Increased growth but greater risks

The Government’s priorities ahead of the Budget Bill for 2016 are clear. We will invest in what makes Sweden strong. In our Sweden, more people will have a job, the negative trend in schools will be turned around and climate emissions will be reduced. This is the message from Minister for Finance Magdalena Andersson, presenting the Ministry of Finance’s latest economic forecast and the focus of the Budget Bill for 2016 at Harpsund today.

Growth around the world is increasing in line with the previous Ministry of Finance forecasts. The prospects for the euro area are looking ever better, primarily for the large economies of Spain and Italy. