2011 and
February 2016, from 2% to the historically low level of -0.5%. In December
21
2018 the Riksbank raised the repo rate to -0.25%, and in December 2019 the
repo rate was raised again to zero per cent. In addition to keeping the repo
rate low, the Riksbank has also carried out a comprehensive government bond
purchase programme. In 2020 several central banks, including the Riksbank,
tried to counter the economic consequences of the COVID-19 pandemic. The
Riksbank has therefore, for example, increased the number of purchases of
assets, such as government securities, local government securities, covered
bonds and bonds issued by non-financial companies, to support the supply of
credit in the economy.
The development of government bond yields in 2019 was characterised by
elevated uncertainty concerning the trade relations between the US and China
and by uncertainty surroundning the exit of the UK from the EU. Lower
inflation expectations and a more expansionary monetary policy globally led
to a fall in government bond yields both in Sweden and in other countries (see
figure 1.4). At the end of 2019, however, confidence on financial markets rose
and government bond yields increased. In conjunction with the outbreak of
the virus in 2020 government bond yields fell.During the autumn of the same
year growth and inflation expectations increased, particularly in the US , as a
result of expansionary fiscal and monetary policy, which has contributed to a
certain rise in government bond yields.
Figure 1.4 Interest rates in Sweden
Per cent
5
10-year government bond
4 Repo rate
Interest rate differential compared to
3 German 10-year government bond
2
1
0
-1
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Sources: Riksbank and Macrobond.
Inflation measured as CPIF slowed clearly in 2020 in connection with the
pandemic and had previously displayed a negative trend since 2018 (see figure
22
1.5). At the start of 2021 inflation increased but remained below the
Riksbank’s inflation target of 2%. CPI inflation, which includes the effect of
changes in mortgage interest rates, also increased in early 2021 after having
slowed in 2020 and displayed a negative trend since 2018.
Figure 1.5 Inflation measured as CPI and CPIF
Annual percentage change
5,00
CPI CPIF
4,00
3,00
2,00
1,00
0,00
-1,00
-2,00
-3,00
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Note: The dashed line shows the Riksbank's inflation target.
Source: Statistics Sweden
Sweden has had a floating exchange rate since November 1992. Figure 1.6
shows the development of the Swedish krona against the euro and the US
dollar as of 2005, along with the trade-weighted KIX exchange rate index. The
krona has weakened against many currencies since 2014, which is explained to
some extent by monetary policy. At the end of 2019, however, the krona
strengthened when the Riksbank raised the repo rate. The krona weakened in
connection with the virus outbreak in 2020, but has since strengthened against
many currencies due to less unrest in financial markets and lower interest rate
differences in relation to other economies.
23
Figure 1.6 KIX krona index and development of the Swedish krona against the euro
and the US dollar
KIX index (right scale), SEK/EUR, SEK/USD (left scale)
14 140
SEK/USD SEK/EUR
12 135
KIX
130
10
125
8
120
6
115
4
110
2 105
0 100
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Source: Riksbank.
2. Macroeconomic developments
2.1 International economy
The spread of COVID-19 is continuing to affect the world economy. After a
sharp fall in economic activity in the first half of 2020, there was a clear
recovery at the start of the autumn of that year. However, in the latter part of
the year the spread of the infection gained pace again and many countries
retained or reintroduced tighter restrictions to limit further spread of the virus.
This led to economic growth slowing down again. At the end of 2020 the level
of GDP was still lower than before the outbreak of the pandemic in the euro
area, the US and the UK, while it was higher in China.
In autumn and winter 2020/2021 the impact of the spread of the infection on
economic activity was not as distinct as in the spring of 2020. GDP growth
was stronger than expected, with positive growth in China and the US. This
was because the restrictions were better targeted in order to minimise negative
side effects at the same time as businesses and consumers partly had adapted
to the new conditions. Even though close-contact industries such as
restaurants, travel and retail are still greatly affected by the pandemic, global
industrial production has developed positively. There has been a reallocation
of consumption from services to goods, with high demand for IT equipment
and medical devices. World trade in goods was already as extensive at the end
of 2020 as before the crisis. The strong recovery in China has contributed to
supplier chains not being hit as severely as in spring 2020.
24
In 2021 the international recovery is expected to speed up, but with great
variation between countries. Vaccination against COVID-19, now under way,
is expected to increase confidence about the future development of the
economy in many countries in the first half of the year. Growth prospects are
highly dependent on when governments are able to relax restrictions and how
households and companies will react to the relaxations and to the state of the
pandemic. Households’ partially involuntary savings in the past year is
forecasted to be able to lead to a strong recovery of household consumption
when restrictions are relaxed. In the US the recovery is expected to accelerate
substantially slightly earlier and faster than in the euro area. This is because of
a faster vaccination rate and the major stimulus packages adopted in that
country.
In the present situation the development of the global economy is very
uncertain. Vaccination has started in many countries, but there are logistical
and production-related challenges that may lead to delays. There is also
uncertainty about how effective the vaccines developed are against the new
mutated forms of the coronavirus discovered in several countries. This may
lead to a more protracted pandemic. It is also uncertain how quickly different
economies can recover when the spread of the infection eventually abates and
restrictions are lifted.
2.2 The Swedish economy
The Swedish economy has been severely affected by the pandemic and
restrictions to suppress the spread of infection in 2020 (see table 2.1). The
strong recovery that started after the summer and in autumn 2020 halted at
the end of the year, and GDP decreased slightly in the fourth quarter. The
development during the year was clearly linked to the spread of the virus and
the restrictions and recommendations concerning physical distancing
introduced. However, the increasing spread of the virus at the end of the year
has turned out to have less of an impact on the economy than during the initial
phase of the pandemic. To some extent, this is explained by the fact that global
industrial production, which is important for an export-oriented country like
Sweden, has been less affected. At the same time, many service industries are
still clearly affected by restrictions, especially in hotels and restaurants, travel
services, culture and entertainment.
At the start of 2021 confidence indicators, such as the Economic Tendency
Survey, were at levels that indicate a good activity in manufacturing. However,
the confidence indicator for the service sector is still at a lower level than
25
normal. Movement indices and card data also indicate that the development
of the service sector will continue to be subdued during the start of the year.
This forecast is based on the assumption that measures to reduce the spread
of the virus will remain in place in Sweden and several other countries during
the first half of 2021 and that the scope of the measures will decrease during
the second half of the year. The spread of infection and the restrictions have
hit household consumption hard. This consumption is expected to increase
gradually as more and more people are vaccinated. Pent-up consumption
needs and a previous high level of saving are expected to contribute to a rapid
increase in household consumption. Rising capacity utilisation in industry and
an expected increase in production volumes in companies indicate a higher
investment need in the future. As the recovery picks up and investments rise
internationally, exports are also expected to grow at a faster rate again. Even
though strong growth is expected in domestic demand, imports are expected
to grow more slowly than exports. Net exports are therefore expected to be
positive in both 2021 and 2022.
In an overall assessment, economic activity in Sweden is expected to speed up
in 2021, given that the spread of the virus decreases and restrictions are then
relaxed. Major stimulatory measures in economic policy help to support the
economic recovery. It is only in the second half of 2021 that GDP is judged
to back at the same level as before the outbreak of the virus. However, this
level is still lower than GDP would have been if the pandemic had never
happened. Resource utilisation therefore remains much lower than normal,
and the Swedish economy is judged to be in a deep recession in 2021. In 2022
resource utilisation is also judged to be lower than normal.
26
Table 2.1 Key indicators
Annual percentage change, unless otherwise stated
2020 2021 2022 2023 2024
GDP -2.8 3.2 3.8 1.9 1.6
GDP gap1 -3.9 -2.6 -0.5 0.0 0.0
Employment2 -1.3 0.3 1.9 1.7 0.6
Employment rate3 67.2 67.2 68.2 69.0 69.1
Hours worked4 -3.8 3.0 2.4 1.1 0.5
Productivity, business sector4,5 1.3 0.5 1.7 0.4 1.2
Unemployment rate6 8.3 8.7 7.9 7.0 7.0
Wages7 2.0 2.5 2.3 2.5 2.7
CPI8 0.5 1.4 1.0 1.3 2.1
1
The difference between actual and potential GDP as a percentage of potential GDP.
2
Persons, 15–74 years.
3
Employment as a percentage of the population in the age bracket 15 –74 years.
4
Calendar-adjusted.
5
Labour productivity measured as GDP to base price per hour worked.
6
Per cent of the labour force, 15–74 years.
7
Measured according to the short-term wage statistics.
8
Annual average.
Sources: Statistics Sweden and own calculations.
There has been some recovery in the labour market
The situation in the labour market is still serious in the wake of the pandemic.
Unemployment is at a much higher level than before the pandemic, especially
among young people, people with at most pre-upper secondary education and
people born outside Europe. The Government has taken several measures to
moderate the severe downturn in the labour market. For instance, short-time
work allowance and reorientation support have been introduced, enabling
many companies to survive and to retain employees. In the fourth quarter of
2020 there was a clear recovery in the labour market. The employment rate
increased and around a third of the fall that occurred in the spring has been
recovered.
Forward indicators of employment have continued to improve clearly in late
2020 and early 2021, despite an increase in the spread of the virus and
expanded restrictions. In the first half of 2021 employment growth is judged
to be more subdued due to lower economic activity at the start of the year.
Looking ahead, service industries in particular, such as hotels and restaurants,
are expected to be most affected by the low demand due to restrictions and
behavioural change.
As demand rises, employment is expected to grow more quickly. However,
this growth will be held back by the fact that many companies are expected to
step up their production by increasing the working hours of existing
employees in the first place when short-time work is phased out. As a
27
consequence of this, employment is only expected to grow weakly in 2021.
Unemployment is forecasted to be higher in 2021 than it was in 2020. In 2022
higher employment growth is expected, especially in service industries in the
business sector. It is expected to take time for employment and
unemployment to return to the same level as before the pandemic. Even
though unemployment is expected to decrease, it is still at a much higher level
in 2022 than before the pandemic.
According to preliminary figures, the rate of wage growth according to the
short-term wage statistics was at a historically low level in 2020. This was
mainly because a postponement of the round of pay negotiations due to the
pandemic. The postponed negotiations resulted in several months without
negotiated pay rises for many employees. In autumn 2020 the social partners
in industry reached an agreement corresponding to a rate of pay growth of
around 5.4% over a period of 29 months. This agreement had a broad impact
and largely became the standard for the rest of the labour market. The rate of
pay growth is judged to increase in 2021, and to then be slightly weaker in
2022.
Inflation, measured as CPIF, increased clearly at the beginning of 2021 after a
weak development in 2020. Energy prices, which contributed to the weak
inflation in 2020, are instead expected to contribute to higher inflation in 2021.
At the same time, low resource utilisation in Sweden means that inflation will
continue to be subdued.
In an overall assessment, CPIF inflation is expected to increase in 2021 but to
be below the Riksbank's inflation target of 2 per cent in the next few years.
CPI inflation, which includes the effect of changes in mortgage interest rates,
is also expected to increase in 2021, but to continue to be subdued.
Continued expansionary monetary policy
Several central banks have continued their extensive support measures,
including purchases of various securities to reduce unrest in financial markets
and contribute to continued good granting of credit in the economy. This
expansionary monetary policy has contributed to lower interest rates and to
share prices rising in several parts of the world. The Riksbank has also
conducted an expansionary monetary policy, which has helped to keep
Swedish interest rates at a low level. The Riksbank is expected to keep the
repo rate unchanged in 2021.
28
2.3 Potential macroeconomic imbalances
Macroeconomic imbalances have deteriorated in several member countries on
account of the pandemic, especially in countries where imbalances were
identified prior to the crisis. To ensure a favourable economic development
in the long term, it is important, in the first place, to implement measures that
prevent macroeconomic imbalances from arising and, in the second place, to
identify and correct at an early stage any imbalances that nevertheless do arise.
It is difficult to give an exact definition of a macroeconomic imbalance. But
such an imbalance can be said to reflect an underlying problem that risks
leading to a rapid and significant correction, which in turn has an adverse
impact on the economy as a whole.
The Macroeconomic Imbalance Procedure
The EU Macroeconomic Imbalance Procedure is part of the European
Semester and economic policy coordination in the EU. The Imbalance
Procedure for the present Semester has been temporarily adjusted to ensure
an effective implementation of the Recovery and Resilience Facility. For
instance, no country-specific recommendations will be issued in 2021 for the
countries that have submitted recovery and resilience plans. However,
recommendations in the area of fiscal policy will be issued within the
framework of the Stability and Growth Pact.
The procedure began when the European Commission published the Alert
Mechanism Report 2021 in November 2020. This report contained a
preliminary economic analysis of Member States, including a scoreboard with
indicators in areas that might constitute macroeconomic imbalances. The
Alert Mechanism Report also selected twelve Member States, including
Sweden, for an in-depth review. These twelve countries are the same countries
that in February 2020 were identified with imbalances or excessive imbalances.
For Sweden, last year’s reviews indicated imbalances related to high private
debt and high housing prices. The reports for the in-depth reviews will be
published in spring 2021, along with the European Commission’s assessment
of the stability and convergence programmes. The reports will contain
accounts of the gravity and evolution of already identified imbalances and the
risks that new ones will emerge.
Within the framework of the European Semester, the Commission also
submits proposal for measures to address these imbalances, known as
country-specific recommendations. However, the country-specific
recommendations adopted in 2021 will be limited to imbalances concerning
29
the situation of general government finances in Member States. The
information provided in the Member States’ national reform programmes and
convergence or stability programmes as well as in their recovery and resilience
plans will be taken into account. If the European Commission considers that
a Member State identified with excessive imbalances takes inadequate
measures, the Commission may recommend that the Council initiate the
Excessive Imbalance Procedure, which is the corrective arm of the
Macroeconomic Imbalance Procedure.
Household debt
Households’ high debt entails risks. There is, above all, a risk to
macroeconomic stability as households with high debt may reinforce a
downturn in the economy if many of them simultaneously choose to reduce
their consumption so as to be able to repay their mortgages or increase their
savings. A number of measures have been taken in recent years in order to
strengthen the resilience of the financial system to financial crises and reduce
the risks associated with household debt. An account of these measures is
given in Sweden’s National Reform Programme 2021. The measures taken
have had effect. As a result, households affected by the measures buy cheaper
homes, borrow less and amortise more than they would otherwise have done.
The rate of increase of household debt has been slowed for several years. Even
though this trend was broken in 2020, the rate of increase is still lower than
the average over the past five years.
3. General government finances
3.1 Accounting principles
This section presents the forecast for the general government finances given
in the Spring Fiscal Policy Bill for 2021 (Govt Bill 2020/21:100). The
reporting of general government revenue and expenditure is based on the
European System of Accounts (ESA 2010). However, the Government's
reporting, which is also used by the National Institute of Economic Research
(NIER), differs in certain respects from ESA 2010 (see table 3.1). The main
differences are that parts of sales revenue from public activities are recorded
on the expenditure side, as a deduction item in general government
consumption expenditure, in the national statistics, while these revenues are
recorded on the revenue side according to ESA 2010 But there is no difference
in the calculation of net lending. A detailed report of general government
finances in accordance with ENS 2010 (and EDP) is given in table C.2a in
Appendix C.
30
Table 3.1 General government finances in accordance with the accounting standards
in the Spring Fiscal Policy Bill and ESA 2010
Per cent of GDP
2020 2021 2022 2023 2024
Spring Fiscal Policy Bill
Revenue 48.7 48.1 47.8 48.1 47.8
Expenditure 51.8 52.6 48.7 47.5 46.9
Net lending -3.1 -4.5 -1.0 0.5 1.0
ESA 2010
Revenue 49.9 48.9 45.8 48.6 48.3
Expenditure 52.9 53.4 49.4 48.1 47.3
Net lending -3.1 -4.5 -1.0 0.5 1.0
Sources: Statistics Sweden and own calculations.
3.2 Development of general government finances
General government finances were reinforced strongly between 2014 and
2017. Net lending turned round from showing a deficit of 1.5% of GDP to a
surplus of 1.4% of GDP (see figure 3.1). Then, as lending was adapted to the
new level of the surplus target, net lending fell and was 0.6% of GDP in 2019.
Figure 3.1 General government net lending 2000-2024
Per cent of GDP
4,0
3,0
2,0
1,0
0,0
-1,0
-2,0
-3,0
-4,0
-5,0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Sources: Statistics Sweden and own calculations.
General government finances showed a surplus in 2016–2019. As a result of
the excessively sharp economic downturn and the measures taken to address
the weakening of the economy, general government finances weakened
severely in 2020. The initially weak economic growth resulted, in combination
with additional stimulatory measures, in continued weakening of general
government finances in 2021 in relation to 2019. As the economy recovers,
net lending is expected to strengthen gradually until and including 2024 (see
figure 3.1 and table 3.2).
31
Table 3.2 General government finances
Per cent of GDP if not otherwise stated
SEK, billions
2020 2020 2021 2022 2023 2024
Revenue 2 414 48.7 48.1 47.8 48.1 47.8
Taxes and charges 2 115 42.7 41.9 41.8 42.2 42.0
Household direct taxes 626 12.6 12.1 11.9 11.9 11.9
Corporate direct taxes 144 2.9 2.7 2.9 3.0 3.0
Employers’ contributions 269 5.4 5.3 5.2 5.3 5.2
Indirect taxes 1 076 21.7 21.8 21.7 22.0 21.9
Income from capital 70 1.4 1.5 1.4 1.4 1.4
Other revenue 229 4.6 4.7 4.6 4.5 4.4
Expenditure 2 566 51.8 52.6 48.7 47.5 46.9
Transfer payments1 966 19.5 20.0 17.2 16.5 16.1
Final consumption expenditure 1 327 26.8 26.8 26.0 25.5 25.3
Gross fixed capital formation 248 5.0 5.3 5.1 5.0 4.9
Interest expenditure 24 0.5 0.5 0.4 0.5 0.5
Net lending -152 -3.1 -4.5 -1.0 0.5 1.0
Primary net lending -136 -2.8 -4.2 -0.7 0.8 1.3
Consolidated gross debt 1 974 39.9 39.9 37.0 33.7 31.4
Net debt 1 339 27.0 23.7 24.8 27.4 29.1
Sources: Statistics Sweden and own calculations.
The main reasons for the weakening of general government net lending
between 2019 and 2020 were the strong rise in expenditure in 2020 and also
the fall in income. In 2021 expenditure is estimated to increase as a share of
GDP and result in a further increase in the deficit in general government
finances (see table 3.2 and figure 3.2).
32
Figure 3.2 General government income and expenditure 2000–2024
Per cent of GDP
60
Revenue Expenditure
58
56
54
52
50
48
46
44
42
40
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Sources: Statistics Sweden and own calculations.
In pace with the expected recovery of the Swedish economy, general
government finances also strengthen as of 2022. It is solely central
government finances that account for the variations in general government
net lending (see table 3.3)
Table 3.3 Net lending and the central government budget balance
Per cent of GDP
2020 2021 2022 2023 2024
General government net lending -3.1 -4.5 -1.0 0.5 1.0
Central government -3.2 -4.7 -0.4 1.1 1.4
Old-age pensions system -0.2 0.0 0.1 0.1 0.1
Local government sector 0.3 0.1 -0.7 -0.7 -0.6
Central government budget balance -4.5 -2.7 1.4 2.6 1.7
Central government debt 24.6 26.2 23.5 20.1 17.8
Sources: Statistics Sweden, National Financial Management Authority and own calculations.
3.3 Net financial wealth and consolidated gross debt
The Maastricht debt is defined by EU regulations and is the debt concept used
to assess Member States’ general government finances within the framework
of the Stability and Growth Pact. For Sweden, this definition means that the
debt consists of the consolidated central government debt and local
government sector debt in the capital markets, less the Swedish National
Pension Funds' holdings of government bonds.
Prior to Sweden’s accession to the EU on 1 January 1995, the consolidated
gross debt amounted to over SEK 1 200 billion, corresponding to around 70%
33
of GDP. Since then the nominal value of this debt has increased by around
SEK 800 billion and was almost SEK 1 974 billion at the end of 2020. The
gross debt increases in 2021 on account of the estimated deficits in central
government. However, the Riksbank’s amortisation of foreign currency loans
means, by itself, that the National Debt Office’s borrowing requirement
decreases by around SEK 60 billion per year in 2021–2023, which restrains
the rate of growth of the gross debt in these years.
Temporary weakening of general government's financial wealth
The net financial wealth of the general government sector consists of both
non-current production assets and financial assets, less debts.
The main component of the net financial wealth of the general government
sector is the AP funds in the old-age pension system. The contribution of
central government and the local government sector to net financial wealth is
negative. The general government sector’s capital income in the form of
interest and dividends, mainly attributable to the old-age pension system,
exceeds its interest expenditure. Its total debt includes the commitments of
central government and the local government sector for defined-benefit
occupational pensions earned as of 1998. Like the premium pension system,
the total liabilities for the funded defined-contribution occupational pensions
are not included in the general government sector, but are instead reported in
the insurance sector.
In 2019–2021 the deficits in central government lead to the weakening of the
net financial wealth of the general government sector. After that, increases in
the value of financial assets and the gradual reinforcement of central
government finances lead to more rapid growth of net financial wealth.
3.4 General government net lending target
There is judged to be a deviation from the surplus target if the structural
balance deviates clearly from the target level in the present year or the coming
year. The occurrence of a deviation from the target may be due to several
circumstances and this must not be equated with the policy being incorrectly
designed or being incompatible with the fiscal policy framework.
An eight-year retrospective average of actual net lending is used in order to be
able to evaluate ex post whether the surplus target has been attained, and to
detect systematic deviations. Accumulated deviations in net lending that lead
to undesirable levels of debt can also justify an adjustment of the target level
34
for lending at the next review of the surplus target. However, the retrospective
average is not intended to govern fiscal policy in the short term.
As of 2019 the target is an average of a third one one per cent of GDP over
an economic cycle. Formulating the net lending target as an average over an
economic cycle, instead of as an annual target, is justified for reasons of
stabilisation policy. If the target were to be a set value in each individual year,
fiscal policy would also need to be contractionary in an economic downturn
to ensure that the annual target is met. Fiscal policy would then amplify
economic fluctuations instead of stabilising them. However, formulating the
target as an average over an economic cycle makes it more difficult to monitor
whether fiscal policy is in line with the target since it is difficult to determine
when an economic cycle begins and ends, as well as the specific cyclical
position of the economy.
Table 3.4 General government net lending and indicators for reconciliation against the
net lending target
Per cent of GDP if not otherwise stated
2020 2021 2022 2023 2024
Net lending -3.1 -4.5 -1.0 0.5 1.0
Retrospective eight-year average -0.3
Structural balance1 -1.3 -2.7 -0.3 0.6 1.1
Sources: Statistics Sweden and own calculations.
Structural balance
Despite considerable uncertainty about the structural balance, this measure,
calculated according to established methods, is considered to be the most
suitable measure for assessing whether the present level of net lending and
fiscal policy are consistent with the surplus target. The use of the structural
balance as the main indicator in the prospective monitoring of the surplus
target is also judged to be consistent with EU law. Table 3.4 presents
outcomes and forecasts of general government net lending. The structural
balance in years t and t+1, i.e. in the present year and the next year, 2021 and
2022, is used to assess achievement of the surplus target from a forward-
looking perspective.
To mitigate the ongoing recession the Government is pursuing an
expansionary fiscal policy, whose active fiscal policy is weakening the
structural balance. The Government’s assessment is that there is a deviation
from the surplus target, but that this deviation is justified on grounds of
stabilisation policy on account of the economic effects of the spread of
COVID-19 (see table 3.4). The retrospective average of net lending for 2013-
35
2020 is also judged to be under the target level. The fiscal policy framework
states explicitly that there can be stabilisation policy reasons that justify
conducting an active fiscal policy that weakens the structural balance. This
means that even if fiscal policy leads to a deviation from the surplus target,
the policy is consistent with the fiscal policy framework. However, when a
target deviation is established, the Government has to give an account of how
a return will be made to the target. The Government makes the assessment
that Sweden will be in a recession until and including 2022. In both 2020 and
2021 the recession is judged to be very deep. It is, in general, very difficult to
make forecasts of the development of the economic cycle. Moreover, the
forecast for the coming development of the economic cycle is unusually
uncertain. This uncertainty is due three factors: the development of the
pandemic, when governments choose to relax restrictions and how household
and companies will react when they do. It is important, in coming years, to
also be able to adapt fiscal policy to the state of the economy. Therefore it is
not appropriate in the situation that has arisen to set out a plan for a return to
the surplus target other than at a general level. The Government intends to
return the structural balance to the surplus target when economic conditions
so permit.
Retrospective eight-year average
The retrospective average of net lending for 2013-2020 is also judged to be
under the target level.
The medium-term budgetary objective (MTO) according to the preventive
arm of the Stability and Growth Pact
Sweden’s medium-term budgetary objective (MTO) is that the structural
balance should not fall below -1% of potential GDP.
Table 3.5 Structural balance, European Commission
Per cent of potential GDP
2020 2021 2022
Structural balance -1.4 -0.9 -0.2
Medium term budgetary objective (MTO) -1.0 -1.0 -1.0
Source: European Commission’s forecast (November 2020).
The European Commission’s forecast, published in November 2020,
estimated the structural balance in Sweden at -1.4% of potential GDP in 2020,
with an increase to -0.9% in 2021 (see table 3.5). The main reason for the
difference between the Commission’s and the Government’s forecast is that
the Commission has not been able to take full account of the new measures
36
proposed by the Government to alleviate the effects of the outbreak of the
novel coronavirus.
3.5 Monitoring of the debt anchor
The fiscal policy framework requires the Government to give an account each
year in the spring fiscal policy bill of the development of the general
government consolidated gross debt in relation to the debt anchor (see
section 1.1). Gross debt as a share of GDP is judged to be within the tolerance
limits of the debt anchor (see figure 3.3). One important reason why the debt
ratio does not increase more in 2021, despite the increase in the deficit in
general government finances is that, as of 2021, the Riksbank is starting a
transition to wholly self-financed foreign exchange reserves after previously
having financed part of its foreign exchange reserves through the Swedish
National Debt Office. The transition will take place gradually until and
including 2023 and also contributes to the decrease in the debt ratio during
the forecast period since the central government borrowing requirement
decreases. According to the present forecast, which is based solely on the fiscal
policy adopted or announced, the gross debt is expected to fall later on in the
forecast period and to be just over 31% of GDP in 2024.
Figure 3.3 Consolidated gross debt
Share of GDP
100
80
60
40
20
0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Consolidated gross debt Forecast
Tolerance limit Tolerance limit
Source: Statistics Sweden and own calculations.
3.6 Monitoring of the expenditure ceiling
The multi-year expenditure ceiling is intended to foster the credibility of
economic policy and is an important budgetary policy commitment for the
Riksdag and the Government.
37
The Riksdag decided to raise the level of the expenditure ceiling for 2020
following the Government’s proposal in the Spring Amending Budget for
2020 on account of the need for measures resulting from the spread of
COVID-19 For the same reason the Riksdag decided to raise the level of the
expenditure ceiling for 2021 and 2022 following the Government’s proposal
in the Budget Bill for 2021.
The Government considers that the size of the budgeting margin is sufficient
to deal with the uncertainty present in the assessment of the development of
expenditure in 2021–2023. Compared with the forecast in the Budget Bill for
2021, the budgeting margin is now estimated to be SEK 127 billion lower in
2021, SEK 2 billion higher in 2022 and SEK 2 billion higher in 2023.
In the Spring Fiscal Policy Bill for 2021 the Government makes an assessment
of the level of the expenditure ceiling for 2024. The Budget Act requires the
Government to propose a level of the expenditure ceiling for the third year
ahead in the budget bill. In accordance with the Budget Act the Government
will propose a level of the expenditure ceiling for 2024 in the Budget Bill for
2022. An assessed level is not subject to decision by the Riksdag.
Table 3.6 Expenditure ceiling 2021–2024
SEK billions, unless otherwise stated
2021 2022 2023 2024
Expenditure ceiling 1 695 1 634 1 539 1 595
Per cent of GDP 32.5 29.7 27.1 27.1
Ceiling-limited expenditure 1 621 1 477 1 456 1 471
Per cent of GDP 31.1 26.8 25.6 25.0
Budgeting margin 74 157 83 124
Per cent of GDP 1.4 2.9 1.5 2.1
Note: The budgeting margin is the difference between an expenditure ceiling and the ceiling -restricted
expenditure.
Source: Own calculations.
The budgeting margin under the expenditure ceiling is estimated at SEK 74
billion for 2021. For 2022, 2023 and 2024 the estimated budgeting margins
are SEK 157 billion, SEK 83 billion and SEK 124 billion (see table 3.6).
3.7 Monitoring the requirement of sound financial management in the
local government sector and the local government balanced budget
requirement
It is net income that determines whether each municipality and region meets
the balanced budget requirement (see section 1.1). The balanced budget
requirement sets a minimum level, but net income generally needs to be higher
38
to fulfil the sound financial management requirement of the Swedish Local
Government Act. What is meant by sound financial management is defined
by the municipalities and regions themselves.
There are accounting differences between the local government accounts and
the National Accounts that can amount to tens of billion kronor for a
particular year (see figure 3.4). The difference between net income and net
lending is largely explained by the inclusion of investments, but not
depreciation and amortisation, as expenditure in the calculation of net lending,
while net income excludes investments but does include depreciation and
amortisation. There may also be differences in accrual accounting of various
items of revenue and expenditure between net lending and net income.
Figure 3.4 Local government net income and net lending
SEK billion
60
40
20
0
-20
-40
-60
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Net income Net lending
Note: Local government accounting has been altered as of 2019, and this means that the metric net income
before extraordinary items has been replaced with the metric net income after financial items. So the diagram
shows net income before extraordinary items until and including 2018 but net income after financial items
thereafter.
Sources: Statistics Sweden and own calculations.
The Local Government Act requires municipalities and regions to have sound
financial management in their operations. One consequence is that
municipalities and regions have to set their own financial targets and be
accountable for long-term sustainable finances. It has long been a fundamental
principle that each generation has to meet its own costs. One commonly used
target is that net income should correspond to a certain proportion of
aggregate tax revenue and general central government grants. The annual
reports of municipalities and regions have to contain an assessment of
whether the balanced budget requirement has been met and of whether targets
for good financial management have been achieved. As of 1 January 2013
municipalities and regions are permitted to build up income equalisation
39
reserves as part of their own funds. This means that surpluses can be set aside
in good times for use if deficits arise as a result of an economic downturn.
Development of net income in local government
In 2020 the local government sector as a whole reported net income after
financial items of SEK 55 billion (see figure 3.4). This historically high level
of net income is explained by considerable additional central government
funding resulting in a strong revenue increase at the same time as the
pandemic resulted in local government services and the costs of these services
being limited in 2020. The Government’s forecast assumes that the local
government sector’s net income after financial items will be SEK 48 billion in
2021 and SEK 15–19 billion in 2022–2024.
3.8 Central government guarantees
A central government guarantee commitment means that central government
provides a guarantee for another party’s payment commitment, and this leads
to a financial risk for central government. The Budget Act enables the
Government to decide on lending and to issue credit guarantees and make
other similar commitments for that purpose not exceeding the amount
determined by the Riksdag. The Act provides that a fee corresponding to the
expected cost of the commitment central government has to be charged,
unless the Riksdag decides otherwise. The expected cost of loans and
guarantees consists of the expected losses and administrative costs associated
with the commitments. Expected loss is a statistical measure of the credit
losses that estimates show may arise because of a certain probability that the
guarantee holder or the borrower will not meet their commitment. These
guarantee and loan activities are thus expected to be self-financing in the long
term. These principles for the provision of loans and guarantees are called the
central government loan and guarantee model. Examples of major guarantee
commitments covered by this guarantee model are export credit guarantees
and credit guarantees for infrastructure projects.
However, the Riksdag can decide to exempt specific guarantees from the
guarantee model. There are guarantees that are regulated in special acts or have
terms that differ from those specified in the Budget Act on some other basis.
The fees for such guarantees are usually stipulated directly in law and may be
based on grounds other than the full recovery of expected costs. The deposit
insurance scheme, which is central government’s largest guarantee
commitment, and the investor compensation scheme are examples of
guarantees regulated under special arrangements. Callable capital for
40
international financial institutions is not covered by the guarantee model
either.
Composition of the guarantee portfolio
Table 3.7 presents a summary of guarantees and commitments issued. At the
end of 2020 the central government guarantee portfolio amounted to SEK
2 189 billion. The largest commitments were the deposit insurance scheme
(SEK 1 734 billion) followed by credit guarantees (SEK 264 billion) and
guarantees for capital injections (SEK 183 billion).
Table 3.7 Central government guarantee commitments and pledges, 31 December 2020
SEK billions
Guarantees Pledges3
Deposit insurance scheme1 1734
Investor compensation2
Credit guarantees 264 45
of which
Bank guarantee programme
Export credit guarantees3 239 44
Credit guarantees in foreign aid 0
Independent guarantees 6 1
Infrastructure 14 0
Housing credits 3
International commitments 1
Guarantees to Corporations 2
Other 0
Guarantees for capital injections 183
of which
Capital cover guarantees 6
Subscription guarantees 0
Guarantee capital 169
Guarantees to the European Union thru SURE 8
Pension guarantees4 7
Total 2189 45
1
The commitment for the deposit insurance scheme is as of 31 December 2019.
2
For the investor compensation scheme there is a lack of data regarding the scope of the protected assets.
3
Refers to restricted pledges.
4
The commitment for pension guarantees is as of 31 December 2019.
Source: Swedish National Debt Office.
Expected losses in central government guarantee portfolio
In the guarantees covered by the guarantee model, the responsible authorities
continuously assess the expected losses. The authorities make provisions for
the expected losses on the liabilities side of their balance sheets.
41
To compile a result for the part of guarantee activities that covers guarantees
for which provisions are made, an analysis is carried out of the relationship
between provisions for expected losses and the assets held in guarantee
activities. This comparison shows that for the part of the guarantee portfolio
covered by the guarantee model, the provisions for expected losses are amply
covered by the charges already paid in (reported as guarantee assets in table
3.8).
Table 3.8 Comparison between provisions for expected costs and assets in the
guarantee operations as of 31 December 2020 (excluding the deposit insurance
scheme, investor compensation scheme, bank guarantee programme and guarantee
capital)
SEK billions
Guarantee Provisions for expected Guarantee
Authority
commitment costs assets
Swedish National Debt Office 24 1 1
The Swedish Export Credits Guarantee Board 239 9 35
Swedish International Development
6 0 3
Cooperation Agency
The Swedish National Board of Housing,
3 0 2
Building and Planning
Total 272 11 41
Source: Swedish National Debt Office.
Annual analysis of the risk of major losses
The National Debt Office has the task of performing a concerted analysis each
year of the risk of large losses in the central government guarantee and lending
portfolio along with the Swedish Export Credits Guarantee Board, the
Swedish Board of Student Finance (CSN), Swedish International
Development Cooperation Agency (Sida), Swedish National Board of
Housing, Building and Planning (Boverket) and the other agencies concerned.
The term large losses is defined by the National Debt Office as losses of at
least SEK 20 SEK billion in the coming five years. The risk of large losses in
the regular portfolio is judged to remain low. The risk of major losses linked
to the deposit insurance scheme is assessed as moderate.
4. Alternative scenarios and comparison with Sweden’s
Convergence Programme 2020
4.1 Alternative scenarios
How quickly vaccines can be produced, adapted to mutated variants and
delivered to different countries and how quickly people can be vaccinated are
factors of central importance for when different countries can relax their
42
restrictions. They are thus also factors that are of crucial importance for
economic growth in the short to medium term. At the same time, previous
experience shows that a deep or protracted recession can also have lasting
negative effects on the economy. Uncertainty about the development of the
pandemic and its possible effects on the economy is illustrated by two
alternative scenarios based on assumptions about the development of the
pandemic.
In scenario 1 the supply of effective vaccines is assumed to be lower than in
the main scenario, and new mutated and more infectious virus variants are
assumed to be spread generally around the world. Continued restrictions are
therefore necessary in this scenario. A more protracted pandemic leads to a
greater economic downturn. This is then assumed to cause lower growth in
the long term, for example if a reduced willingness to take risks holds back
companies’ investments or if unemployment remains at a higher level for a
longer period. This can i.e. occur if people who become unemployed do not
have time to retarin when industry structures change. Overall, GDP growth
in 2021 will be lower in this scenario than in the main scenario and also
increases more slowly in subsequent years than is assumed in the main
scenario (see table 4.1). This leads to unemployment being higher. As a
consequence of the lower activity in the economy, general government net
lending is lower than in the main scenario, mainly due to lower income from
taxes, but also, to some extent, due to increased public expenditure when
unemployment rises. The deterioration of general government finances are
assumed to be financed with loans, which along with lower GDP, results in a
higher general government consolidated gross debt than in the main scenario.
In scenario 2 the supply of effective vaccines globally is assumed to be greater
than in the main scenario, making faster vaccination of the world’s population
possible. At the same time, a pent-up need to consume is assumed, along with
the high level of saving during the pandemic, to reinforce the recovery of the
world economy when countries relax their restrictions. In addition, decisions
by many countries to adopt new stabilisation policy support packages to
restart their economies are assumed to generate higher growth in the longer
term if, for example, the support is used for productive investments in
digitalisation and environmental technology. In this scenario GDP growth in
Sweden in 2021 is stronger than in the main scenario, and the economy also
recovers slightly faster in succeeding years. This leads to resource utilisation
in the economy being higher than in the main scenario, and to unemployment
being lower. In aggregate, general government net lending is higher than in
43
the main scenario. The general government consolidated gross debt is
therefore slightly lower.
Table 4.1 Alternative scenarios
Percentage change unless otherwise stated
The outcome in 2020 and the forecast according to the main scenario are shown in bold for each variable on the
basis of previously adopted and announced reforms and reforms now proposed and announced. 1
2020 2021 2022 2023 2024
2
GDP -3.1 3.1 3.8 2.1 1.6
Scenario 1: Deeper and protracted crisis -3.1 2.2 3.0 2.4 2.0
Scenario 2: Faster and sustained recovery -3.1 3.3 5.2 2.4 1.4
3
GDP gap -3.9 -2.6 -0.5 0.0 0.0
Scenario 1: Deeper and protracted crisis -3.9 -3.4 -2.1 -1.3 -1.0
Scenario 2: Faster and sustained recovery -3.9 -2.4 1.1 2.0 1.7
4
Unemployment 8.3 8.7 7.9 7.0 7.0
Scenario 1: Deeper and protracted crisis 8.3 9.3 9.1 7.9 7.7
Scenario 2: Faster and sustained recovery 8.3 8.5 6.7 5.6 5.8
5
Net lending -3.1 -4.5 -1.0 0.5 1.0
Scenario 1: Deeper and protracted crisis -3.1 -5.1 -2.2 -0.5 0.1
Scenario 2: Faster and sustained recovery -3.1 -4.3 0.1 1.9 2.2
Maastricht debt5 39.9 39.9 37.0 33.7 31.4
Scenario 1: Deeper and protracted crisis 39.9 41.0 40.0 37.6 35.8
Scenario 2: Faster and sustained recovery 39.9 39.5 34.5 29.5 26.2
1 In the alternative scenarios, supplementary monetary policy measures have also been taken into account.
2
Calendar-adjusted growth rates.
3
The difference between actual and potential GDP as a percentage of potential GDP.
4
Annual average.
5
Percentage of GDP.
Sources: Statistics Sweden and own calculations.
4.2 Comparison with the 2020 Convergence Programme
The Swedish economy turned out to be more resistant to the effects of the
pandemic, and GDP growth in 2020 did not fall as much as implied by the
forecast in the 2020 Convergence Programme (see table 4.2). This means that
GDP growth in 2021 is now expected to be lower than in the assessment in
the 2020 Convergence Programme. In an overall assessment, economic
activity in Sweden is expected to speed up in 2021, given that the spread of
infection decreases and restrictions are then relaxed. Major stimulatory
measures in economic policy help to support the economic recovery. GDP is
judged to rise by 3.2% in 2021 and 3.8% in 2022.
44
Table 4.2 Comparison with the 2020 Convergence Programme
Annual percentage change in volume and per cent of GDP
2020 2021 2022 2023 2024
GDP, percentage change in volume
2020 Convergence Programme -4.0 3.5 3.4 3.1 --
2021 Convergence Programme -2.8 3.2 3.8 1.9 1.6
Difference, percentage points 1.2 -0.3 0.4 -1.2 --
General government net lending, per cent of GDP
2020 Convergence Programme -3.8 -1.4 0.1 1.5 --
2021 Convergence Programme -3.1 -4.5 -1.0 0.5 1.0
Difference, percentage points 0.7 -3.1 -1.1 -1.0 --
Consolidated gross debt, per cent of GDP
2020 Convergence Programme 39.9 38.3 36.2 32.4 --
2021 Convergence Programme 39.9 39.9 37.0 33.7 31.4
Difference, percentage points 0.0 1.6 0.8 1.3 --
5. Long-term sustainability of fiscal policy
This section presents an assessment of whether fiscal policy is sustainable in
the long-term. This is done on the basis of an assessment of the development
of the macroeconomy and of general government finances in the long term
given assumptions about population change, employment and growth, etc.
The purpose of the assessment is to get an indication, in good time, if fiscal
policy is unsustainable so that action can be taken as early as possible to make
it sustainable.
Despite the economic downturn resulting from the spread of COVID-19,
fiscal policy is judged to be long-term sustainable. The weakening of general
government net lending in 2020 and 2021 is temporary and does not
jeopardise the long-term sustainability of fiscal policy. Since the number of
hours worked in the economy has a considerable effect on general
government finances, any potential long-term negative effects on employment
may, however, worsen sustainability.
At the same time, general government finances are affected by trends that are
not related to the spread of COVID-19. Demographic developments mean
that the need for health care and social care, in particular, is increasing rapidly
at present. This means that staffing in parts of local government services is a
challenge.
5.1 Long-term challenges
Sweden’s population is expected to increase by just over 900 000 persons, or
almost 9%, between 2020 and 2035 according to Statistics Sweden’s
45
population projection from April 2020 (see figure 5.1). Children and young
people account for around 12% of this increase and the number of people of
working-age (20–69) for around 47%. The remaining 40% consists of people
aged 70 or older.
The number of people who are 80 and older is expected to increase by around
60% between 2020 and 2035. To a great extent, the expected population
increase therefore takes place in the age groups for which general government
expenditure on welfare services and transfer payments is higher than payments
of tax.
Figure 5.1 Changes in population compared with 2020
Percentage change
70
60
50
40
30
20
10
0
-10
0-19 years 20-69 years 70-79 years 79 years and older All ages
2025 2030 2035
Source: Statistics Sweden
5.2 What is meant by fiscal policy being sustainable?
The assessment of whether fiscal policy is sustainable is based on a projection
of general government income and expenditure far into the future. If the fiscal
policy is sustainable, the rules that govern general government income and
expenditure can remain unchanged over the long term without this resulting
in growing deficits and excessive general government debt. The purpose of
the analysis is to assess under what conditions the present regulatory
framework is sustainable and under what conditions it is unsustainable, i.e.
must be changed.
The analysis in this section is based on fiscal policy being unchanged and
disregards the fact that, in reality, it is is constantly being adapted to cope with
quantitative targets and restrictions like the surplus target and the expenditure
ceiling. If, instead, fiscal policy is adapted so that general government net
lending ls always in line with the surplus target, the financial position of the
46
general government sector as a share of GDP is stable. This means that, in
itself, a net lending in line with the surplus target ensures that general
government gross debt does not develop in an unsustainable way.
5.3 A scenario for long-term development
The projection of general government income and expenditure presented
here, which extends up to and including 2110, is based on Statistics Sweden’s
population forecast from April 2020.
For tax-financed activities it is assumed that the standard is unchanged,
expressed as resource input per user. For example, in the future, a 90-year-old
receives the same number of hours of health and social care and access to
areas of premises of the same size and the same other assistive devices, etc. as
a 90-year-old does today. The compensation level in all transfer systems apart
from the pension system is assumed to increase in line with average income.
A separate calculation is made for the pension system based on its rules. This
calculation includes the effect of the reform announced in the Budget Bill for
2021 (Govt Bill 2020/21:1 Proposal for the central government budget,
budget statement, etc. section 1.4) that links age limits in the old-age pension
system, in the tax system and in other social insurance systems to a benchmark
age that increases with life expectancy at the age of 65.
It is also assumed that current tax rates are unchanged. The projection focuses
on the general government commitment as a whole, and the general
government sector (central government, municipalities and regions, the old-
age pension system) is regarded as a single entity. There is great uncertainty in
the projection and it should not be seen as a forecast of the most probable
development, but should be viewed as an impact analysis whose purpose is to
describe the effect on general government finances of the assumptions made.
Labour supply grows more slowly than the population
The projection assumes that the labour force participation rate,
unemployment and average working hours are unchanged for people of
different ages with different origins, with the exception of adjustments due to
the pension reform and a trend of a decreasing share of sick people outside
the labour force. The latter trend increases the labour force participation rate
in the 55–64 age group. The share of the population aged 60–69 increases in
the long term on account of the reform of the pension system. At the same,
there is a rapid increase in the share of older people, who have, on average, a
47
lower employment rate. Overall, the share of the population in employment
increases slightly up until 2027, and then decreases.
On average, the share in employment and the number of hours worked
increases by around 0.6% and 0.8% respectively per year between 2020 and
2035, and by around 0.3% per year in the period thereafter. One reason why
employment increases more than twice as fast in the former period is that it
was particularly low in 2020, when it was greatly affected by the recession
caused by the spread of COVID-19.
The need for welfare services increases when the population is growing and
ageing.
The use of public consumption, i.e. health care, schools and social care, etc.,
varies over life. Early in life, considerable resources are used for preschool and
other education. When a person is around 20, their use of general government
expenditure usually decreases, and towards the end of life expenditure
increases rapidly, primarily for healthcare and elderly care. A rising number of
older people means that the need for care of older people and disabled people
increases by around 18 per cent between 2020 and 2030, and by around a
further 7 per cent between 2030 and 2035.
The demand for services that are not consumed individually, such as the
judicial system, public administration and defence, is assumed to rise in pace
with the total population and is just less than 9 per cent higher in 2035 than
in 2020. If the supply of welfare services is to be maintained at the present
level, demographic developments mean that public consumption, in total, will
increase by around 12.5% until and including 2035.
When the general government sector expands, the number employed also
needs to expand. If the number of employees in the public sector is to keep
pace with the number of people using tax-financed services, the need for
personnel increases by around 10 000–14 000 per year until and including
2035, which means a total increase of around 190 000 persons between 2020
and 2035. The need for personnel is greater in the local government sector
than in central government – especially in care of older people and disabled
persons, but also in health care.
Despite a rapid expansion, general government net lending and debt
develop in a sustainable way.
Between 2024 and 2035 general government consumption increases slightly
as a share of GDP on account of the demographic changes (see table 5.1). It
48
is mainly expenditure for care of older people and disabled persons and health
care that rise faster than GDP. The primary balance weakens as a share of
GDP in these years, mainly in central government, which bears the overall
responsibility for financing welfare provision. After 2024 primary expenditure
is more or less stable as a share of GDP. The weak growth of expenditure for
consumption as a share of GDP is countered by the fact that investments
grow more slowly than GDP. General government transfer payments increase
slightly as a share of GDP even after 2035.
The most important tax bases are largely steered by the performance of the
labour market. Primary income decreases marginally as a share of GDP after
2024.
Table 5.1 Primary general government expenditure if there is no change in behaviour
Per cent of GDP
2020 2024 2035 2060
Primary expenditure 51.3 46.4 46.3 46.4
General government consumption 26.8 25.3 25.7 25.7
Investments 5.0 4.9 4.7 4.4
Transfer payments 19.5 16.1 16.0 16.2
To households 14.4 12.6 12.4 12.7
Primary revenue 47.3 46.4 46.1 45.8
Sources: Statistics Sweden and own calculations.
Following an initial sharp deterioration, the primary balance improves
markedly by 2024 and is then more or less stable as a share of GDP until 2035
(see figure 5.2). The reason for the one-off improvement of the primary
balance that takes place around 2035 is that the benchmark age for the age
limits in the pension and tax systems is judged to increase by one year. This
means that more people will be in employment, at the same time as
expenditure for pensions decreases.
49
Figure 5.2 General government net lending and consolidated gross debt
Per cent of GDP
45 2
1
40 0
-1
35 -2
-3
30 -4
-5
25 -6
2020 2025 2030 2035 2040 2045 2050
Gross debt (left axis) Primary net leding (right axis)
Net lending (right axis)
Sources: Statistics Sweden and own calculations.
Since the financial position of the general government sector is positive, i.e.
its financial assets are greater than its debts, net lending is judged to be greater
than the primary balance, and to be slightly above the present level of the
surplus target in most years as of 2023. The high level of net lending
contributes to a decrease in the consolidated gross debt, from just under
40 per cent of GDP in 2021 to just over 31 per cent of GDP in 2024, and to
under 30 per cent of GDP in 2030. After 2030 the debt ratio increases again,
reaching the benchmark for the debt anchor at the end of the period reported.
Two indicators, called the S1 and S2 indicators, are used to summarise the
sustainability analysis; they show the size of the permanent change in general
government net lending required for the general government debt to develop
as wanted. The S1 indicator is a measure of the size of the change in fiscal
policy needed in 2022 for the general government consolidated gross debt
(Maastricht debt) to correspond to 60% of GDP in 2035. Since the gross debt
is expected to correspond to around 40% of GDP at the end of 2021, there is
a safety margin to this level of debt, so S1 is negative. The S2 indicator shows
how much general government net lending must change permanently in 2022
for the general government net debt as a proportion of GDP to stabilise in
the very long run.
The S1 indicator is -3.1% of GDP, calculated from 2022. The relatively large
negative S1 value shows that the present volume of the public commitment
can very likely be maintained until and including 2035 without the gross debt
exceeding the limit value of the Stability and Growth Pact. If a calculation is
instead made of the adjustment in net lending required for the debt ratio to
50
correspond to 35 per cent of GDP in 2035, i.e. a debt ratio in line with the
debt anchor, the indicator value is -0.7.
The value of S2 is -0.2. Strictly interpreted, this means that net lending can be
permanently weakened by 0.2% of GDP in 2022, without net debt becoming
unstable over the very long term. Fiscal policy is therefore also sustainable
using this method.
The value of the indicators has changed slightly since the previous
assessment.
In the 2020 Convergence Programme for Sweden S1 was calculated as -3.4
and S2 as -1.2. One reason why the S1 indicator has weakened marginally is
that the general government consolidated gross debt for the initial year is
slightly higher than in the previous projection.
Other assessments of the sustainability of the fiscal policy.
Both the National Institute of Economic Research (NIER) and the European
Commission have recently published assessments of the long-term
sustainability of Swedish fiscal policy (see Special Study 2021:3, NIER,
February 2021 and Debt Sustainability Monitor 2020, European Economy,
February 2021).
The NIER’s assessment is that Sweden has strong general government
finances that are sustainable in the long-term despite the spread of COVID-
19. This assessment is based on an assumption that the population is getting
healthier and is continuing to work at higher ages. If this is not the case,
general government finances are not assessed as being long-term sustainable.
The Commission’s assessment is that the risk of an unsustainable
development is low in both the short and the medium (up until 2034) term.
In the long term, the Commission’s assessment is that there is a moderate risk
of an unsustainable development. Summary sustainability indicators are
presented in table 5.2.
51
Table 5.2 Sustainability indicators for Sweden
Per cent of GDP
S1 S2
Government -3.1 -0.2
National Institute of Economic Research (February 2021) 0.4
European Commission (February 2021) -3.1 2.9
Note: The values of the indicators are not directly comparable since they are calculated based on different
assumptions.
Sources: National Institute of Economic Research, European Commission and own calculations.
5.4 Fiscal policy is judged to be long-term sustainable
In an overall assessment, fiscal policy is judged to be long-term sustainable. In
the long-term scenario, which is reported in section 5.3, S1 is -3.1% of GDP
and S2 is -0.2% of GDP.
It is, however, too early to say whether the sharp economic downturn resulting
from the spread of COVID-19 will have long-term effects on general
government finances. Since the number of hours worked in the economy has
a considerable effect on general government finances, the potential long-term
negative effects on employment are of crucial importance. However, the
weakening of general government finances in 2020 and 2021 due to the
ongoing spread of COVID-19 is temporary and does not, by itself, jeopardise
the long-term sustainability of general government finances.
There are important trends for general government finances that are not
linked to the ongoing spread of COVID-19. For example, the years up until
2035 are characterised by growing demographically motivated needs of tax-
financed welfare services. Primary expenditure in central government and in
the local government sector is estimated to increase in these years, but the
increase is not of an order that makes fiscal policy unsustainable.
6. Quality of general government finances
6.1 Expenditure
In assessing the structure of general government finances it is not sufficient
to only consider total expenditure and income. For this reason, income and
expenditure are reported at a more detailed level below. Principles have been
developed at the EU level for the production of uniform statistics on each
Member State’s distribution of general government finances (the ‘COFOG
classification’). Uniform statistics facilitate comparisons between different
Member States’ general government expenditure, as well as of their
development over time. Additional, and also more granular, information is
required to be able to evaluate whether a change in the composition of general
52
government expenditure has influenced long-term growth. However, the
distribution of general government expenditure between different purposes,
and the change in this distribution over time, show how different types of
expenditure and purposes have been prioritised, and provide an indication of
the direction of policy.
Table 6.1 General government expenditure by purpose, per cent of GDP
Per cent of GDP
Change
2009–
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
2019
General public
7.4 7.4 7.6 7.6 7.8 7.5 7.0 6.7 6.8 7.1 6.9 -0.5
services
Interest
1.3 1.2 1.3 1.1 1.0 0.8 0.7 0.7 0.6 0.6 0.6 -0.7
payments
Other 6.1 6.2 6.3 6.6 6.8 6.6 6.3 6.0 6.2 6.4 6.4 0.3
Defence 1.5 1.5 1.4 1.4 1.4 1.3 1.2 1.2 1.2 1.2 1.2 -0.2
Public order and
1.3 1.3 1.3 1.4 1.3 1.3 1.3 1.3 1.3 1.3 1.3 0.0
safety
Economic affairs 4.6 4.5 4.4 4.5 4.4 4.3 4.2 4.2 4.2 4.3 4.4 -0.2
Environmental
0.5 0.4 0.4 0.5 0.5 0.4 0.4 0.4 0.5 0.5 0.5 0.0
protection
Housing and
community 0.6 0.5 0.5 0.5 0.6 0.6 0.6 0.5 0.6 0.7 0.7 0.1
amenities
Health 7.0 6.7 6.7 6.8 6.9 6.9 6.8 6.9 6.8 7.0 7.0 0.0
Recreation,
culture and 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.2 1.3 1.3 0.0
religion
Education 6.7 6.4 6.3 6.4 6.5 6.5 6.4 6.6 6.7 6.9 6.9 0.2
Social protection 21.4 20.3 19.6 20.4 21.0 20.5 20.1 20.6 20.0 19.6 19.0 -2.4
Total
52.3 50.4 49.7 50.9 51.6 50.7 49.3 49.7 49.2 49.8 49.3 -2.9
expenditure
Excluding
50.9 49.2 48.4 49.8 50.6 49.9 48.6 49.1 48.6 49.2 48.7 -2.2
interest
Sources: Statistics Sweden and own calculations.
Expenditure as a share of GDP (the expenditure ratio) was relatively uneven
in the wake of the financial crisis in 2008 and 2009 but has, since 2015, been
relatively stable at just under 50% of GDP. As shown in table 6.1 and table
6.2, expenditure on social protection in Sweden in 2019 amounted to around
19% of GDP and just under 39% of total general government expenditure.
After having swung around 40% of total expenditure since 2009, expenditure
on social protection has decreased gradually in recent years. Expenditure on
health care also accounts for a large share of general government expenditure.
After being around 13% of total expenditure in 2009, this share has risen, and
was around 14% in 2019. There has been a large decrease in the share of
expenditure consisting of interest payments; this is mainly because the general
53
government consolidated gross debt has fallen strongly as a proportion of
GDP at the same time as the level of interest rates has been relatively low.
Table 6.2 General government expenditure by purpose, per cent of total expenditure
Per cent of total expenditure
Change
2009–
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
2019
General public
14.2 14.7 15.3 15.0 15.0 14.7 14.3 13.5 13.8 14.2 14.1 -0.1
services
Interest
2.5 2.4 2.6 2.1 1.9 1.6 1.4 1.3 1.2 1.3 1.2 -1.4
payments
Other 11.7 12.3 12.7 12.9 13.2 13.1 12.8 12.2 12.6 12.9 12.9 1.2
Defence 2.8 3.0 2.8 2.7 2.8 2.5 2.4 2.4 2.4 2.4 2.5 -0.3
Public order and
2.6 2.7 2.6 2.7 2.6 2.6 2.6 2.6 2.6 2.6 2.7 0.1
safety
Economic affairs 8.8 8.9 8.9 8.9 8.4 8.6 8.4 8.5 8.5 8.7 9.0 0.2
Environmental
0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 1.0 1.0 0.1
protection
Housing and
community 1.1 1.0 1.1 1.0 1.1 1.2 1.2 1.1 1.1 1.4 1.4 0.3
amenities
Health 13.3 13.3 13.5 13.4 13.4 13.6 13.8 13.8 13.9 14.0 14.2 0.8
Recreation,
culture and 2.5 2.6 2.6 2.5 2.5 2.6 2.6 2.6 2.5 2.5 2.6 0.1
religion
Education 12.8 12.7 12.7 12.7 12.6 12.8 13.0 13.3 13.6 13.8 14.1 1.2
Social protection 40.9 40.3 39.5 40.1 40.6 40.5 40.8 41.3 40.6 39.2 38.6 -2.3
Total
100 100 100 100 100 100 100 100 100 100 100
expenditure
Excluding
97.5 97.6 97.4 97.9 98.1 98.4 98.6 98.7 98.8 98.7 98.8 1.4
interest
Sources: Statistics Sweden and own calculations.
6.2 Income
The tax ratio, i.e. total tax revenue as a percentage of GDP, is usually affected
most by changes in regulations, since tax bases normally follow the
development of the economy. Between 2013 and 2024, the tax ratio is
expected to decrease by 0.4 percentage points, but the variations during this
period are larger (see table 6.3 and table 6.4). The tax ratio rose at the
beginning of the period, peaking at 44.1% in both 2016 and 2017. After that
the tax ratio is estimated to decrease gradually and to be lowest in 2022 at
41.9%. This is due both to previously adopted changes in regulations and to
the measures the Government has taken on account of the outbreak of the
coronavirus. At the end of the forecast period the tax ratio is expected to rise
slightly, to just over 42 per cent.
A large part of the variation in revenue from tax on labour is explained by
regulatory changes. A reinforcement of the earned income tax credit held tax
54
revenue back in 2014. Then the abolition of reduced social security
contributions for young people meant that revenue from tax on labour rose.
It was highest in 2016 and 2017. Thereafter revenue decreased again, and it is
expected to continue to decrease in the forecast period, reaching its lowest
level in 2022. The decrease in revenue from tax on labour as a share of GDP
in 2020−2022 is due to the Government’s measures on account of the spread
of COVID-19, such as temporary reductions of employers’ social security
contributions and reduced tax on work income.
As a share of GDP, revenue from tax on capital is expected to rise by 0.6
percentage points in the period 2013-2024. But the share is expected to vary
more during the period. In 2015 and for a few years thereafter the share was
unusually high, which is explained by temporarily higher revenue from both
tax on corporate profits and tax on household capital. In 2020 revenue from
tax on capital are expected to decrease strongly on account of the outbreak of
the coronavirus, which has decreased company profits. In 2021 a tax reduction
for business investments also means that revenue from tax on capital
decreases even more as a share of GDP. Some recovery is expected during the
remainder of the forecast period.
Revenue from the taxes on consumption is estimated to remain stable overall
as a share of GDP throughout the period 2013 and 2024. But the share taken
by revenue from value added tax is expected to rise and the share taken by
excise duties to fall during the period. Part of the explanation of the rise in
revenue from value added tax as a share of GDP is the strong increase in
housing investments. These are investments a large part of which are made by
households. Looking ahead, a strong increase in household consumption is
expected to lead to a rise in revenue from value added tax as a share of GDP.
Revenue from excise duties is decreasing continuously as a proportion of
GDP There are several reasons for this, for example: the use of certain
products subject to selective taxation decreases over time, a part of excise
duties tax rates is not adjusted to inflation and the use of various kinds of
energy in transport, heating and production is becoming increasingly efficient.
Revenue from tax arrears and other taxes as a share of GDP is only expected
to fall by 0.1 percentage points in 2013−2024, but their share varies slightly
more during the period. Revenue from tax arrears and other taxes is affected
by factors including temporary respites granted to companies and collection
losses.
55
Table 6.3 Tax revenue, by tax types, per cent of GDP
Per cent of GDP
Change
2013–
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2024
Tax on labour 25.4 24.9 24.6 25.8 25.8 25.7 25.2 25.2 24.8 24.5 24.7 24.6 -0.8
Direct
taxes 13.7 13.3 13.1 13.8 13.7 13.6 13.1 13.6 13.0 12.7 12.7 12.7 -1.0
Indirect
taxes 11.8 11.6 11.5 12.0 12.1 12.1 12.0 11.7 11.9 11.8 12.0 11.9 0.2
Tax on capital 4.5 5.0 5.7 5.6 5.7 5.4 5.6 5.1 4.9 5.1 5.2 5.2 0.6
Households 0.8 1.2 1.6 1.7 1.7 1.4 1.4 1.2 1.2 1.2 1.2 1.1 0.3
Corporate
incomce 2.3 2.4 2.8 2.6 2.7 2.8 3.1 2.8 2.6 2.8 2.9 2.9 0.5
Tax on
consumption 12.1 12.0 12.0 12.3 12.2 12.2 12.0 12.3 12.1 12.1 12.1 12.1 0.0
VAT 8.9 8.9 8.9 9.2 9.2 9.2 9.2 9.4 9.4 9.4 9.4 9.5 0.6
Excises duties 3.2 3.1 3.0 3.1 3.0 2.9 2.8 2.8 2.7 2.7 2.7 2.6 -0.6
Arrears and
other taxes 0.4 0.3 0.3 0.5 0.4 0.5 0.3 0.2 0.2 0.2 0.3 0.3 -0.1
Total tax
42.5 42.2 42.6 44.1 44.1 43.8 43.1 42.8 42.1 41.9 42.3 42.1 -0.4
revenue
Sources: Statistics Sweden and own calculations.
Table 6.4 Tax revenue, by tax types, per cent of total tax revenue
Per cent of total revenue
Change
2013–
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2024
Tax on labour 59.9 59.0 57.8 58.4 58.6 58.8 58.5 58.9 59.1 58.4 58.4 58.4 -1.5
Direct
taxes 32.2 31.5 30.7 31.2 31.2 31.1 30.5 31.6 30.8 30.3 30.1 30.1 -2.1
Indirect
taxes 27.7 27.5 27.1 27.2 27.4 27.7 28.0 27.3 28.2 28.1 28.4 28.3 0.6
Tax on capital 10.6 11.9 13.5 12.6 12.9 12.4 13.0 12.0 11.8 12.2 12.2 12.2 1.6
Households 2.0 2.8 3.8 3.8 3.9 3.3 3.2 2.8 2.9 2.8 2.8 2.7 0.7
Corporate
incomce 5.5 5.7 6.6 5.9 6.2 6.3 7.1 6.5 6.1 6.7 6.8 6.8 1.3
Tax on
consumption 28.5 28.4 28.1 27.9 27.6 27.8 27.9 28.7 28.8 28.8 28.6 28.7 0.2
VAT 20.9 21.1 21.0 20.9 20.9 21.1 21.3 22.1 22.3 22.4 22.3 22.5 1.6
Excises
7.6 7.3 7.1 7.0 6.7 6.6 6.6 6.6 6.5 6.4 6.3 6.2 -1.4
duties
Arrears and
other taxes 1.0 0.7 0.6 1.1 0.9 1.1 0.6 0.4 0.4 0.6 0.7 0.7 -0.3
Total tax
100 100 100 100 100 100 100 100 100 100 100 100
revenue
Sources: Statistics Sweden and own calculations.
56
Appendix A – Technical assumptions
This annex gives a more detailed account of the methods applied in the
calculation of general government finances in the period 2024-2110.
Demographic assumptions
The calculation is based on Statistics Sweden’s population forecast from April
2020, shown in table A.1.
Table A.1 Demographic assumptions
Average number of children born per woman, number of years and number of individuals
2020 2030 2040 2050 2060 2070 2080
Birth rate 1.69 1.86 1.84 1.86 1.88 1.88 1.88
Average life expectancy,
84.8 85.8 86.8 87.8 88.8 89.6 90.5
women
Average life expectancy, men 81.4 82.9 84.3 85.4 86.5 87.4 88.4
Net migration, thousands 64 34 24 22 22 23 23
Source: Statistics Sweden.
Labour market
The performance of the labour market depends on demographic
developments. The projection of the employment rate and the number of
hours worked is calculated disaggregated by age, gender and country of origin.
The labour force participation rate, employment rate and average working
hours are assumed to remain constant in each group in the long term. This
can be interpreted as unchanged labour market behaviour because the
absenteeism rate, rate of sickness and activity compensation, average hours
worked, employment rate and unemployment rate are constant within each
sub-group. Two exceptions are made from this principle. First, it is assumed
that the current low inflows to sickness compensation continue, which means
that the labour supply for persons in the 55–64 age group continues to
increase slightly in the next few years. Second, it is assumed that the reform
announced in the Budget Bill for 2021 (Govt Bill 2020/21:1) that links age
limits in the old-age pension system, in the tax system and in other social
insurance systems to a benchmark age that increases with life expectancy at
the age of 65 will lead to an increase in the number of employed people in the
60–69 age group.
The number of hours worked in the general government sector is assumed to
rise at the same rate as demographically dependent general government
consumption. This means that the staffing ratio is assumed to be constant in
the general government sector. The number of hours worked in the business
57
sector is the difference between total hours worked and hours worked in the
general government sector.
Productivity
The assumption about productivity growth in the business sector is based on
the historical development. The relatively low rate of productivity growth in
recent years is assumed to increase gradually in the next few years so that
productivity in the business sector again increases at the same rate as it did on
average in 2000-2020. This means a trend in productivity growth of about
1.9 per cent per year as of 2030 (See table A.2). Productivity growth in the
general government sector is assumed to be zero as of 2025.
GDP, expenditure and output approach
GDP growth is determined by the sum of the productivity growth in the
economy as a whole and the increase in the number of hours worked. The use
side of GDP, i.e. how production is used, is determined so that households’
current relatively high savings ratio decreases gradually. Household
consumption expenditure as a share of GDP therefore increases gradually
over the period as people live longer and an increasing share of the population
does not work. In total, gross fixed capital formation accounts for around 23–
24% of nominal GDP. The projection of general government consumption
in volume terms is determined by demographic developments, while its price
growth is determined by assumptions about hourly pay growth and the price
growth for other production factors such as rents etc. The production of
general government consumption is obtained with an assumption of
unchanged productivity and degree of privatisation. The remaining
component of the expenditure approach of GDP is net exports, which are
calculated as the difference between GDP and its domestic use. Production in
the business sector is determined as the product of productivity and the
number of hours worked in that sector.
Inflation and wages
It is assumed that the Riksbank pursues a monetary policy that makes inflation
2 % per year. The share of wage costs and gross profits in the business sector
is assumed to be constant in the long term. This means that wages are
determined by price growth and productivity. Higher productivity and a
higher value added price in the business sector generate scope for higher
wages. Hourly pay in the general government sector is assumed to rise in line
with private sector pay.
58
Assumptions regarding yield on capital
In the long term it is assumed that average interest rates for income and
expenditure are the same for all sectors in the economy. The assumed nominal
interest rate is the nominal GDP growth rate plus 0.5 percentage points. In
addition to interest-bearing assets, the general government sector also has
non-interest-bearing assets. The yield on these assets consists of share
dividends and value adjustments. Dividends are assumed to be 3% in the long
term and value increases are calculated using residuals so that the total return
is the same as for interest-bearing assets. It is likely that there will also be
differences in the long term between the interest rates on deposits and lending
and that there will be differences between sectors. It is also likely that the
return on non-interest-bearing assets is higher than for interest-bearing assets.
However, the assumption regarding the return on financial capital is intended
to simplify and to avoid the focus of the analysis shifting from central issues
to those surrounding the dynamics of return on capital.
Table A.2 Macroeconomic assumptions
Annual percentage change and per cent
2020 2030 2040 2050 2060 2070 2080
Percentage change
Population, 15–74 years 0.5 0.5 0.1 0.2 0.3 0.2 0.3
Labour force, 15–74 years 0.3 0.4 0.2 0.2 0.2 0.9 0.3
Number employed, 15–74 years -1.3 0.4 0.2 0.2 0.2 0.9 0.3
Hours worked -3.2 0.5 0.2 0.2 0.2 0.9 0.3
Business sector productivity 1.3 2.0 1.9 1.9 1.9 1.9 1.9
GDP, fixed prices -2.8 2.0 1.8 1.8 1.9 2.6 2.0
GDP per capita -3.7 1.5 1.5 1.5 1.6 2.3 1.7
GDP productivity 0.4 1.6 1.7 1.6 1.7 1.8 1.8
GDP deflator 1.4 2.9 2.4 2.3 2.3 2.0 2.2
CPI, annual average 0.5 2.5 2.0 2.0 2.0 2.0 2.0
Hourly wages 4.4 4.7 4.2 4.1 4.1 3.9 4.0
Per cent
Real interest 0.5 0.8 2.9 2.8 2.7 3.0 2.8
Employment rate, 15–74 years 67.1 69.2 69.2 69.9 69.5 71.6 71.4
ILO unemployment rate, 15–74
years 8.3 6.9 7.1 7.0 6.9 6.8 6.5
Sources: Statistics Sweden and own calculations.
General government income
The calculations of general government income presented in this
Convergence Programme are based on an assumption of constant tax rates
relative to different tax bases. Consequently, the aggregate tax ratio will vary
if the tax bases develop in a different way from GDP. This method reflects
59
unchanged tax regulations. Table A.3 details general government taxes,
contributions and charges as a proportion of GDP and as a proportion of the
respective tax base (implicit tax rate), as well as the tax base’s share of GDP.
Table A.3 Taxes and charges
Per cent of GDP
2020 2030 2040 2050 2060 2070 2080
Taxes and charges 42.7 41.9 42.0 42.0 42.3 42.1 42.3
Household direct taxes and charges
Proportion of GDP 12.6 11.9 12.0 12.0 12.1 12.1 12.2
Implicit tax rate of direct taxes 22.9 22.7 22.7 22.7 22.6 22.7 22.6
Tax base for direct taxes as a proportion of GDP 55.1 52.3 52.7 53.0 53.6 53.3 53.8
Implicit tax rate of charges 6.6 6.5 6.5 6.5 6.5 6.5 6.5
Tax base for charges as a proportion of GDP 40.9 40.1 40.6 40.9 41.1 41.3 41.5
Corporate direct taxes
Proportion of GDP 2.7 3.0 3.0 3.0 3.0 3.0 3.0
Implicit tax rate 9.3 10.4 10.4 10.4 10.4 10.4 10.4
Tax base as a proportion of GDP 29.0 29.0 28.8 28.8 28.6 28.8 28.7
Indirect taxes1
Proportion of GDP 12.8 12.4 12.3 12.1 12.3 12.0 12.1
Implicit tax rate 29.0 27.7 26.7 26.0 25.6 25.4 25.1
Tax base as a proportion of GDP 44.3 44.7 45.9 46.8 48.0 47.5 48.3
Social security contributions from employers and the
self-employed2
Proportion of GDP 14.3 14.5 14.7 14.8 14.9 15.0 15.0
Implicit tax rate 35.0 36.3 36.3 36.3 36.3 36.3 36.3
Tax base as a proportion of GDP 40.9 40.1 40.6 40.9 41.1 41.3 41.5
1
Excluding wage-dependent indirect taxes.
2
Including wage-dependent indirect taxes.
Sources: Statistics Sweden and own calculations.
General government expenditure on consumption
The projection of general government consumption is made in two parts: a
volume projection and a price projection. The calculation of general
government consumption is based on costs for various purposes such as
schools, health care and social care, disaggregated by age and gender (see table
A.4). All expenditure areas are projected in line with the demographic trend.
This means, for example, that an average 70-year-old woman is allocated the
same amount of public services, in real terms, in 2060 as in 2024. This can be
seen as an expression of unchanged standards in general government services.
The price of general government consumption develops in line with a
weighting of the price of the component parts of gross production, i.e. hourly
pay, the price of consumables used and the price of consumption of fixed
capital (the price of gross fixed capital formation).
60
Table A.4 General government consumption
Per cent of GDP
2020 2030 2040 2050 2060 2070 2080
Total consumption 26.8 25.5 25.8 25.7 25.7 25.0 25.0
Childcare 1.7 1.6 1.6 1.6 1.6 1.5 1.5
Education 5.3 4.8 4.7 4.6 4.5 4.3 4.2
Healthcare 6.7 6.3 6.3 6.3 6.2 6.0 5.9
Elderly care 5.1 5.3 5.7 5.9 6.2 6.2 6.4
Other activities 8.0 7.5 7.5 7.4 7.3 7.1 7.0
Sources: Statistics Sweden and own calculations.
Transfer payments
The calculations assume a certain guarantee of standards in the general
government transfer payment systems (see table A.5). Some transfer payments
have rules and regulations that automatically increase expenditure in line with
earnings. This applies, for instance, to pensions that are uprated in line with
the income index and also partly to transfer payments compensating for
income loss, such as health and parental insurance. In the calculation, pensions
are projected in accordance with the current rules. Other transfer payments to
households are assumed to rise in line with earnings. This also means that
there is an assumption that the caps applied in the social insurance systems
rise in line with earnings. Such a guarantee of standards offsets the erosion of
household transfer payments that would take place if the estimate was only
based on a price projection.
Table A.5 General government transfer payments
Per cent of GDP
2020 2030 2040 2050 2060 2070 2080
Total transfer payments 19.5 15.9 15.9 15.9 16.2 15.9 16.1
Transfer payments to households 14.4 12.4 12.4 12.4 12.7 12.4 12.6
Old age 8.1 7.1 7.1 7.0 7.2 6.9 7.1
Ill-health 2.2 1.8 1.9 1.9 2.0 2.0 2.0
Children/studies 2.1 1.8 1.8 1.9 1.9 1.9 1.9
Labour market 0.9 0.6 0.6 0.6 0.6 0.6 0.5
Other 1.1 1.0 1.1 1.1 1.1 1.1 1.1
Transfer payments to businesses and
the rest of the world 5.1 3.5 3.5 3.5 3.5 3.5 3.5
Note: Old age = old-age pensions, survivor’s pensions, central government and local government pensions and
supplementary housing benefit to pensioners. Ill-health = health insurance, occupational injury insurance
sickness compensation and assistance compensation. Children/studies = child benefit, parental insurance,
maintenance support and student grants. Labour market = unemployment benefit, labour market training grants
and wage guarantees.
Sources: Statistics Sweden and own calculations.
61
Old-age pension system
Table A.6 shows the old-age pensions system’s income and expenditure and
its financial position. The calculation of pension expenditure is based on
demographic developments, economic assumptions and the applicable
regulations. The average pension age is assumed to increase over time at a rate
determined by average life expectancy at the age of 65.
Table A.6 Old-age pensions system
Per cent of GDP
2020 2030 2040 2050 2060 2070 2080
Revenue 6.5 6.6 6.9 7.1 7.3 7.4 7.6
Fees 6.0 5.7 5.7 5.8 5.8 5.9 5.9
Interest, dividends etc. 0.5 0.9 1.1 1.3 1.5 1.6 1.7
Expenditure 6.7 5.8 5.7 5.6 5.9 5.6 5.8
Pensions 6.6 5.6 5.5 5.5 5.7 5.4 5.6
Other 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Net lending -0.2 0.8 1.2 1.4 1.4 1.8 1.8
Net financial assets 34.6 30.0 32.1 35.9 41.1 43.3 48.7
Sources: Statistics Sweden and own calculations.
Table A.7 presents a number of key variables from the Swedish Convergence
Programme in the format recommended by the European Commission.
62
Table A.7 Long-term sustainability of the general government finances
Per cent of GDP, unless otherwise stated
2020 2030 2040 2050 2060 2070 2080
Total expenditure 51.8 47.4 48.1 48.1 48.5 47.6 47.8
Age-related1 35.7 33.2 33.4 33.3 33.6 32.4 32.6
Pensions2 8.1 7.1 7.1 7.0 7.2 6.9 7.1
Guarantee pensions 0.3 0.3 0.3 0.4 0.4 0.3 0.3
Old-age pensions 6.6 5.6 5.5 5.5 5.7 5.4 5.6
Other pensions (disability and
survivors') 0.4 0.4 0.4 0.4 0.4 0.4 0.4
General government occupational
pensions 0.8 0.8 0.8 0.8 0.8 0.7 0.8
Healthcare 6.7 6.3 6.3 6.3 6.2 6.0 5.9
Elderly care and care services for disabled 5.1 5.3 5.7 5.9 6.2 6.2 6.4
Childcare 1.7 1.6 1.6 1.6 1.6 1.5 1.5
Education 5.3 4.8 4.7 4.6 4.5 4.3 4.2
Unemployment benefit 0.9 0.6 0.6 0.6 0.6 0.6 0.5
Other age-related expenditure 8.0 7.5 7.5 7.4 7.3 7.1 7.0
Interest expenditure 0.3 0.9 1.4 1.6 1.8 2.1 2.2
Total revenue 48.7 48.1 48.4 48.2 48.4 48.0 48.2
of which income from capital 1.4 1.9 2.4 2.5 2.7 2.8 2.9
of which is from the pensions system 0.5 0.9 1.1 1.3 1.5 1.6 1.7
Assumptions
Labour productivity growth, GDP level 0.4 1.5 1.7 1.6 1.7 1.8 1.8
GDP growth -2.8 2.0 1.8 1.8 1.9 2.6 2.0
Unemployment rate 8.3 6.9 7.1 7.0 6.9 6.8 6.5
Population aged 65 + as a proportion of the
total population 20.1 21.6 23.1 23.5 25.0 24.8 25.5
1
Age-related expenditure includes childcare. This expenditure is not included in the age -dependent expenditure
presented in Appendix B as calculated by an EU working group.
2
In addition to old-age pensions, pensions also include sickness and activity com pensation.
Sources: Statistics Sweden and own calculations.
63
Appendix B - Comparison with the European Commission’s
calculations of demographically dependent expenditure
A working group (Working Group on Ageing Populations and Sustainability)
under the Economic Policy Committee (EPC) has, together with the
European Commission, calculated the development of demographically
dependent expenditure in all Member States up to and including 2070. These
calculations were reported most recently in spring 2018. However, the
calculations in this Convergence Programme are based on the data presented
to the Riksdag in the 2021 Spring Fiscal Policy Bill. This section compares the
key demographic and macroeconomic indicators and also the demographically
dependent expenditure from these two sources (see table B.1 and table B.2).
Table B.1 Macroeconomic assumptions in the EPC estimates and in the Swedish
convergence programme
Index, unless otherwise stated
2019 2020 2030 2040 2050 2060 2070
Population, 15–74 years
EPC 100.0 100.5 107.1 113.9 118.2 123.0 125.4
Convergence programme 100.0 100.5 105.5 108.7 110.5 113.8 115.5
Employed
EPC, 15–74 years 100.0 100.6 107.5 113.7 118.7 121.0 125.1
Convergence programme, 15–74
100.0 98.7 106.8 110.0 113.0 115.8 121.0
years
Hours
EPC 100.0 100.7 107.3 113.5 118.5 120.8 124.9
Convergence programme 100.0 96.8 107.0 110.3 113.1 115.5 121.3
Unemployment rate, percentage
points
EPC, 15–74 years 5.8 5.8 5.6 5.6 5.6 5.6 5.6
Convergence programme, 15–74
6.8 8.3 6.9 7.1 7.0 6.9 6.8
years
Labour productivity
EPC 100.0 101.3 115.0 132.5 154.1 179.5 208.9
Convergence programme 100.0 100.4 113.6 133.3 157.0 185.5 220.4
Potential GDP
EPC 100.0 102.0 123.4 150.4 182.6 216.7 260.9
Convergence programme 100.0 97.2 121.5 147.1 177.5 214.3 267.4
Potential GDP per capita
EPC 100.0 100.9 111.9 127.9 146.9 166.5 192.4
Convergence programme 100.0 96.3 112.9 131.3 153.2 179.0 216.2
Sources: European Commission and own calculations.
The population projection for Sweden used by the EPC was prepared by
Eurostat in 2017. The calculations in this Convergence Programme are based
64
on a population projection performed by Statistics Sweden in April 2020. That
assessment takes account of actual developments in recent years, which means
that the population increases slightly more rapidly than in the EPC calculation
in the next few years. In the longer term, however, the population grows more
slowly according to this Convergence Programme. The EPC thus assumes a
stronger increase both in hours worked and in the number of persons
employed in the longer term. Productivity growth is faster in the Convergence
Programme than according to the EPC calculations, which means that both
GDP and per capita GDP are higher in the long term in the Convergence
Programme than according to the EPC calculations.
Table B.2 Change in age-dependent general government expenditure in the EPC
calculations and in the Swedish convergence programme
Proportion of GDP
Change 2018–2035 Change 2018–2070
CP EPC CP-EPC CP EPC CP-EPC
Pensions -0.5 -0.7 0.2 -0.8 -0.8 0.0
Healthcare 0.0 0.3 -0.3 -0.4 0.7 -1.0
Elderly care and care services 0.6 0.8 -0.2 1.2 1.7 -0.5
for disabled
Education/Unemployment
-0.4 0.3 -0.7 -0.9 0.4 -1.3
benefit
Total -0.3 0.7 -1.0 -0.8 2.1 -2.9
Note: CP is the abbreviation of convergence programme. Childcare is not included in this synthesis.
Sources: European Commission and own calculations.
65
Appendix C – Tables
Table C.1a Macroeconomic prospects
Annual percentage change
Mdkr
2020 2020 2021 2022 2023 2024
Real GDP 4 883 -2.8 3.2 3.8 1.9 1.6
Nominal GDP 4 952 -1.5 5.2 5.5 3.4 3.5
Components of real GDP
Private consumption expenditure 2 169 -4.7 3.3 6.2 2.8 1.9
Government consumption expenditure 1 294 -0.5 2.0 -0.3 -0.9 0.1
Gross fixed capital formation 1 211 0.6 2.6 3.4 2.6 2.2
Changes in inventories and net acquisition of
valuables 2 270 -5.2 6.0 4.7 3.3 2.8
Exports of goods and services 2 059 -5.8 6.2 4.6 3.2 2.6
Imports of goods and services
Contributions to real GDP growth
Final domestic demand -2.1 2.6 3.5 1.7 1.4
Changes in inventories and net acquisition of
valuables -0.8 0.3 0.0 0.0 0.0
External balance of goods and services 0.0 0.2 0.2 0.2 0.2
Sources: Statistics Sweden and own calculations.
Table C.1b Price developments
Annual percentage change
Level
2020 2020 2021 2022 2023 2024
GDP deflator 101 1.4 2.0 1.7 1.5 1.8
Private consumption deflator 101 1.1 1.5 1.3 1.5 2.0
HICP1 108 0.7 1.5 1.2 1.6 1.9
Public consumption deflator 103 2.5 3.1 3.0 2.3 2.5
Investment deflator 101 0.5 1.1 1.5 1.5 1.5
Export price deflator (goods and services) 97 -3.5 -0.5 1.0 1.0 1.0
Import price deflator (goods and services) 96 -4.2 -0.4 1.2 1.2 1.2
Note: All deflators are indices. 2018=100.
1
Index, 2015=100.
Sources: Statistics Sweden and own calculations.
66
Table C.1c Labour market developments
Annual percentage change if not otherwise stated
Level
2020 2020 2021 2022 2023 2024
Employment, persons1 5 059 -1.3 0.3 1.9 1.7 0.6
Employment, hours worked2 796 773 -3.2 3.3 2.4 0.6 0.5
Unemployment rate (%)3 459 8.3 8.7 7.9 7.0 7.0
Labour productivity, persons4 855 -1.8 3.1 1.8 0.1 1.0
Labour productivity, hours worked5 606 1.3 0.5 1.7 0.4 1.2
Compensation of employees6 2 423 0.9 3.4 4.5 3.7 3.1
Compensation per employee7 479 020 2.3 3.1 2.6 2.0 2.5
1 Occupied population, national accounts definition. Level in thousands.
2
National accounts definition. Level in ten thousands.
3
Level in thousands. Per cent of labour force.
4
Real GDP per person employed, SEK.
5
Real GDP per hour worked, SEK.
6
SEK billion.
7
SEK.
Sources: Statistics Sweden and own calculations.
Table C.1d Sectoral balances
Per cent of GDP
2020 2021 2022 2023 2024
Net lending/borrowing vis-a-vis the rest of the world 5.4 4.7 4.3 4.3 4.3
of which
Balance on goods and services 4.4 4.3 4.2 4.2 4.2
Balance of primary incomes and transfers 1.0 0.4 0.1 0.1 0.1
Capital account 0.0 0.0 0.0 0.0 0.0
Net lending/borrowing of the private sector 8.8 8.8 5.3 3.8 3.4
Net lending/borrowing of the general government -3.3 -4.2 -1.0 0.5 1.0
Sources: Statistics Sweden and own calculations.
67
Table C.2a General government budgetary prospects
Per cent of GDP
SEK bn
2020 2020 2021 2022 2023 2024
Net lending by sub-sector
General government -152 -3.1 -4.5 -1.0 0.5 1.0
Central government -156 -3.2 -4.7 -0.4 1.1 1.4
Local government 14 0.3 0.1 -0.7 -0.7 -0.6
Social security funds -10 -0.2 0.0 0.1 0.1 0.1
General government
Total revenue 2 468 49.9 48.9 45.8 48.6 48.3
Total expenditure 2 620 52.9 53.4 49.4 48.1 47.3
Net lending/borrowing -152 -3.1 -4.5 -1.0 0.5 1.0
Interest expenditure 15 0.3 0.3 0.3 0.3 0.3
Primary balance -136 -2.8 -4.2 -0.7 0.8 1.3
One-off and other temporary measures 0 0.0 0.0 0.0 0.0 0.0
Selected components of revenue
Total taxes 1 977 39.9 39.2 39.1 39.4 39.4
Taxes on production and imports 1 076 21.7 21.8 21.7 22.0 21.9
Current taxes on income. wealth. etc. 900 18.2 17.4 17.3 17.5 17.4
Capital taxes 0 0.0 0.0 0.0 0.0 0.0
Social contributions 171 3.5 3.4 3.3 3.4 3.3
Property income 75 1.5 1.6 1.5 1.5 1.5
Other 245 5.0 4.8 4.5 4.3 4.1
Total revenue 2 468 49.9 48.9 48.5 48.6 48.3
Tax burden 2 121 42.8 42.0 41.9 42.3 42.1
Selected components of expenditure
Compensation of employees + intermediate
consumption 1 061 21.4 21.1 20.4 19.9 19.7
Compensation of employees 647 13.1 13.1 12.7 12.4 12.2
Intermediate consumption 414 8.4 8.0 7.7 7.5 7.4
Social payments 827 16.7 16.3 15.5 15.0 14.8
of which Unemployment benefits 43 0.9 0.9 0.8 0.6 0.6
Social transfers in kind supplied via market
producers 184 3.7 3.7 3.5 3.4 3.4
Social transfers other than in kind 643 13.0 12.6 12.0 11.6 11.4
Interest expenditure 15 0.3 0.3 0.3 0.3 0.3
Subsidies 140 2.8 3.3 1.6 1.5 1.5
Gross fixed capital formation 248 5.0 5.3 5.1 5.0 4.9
Capital transfers 23 0.5 1.2 0.8 0.6 0.5
Other 306 6.2 6.0 5.7 5.6 5.6
Total expenditure 2 620 52.9 53.4 49.4 48.1 47.3
Government consumption (nominal) 1 327 26.8 26.8 26.0 25.5 25.3
Sources: Statistics Sweden and own calculations.
68
Table C.2b Revenue and expenditure forecasts
Per cent of GDP if not otherwise stated
SEK bn
2020 2020 2021 2022 2023 2024
Total revenue 2 468 49.9 49.0 48.6 48.7 48.4
Total expenditure 2 623 52.9 53.6 49.5 48.2 47.4
Sources: Statistics Sweden and own calculations.
Table C.2c Amounts to be excluded from the expenditure benchmark
Per cent of BNP if not otherwise stated
SEK bn
2020 2020 2021 2022 2023 2024
Expenditure on EU programmes fully matched by 4 0.1 0.1 0.1 0.1 0.1
EU funds revenue
of which investment fully matched by EU 0.0 0.0 0.0 0.0 0.0 0.0
funds revenue
Cyclical unemployment benefit expenditure1 -1 0.0 -0.3 0.2 0.0 0.1
Effect of discretionary revenue measures -17 -0.3 -0.7 0.5 0.1 0.0
Revenue increases mandated by law – – – – – –
Source: Statistics Sweden and own calculations.
Table C.3 General government expenditure by function
Per cent of GDP
COFOG code 2019
General public services 1 6.9
Defence 2 1.2
Public order and safety 3 1.3
Economic affairs 4 4.4
Environmental protection 5 0.5
Housing and community amenities 6 0.7
Health 7 7.0
Recreation, culture and religion 8 1.3
Education 9 6.9
Social protection 10 19.0
Total expenditure 49.3
Source: Statistics Sweden and own calculations.
69
Table C.4 General government debt developments
Per cent of GDP
2020 2021 2022 2023 2024
Gross debt 39.9 39.9 37.0 33.7 31.4
Change in gross debt ratio 4.8 0.1 -2.9 -3.3 -2.3
Contribution to changes in gross debt
Primary balance 2.8 4.2 0.7 -0.8 -1.3
Interest expenditure 0.3 0.3 0.3 0.3 0.3
Stock-flow adjustment 1.2 -2.5 -1.8 -1.6 -0.2
of which
Differences between cash and accruals 0.5 -0.5 -0.3 -0.2 -0.1
Privatisation proceeds 0 -0.1 -0.1 -0.1 -0.1
Valuation effects and others 0.8 -2 -1.4 -1.3 0
Nominal GDP change 0.5 -2 -2.1 -1.2 -1.1
Sources: Statistics Sweden and own calculations.
Table C.5 Cyclical developments
Per cent of GDP if not otherwise stated
2020 2021 2022 2023 2024
Real GDP growth (%) -2.8 3.2 3.8 1.9 1.6
Net lending of general government -3.1 -4.5 -1.0 0.5 1.0
Interest expenditure 0.5 0.5 0.4 0.5 0.5
One-off and other temporary measures 0.0 0.0 0.0 0.0 0.0
Potential GDP growth (%) 1.7 1.7 1.6 1.6 1.6
Output gap -3.9 -2.6 -0.5 0.0 0.0
Cyclical budgetary component -1.8 -1.8 -0.6 -0.1 -0.1
Cyclically-adjusted balance -1.3 -2.7 -0.3 0.6 1.1
Cyclically-adjusted primary balance -0.8 -2.3 0.1 1.1 1.6
Structural balance -1.3 -2.7 -0.3 0.6 1.1
Sources: Statistics Sweden and own calculations.
70
Table C.6 Divergence from previous update
2020 2021 2022 2023 2024
Real GDP growth (%)
Previous update -4.0 3.5 3.4 3.1 --
Current update -2.8 3.2 3.8 1.9 1.6
Difference 1.2 -0.3 0.4 -1.2 --
General government net lending (% of GDP)
Previous update -3.8 -1.4 0.1 1.5 --
Current update -3.1 -4.5 -1.0 0.5 1.0
Difference 0.7 -3.1 -1.1 -1.0 --
General government gross debt (% of GDP)
Previous update 39.9 38.3 36.2 32.4 --
Current update 39.9 39.9 37.0 33.7 31.4
Difference 0.0 1.6 0.8 1.3 --
Sources: Statistics Sweden and own calculations.
71
Table C.7 Long-term sustainability of public finances
Per cent of GDP
2020 2030 2040 2050 2060 2070 2080
Total expenditure 51.8 47.4 48.1 48.1 48.5 47.6 47.8
of which
Age-related expenditure 35.7 33.2 33.4 33.3 33.6 32.4 32.6
of which
Pension expenditure 8.1 7.1 7.1 7.0 7.2 6.9 7.1
of which
Social security pension 0.3 0.3 0.3 0.4 0.4 0.3 0.3
Old-age and early pensions 6.6 5.6 5.5 5.5 5.7 5.4 5.6
Other pensions (disability- and survivors-) 0.4 0.4 0.4 0.4 0.4 0.4 0.4
Occupational pensions (if in general
government) 0.8 0.8 0.8 0.8 0.8 0.7 0.8
Health care 6.7 6.3 6.3 6.3 6.2 6.0 5.9
Long-term care 5.1 5.3 5.7 5.9 6.2 6.2 6.4
Educational expenditure 5.3 4.8 4.7 4.6 4.5 4.3 4.2
Other age-related expenditures 8.0 7.5 7.5 7.4 7.3 7.1 7.0
Interest expenditure 0.3 0.9 1.4 1.6 1.8 2.1 2.2
Total revenue 48.7 48.1 48.4 48.2 48.4 48.0 48.2
of which
Property income 1.4 1.9 2.4 2.5 2.7 2.8 2.9
of which
From pensions contributions (or social
contributions if appropriate) 0.5 0.9 1.1 1.3 1.5 1.6 1.7
Pension reserve fund assets 34.6 30.0 32.1 35.9 41.1 43.3 48.7
of which
Consolidated public pension fund assets (assets other
than government liabilities) 35.4 29.3 31.1 34.9 40.2 42.5 48.0
Assumptions
Labour productivity 1.3 2.0 1.9 1.9 1.9 1.9 1.9
Real GDP growth -2.8 2.0 1.8 1.8 1.9 2.6 2.0
Unemployment rate 8.3 6.9 7.1 7.0 6.9 6.8 6.5
Population aged 65+ over total population 20.1 21.6 23.1 23.5 25.0 24.8 25.5
Sources: Statistics Sweden and own calculations.
Table C.7a Contingent liabilities
Per cent of GDP
2020
Central government guarantees 44.2
Sources: Statistics Sweden and own calculations.
72
Table C.8 Basic assumptions
Annual average if not otherwise stated
2020 2021 2022 2023 2024
Short-term interest rate (annual average)1 -0.2 -0.2 -0.4 -0.6 -0.4
Long-term interest rate (annual average)2 0.0 0.3 0.5 0.6 0.7
USD/ € exchange rate (annual average) 1.1 1.2 1.2 1.3 1.2
Nominal effective exchange rate vis-á-vis the €3 10.5 10.0 10.2 10.3 10.4
World. GDP growth4 -3.5 5.5 4.0 3.5 3.5
EU GDP growth4 -6.3 4.0 4.5 2.0 1.5
Growth of relevant foreign markets4 -9.8 6.5 6.0 3.5 3.2
World import volumes, excluding EU - - - - -
Oil prices (Brent USD/barrel. annual average) 42 61 58 56 55
1
6-months interest rate.
2
10-year government bond yield.
3
SEK/€. Annual average.
4
Annual percentage change.
Sources: Statistics Sweden and own calculations
Table C.9 Central government guarantees – Measures adopted during 2020
Maximum amount of
Date of Estimated take-
Measures in response to COVID-19 contingent liabilities (% of
adoption up (% of GDP)
GDP)
State credit guarantees for Swedish airlines March 0.1 0.0
State guarantees for loans to companies April 2.0 0.0
Guarantees via the Swedish Export Credit Agency April 1.0 1.1
Guarantees to EU institutions (EIB and SURE) June 0.4 0.2
Total 3.5 1.3
73
Table C.10 Table on the discretionary measures adopted/announced according to the
Programme
Budgetary impact (percent of GDP - change from previous year) 1
EXPENDITURE ESA-code 2020 2021 2022 2023
Care backlog and continued COVID-19 Compensation of employees D.1
0.00 -0.04 0.02 0.03
care
Intermediate consumption P.2 0.00 -0.03 0.01 0.02
Social payments D.62+D.632 0.00 -0.02 0.01 0.01
Interest expenditure D.41 0.00 0.00 0.00 0.00
Subsidies, payable D.3 0.00 0.00 0.00 0.00
Current transfers D.7 0.00 -0.01 0.00 0.01
TOTAL CURRENT EXPENDITURE 0.00 -0.11 0.04 0.07
Gross fixed capital formation P.51g 0.00 -0.01 0.00 0.00
Capital transfers D.9 0.00 0.00 0.00 0.00
TOTAL CAPITAL EXPENDITURE 0.00 -0.01 0.00 0.00
Compensation for extended costs for Compensation of employees D.1
-0.08 0.00 0.08 0.00
health care and social services
Intermediate consumption P.2 -0.06 0.00 0.06 0.00
Social payments D.62+D.632 -0.04 0.00 0.04 0.00
Interest expenditure D.41 0.00 0.00 0.00 0.00
Subsidies, payable D.3 0.00 0.00 0.00 0.00
Current transfers D.7 -0.01 0.00 0.02 0.00
TOTAL CURRENT EXPENDITURE -0.19 -0.01 0.20 0.00
Gross fixed capital formation P.51g -0.01 0.00 0.01 0.00
Capital transfers D.9 0.00 0.00 0.00 0.00
TOTAL CAPITAL EXPENDITURE -0.01 0.00 0.01 0.00
Continued testing and contact tracing Compensation of employees D.1 -0.07 -0.02 0.09 0.00
Intermediate consumption P.2 -0.05 -0.02 0.07 0.00
Social payments D.62+D.632 -0.03 -0.01 0.05 0.00
Interest expenditure D.41 0.00 0.00 0.00 0.00
Subsidies, payable D.3 0.00 0.00 0.00 0.00
Current transfers D.7 -0.01 0.00 0.02 0.00
TOTAL CURRENT EXPENDITURE -0.16 -0.06 0.22 0.00
Gross fixed capital formation P.51g -0.01 0.00 0.01 0.00
Capital transfers D.9 0.00 0.00 0.00 0.00
TOTAL CAPITAL EXPENDITURE -0.01 0.00 0.01 0.00
Disease carrier's allowance and others Compensation of employees D.1 -0.05 0.03 0.02 0.00
Intermediate consumption P.2 -0.04 0.02 0.01 0.00
Social payments D.62+D.632 -0.03 0.02 0.01 0.00
Interest expenditure D.41 0.00 0.00 0.00 0.00
Subsidies, payable D.3 0.00 0.00 0.00 0.00
Current transfers D.7 -0.01 0.01 0.00 0.00
TOTAL CURRENT EXPENDITURE -0.13 0.08 0.05 0.00
Gross fixed capital formation P.51g -0.01 0.00 0.00 0.00
Capital transfers D.9 0.00 0.00 0.00 0.00
TOTAL CAPITAL EXPENDITURE -0.01 0.00 0.00 0.00
Extended reorientation support, and Compensation of employees D.1
turnover-based support for sole 0.00 0.00 0.00 0.00
traders
Intermediate consumption P.2 0.00 0.00 0.00 0.00
Social payments D.62+D.632 0.00 0.00 0.00 0.00
Interest expenditure D.41 0.00 0.00 0.00 0.00
Subsidies, payable D.3 -0.12 -0.80 0.92 0.00
Current transfers D.7 0.00 0.00 0.00 0.00
TOTAL CURRENT EXPENDITURE -0.12 -0.80 0.92 0.00
Gross fixed capital formation P.51g 0.00 0.00 0.00 0.00
Capital transfers D.9 0.00 0.00 0.00 0.00
TOTAL CAPITAL EXPENDITURE 0.00 0.00 0.00 0.00
General government grants to Compensation of employees D.1
-0.17 0.00 0.13 0.04
municipalities and regions
Intermediate consumption P.2 -0.12 0.00 0.10 0.03
Social payments D.62+D.632 -0.08 0.00 0.07 0.02
Interest expenditure D.41 0.00 0.00 0.00 0.00
Subsidies, payable D.3 0.00 0.00 0.00 0.00
Current transfers D.7 -0.03 0.00 0.03 0.01
TOTAL CURRENT EXPENDITURE -0.40 -0.01 0.32 0.09
Gross fixed capital formation P.51g -0.02 0.00 0.02 0.01
Capital transfers D.9 0.00 0.00 0.00 0.00
TOTAL CAPITAL EXPENDITURE -0.02 0.00 0.02 0.01
Higher unemployment compensation Compensation of employees D.1
-0.01 0.00 0.00 0.01
levels
Intermediate consumption P.2 -0.01 0.00 0.00 0.00
Social payments D.62+D.632 -0.01 0.00 0.00 0.01
Interest expenditure D.41 0.00 0.00 0.00 0.00
Subsidies, payable D.3 -0.02 0.00 0.01 0.02
Current transfers D.7 -0.06 -0.01 0.03 0.05
74
EXPENDITURE ESA-code 2020 2021 2022 2023
TOTAL CURRENT EXPENDITURE -0.11 -0.02 0.04 0.09
Gross fixed capital formation P.51g 0.00 0.00 0.00 0.00
Capital transfers D.9 0.00 0.00 0.00 0.00
TOTAL CAPITAL EXPENDITURE 0.00 0.00 0.00 0.00
Increased number of education and Compensation of employees D.1
-0.07 -0.03 0.06 0.03
training places
Intermediate consumption P.2 -0.03 -0.02 0.03 0.01
Social payments D.62+D.632 -0.01 -0.01 0.01 0.01
Interest expenditure D.41 0.00 0.00 0.00 0.00
Subsidies, payable D.3 0.00 0.00 0.00 0.00
Current transfers D.7 -0.02 -0.01 0.01 0.01
TOTAL CURRENT EXPENDITURE -0.13 -0.06 0.12 0.05
Gross fixed capital formation P.51g 0.00 0.00 0.00 0.00
Capital transfers D.9 0.00 0.00 0.00 0.00
TOTAL CAPITAL EXPENDITURE 0.00 0.00 0.00 0.00
Short-term layoffs Compensation of employees D.1 -0.02 0.01 0.01 0.00
Intermediate consumption P.2 -0.01 0.00 0.01 0.00
Social payments D.62+D.632 0.00 0.00 0.00 0.00
Interest expenditure D.41 0.00 0.00 0.00 0.00
Subsidies, payable D.3 -0.51 0.18 0.33 0.00
Current transfers D.7 -0.16 0.06 0.10 0.00
TOTAL CURRENT EXPENDITURE -0.71 0.25 0.45 0.00
Gross fixed capital formation P.51g 0.00 0.00 0.00 0.00
Capital transfers D.9 0.00 0.00 0.00 0.00
TOTAL CAPITAL EXPENDITURE 0.00 0.00 0.00 0.00
Sickness benefit and others Compensation of employees D.1 -0.01 0.00 0.01 0.00
Intermediate consumption P.2 -0.01 0.00 0.00 0.00
Social payments D.62+D.632 0.00 0.00 0.00 0.00
Interest expenditure D.41 0.00 0.00 0.00 0.00
Subsidies, payable D.3 -0.24 0.03 0.20 0.00
Current transfers D.7 -0.07 0.01 0.06 0.00
TOTAL CURRENT EXPENDITURE -0.32 0.05 0.28 0.00
Gross fixed capital formation P.51g 0.00 0.00 0.00 0.00
Capital transfers D.9 0.00 0.00 0.00 0.00
TOTAL CAPITAL EXPENDITURE 0.00 0.00 0.00 0.00
Strengthened culture and civil society Compensation of employees D.1 0.00 0.00 0.00 0.00
Intermediate consumption P.2 0.00 0.00 0.00 0.00
Social payments D.62+D.632 0.00 0.00 0.00 0.00
Interest expenditure D.41 0.00 0.00 0.00 0.00
Subsidies, payable D.3 -0.09 -0.06 0.16 0.00
Current transfers D.7 0.00 0.00 -0.01 0.00
TOTAL CURRENT EXPENDITURE -0.09 -0.06 0.15 0.00
Gross fixed capital formation P.51g 0.00 0.00 0.00 0.00
Capital transfers D.9 0.00 0.00 0.00 0.00
TOTAL CAPITAL EXPENDITURE 0.00 0.00 0.00 0.00
Vaccination Compensation of employees D.1 0.00 -0.07 0.07 0.00
Intermediate consumption P.2 0.00 -0.05 0.05 0.00
Social payments D.62+D.632 0.00 -0.03 0.03 0.00
Interest expenditure D.41 0.00 0.00 0.00 0.00
Subsidies, payable D.3 0,00 0,00 0.00 0.00
Current transfers D.7 0.00 -0.01 0.01 0.00
TOTAL CURRENT EXPENDITURE 0.00 -0.16 0.16 0.00
Gross fixed capital formation P.51g 0.00 -0.01 0.01 0.00
Capital transfers D.9 0.00 0.00 0.00 0.00
TOTAL CAPITAL EXPENDITURE 0.00 -0.01 0.01 0.00
Other Expenditure2 Compensation of employees D.1 -0.03 -0.20 0.09 -0.01
Intermediate consumption P.2 -0.02 -0.14 0.06 -0.03
Social payments D.62+D.632 -0.02 -0.08 0.05 0.01
Interest expenditure D.41 0.00 0.00 0.00 0.00
Subsidies. payable D.3 0.00 -0.15 0.05 0.03
Current transfers D.7 -0.07 -0.22 0.05 0.05
TOTAL CURRENT EXPENDITURE -0.13 -0.79 0.29 0.04
Gross fixed capital formation P.51g -0.03 -0.09 0.03 0.02
Capital transfers D.9 0.00 0.00 0.00 0.00
TOTAL CAPITAL EXPENDITURE -0.03 -0.09 0.03 0.02
75
EXPENDITURE ESA-code 2020 2021 2022 2023
TOTAL EXPENDITURE Compensation of employees D.1 -0.50 -0.33 0.58 0.09
Intermediate consumption P.2 -0.34 -0.23 0.40 0.04
Social payments D.62+D.632 -0.22 -0.14 0.27 0.05
Interest expenditure D.41 0.00 0.00 0.00 0.00
Subsidies, payable D.3 -0.99 -0.81 1.68 0.05
Current transfers D.7 -0.45 -0.20 0.32 0.12
TOTAL CURRENT EXPENDITURE -2.50 -1.71 3.24 0.34
Gross fixed capital formation P.51g -0.09 -0.10 0.09 0.03
Capital transfers D.9 0.00 0.00 0.00 0.00
TOTAL CAPITAL EXPENDITURE -0.09 -0.10 0.09 0.03
REVENUE ESA-code 2020 2021 2022 2023
Lower employers’ social security Taxes on production and imports, D.2r
-0.67 0.52 -0.02 0.14
contributions for young people
Taxes on income, wealth, etc. D5r b 0.00 0.00 0.00 0.00
of which, from corporations, D5r bx 0.00 0.00 0.00 0.00
TOTAL -0.67 0.52 -0.02 0.14
Tax reduction to promote investment Taxes on production and imports, D.2r 0.00 0.00 0.00 0.00
Taxes on income, wealth, etc. D5r b 0.00 -0.09 0.06 0.02
of which, from corporations, D5r bx 0.00 -0.09 0.06 0.02
TOTAL 0.00 -0.09 0.06 0.02
Tax reduction on labour income to Taxes on production and imports, D.2r
address increased work-related costs 0.00 0.00 0.00 0.00
due to the pandemic
Taxes on income, wealth, etc. D5r b 0.00 -0.10 0.01 0.09
of which, from corporations, D5r bx 0.00 0.00 0.00 0.00
TOTAL 0.00 -0.10 0.01 0.09
Lower income tax2 Taxes on production and imports, D.2r 0.00 0.00 0.00 0.00
Taxes on income, wealth, etc. D5r b 0.00 -0.10 -0.03 -0.11
of which, from corporations, D5r bx 0.00 0.00 0.00 0.00
TOTAL 0.00 -0.10 -0.03 -0.11
Other tax changes Taxes on production and imports, D.2r 0.00 -0.01 0.00 0.01
Taxes on income, wealth, etc. D5r b 0.00 -0.09 0.07 0.07
of which, from corporations, D5r bx 0.00 -0.05 -0.01 0.16
TOTAL 0.00 -0.14 0.06 0.13
Total tax measure Taxes on production and imports, D.2r -0.67 0.51 -0.02 0.15
Taxes on income, wealth, etc. D5r b 0.00 -0.38 0.11 0.08
of which, from corporations, D5r bx 0.00 -0.14 0.05 0.19
TOTAL -0.67 0.10 0.08 0.27
Total effect on net-lending -3.25 -1.71 3.41 0.64
1
All reforms are temporary unless otherwise stated.
2
Party permanet effect.
Source: The Swedish Financial Management Authority and own calculations.
76
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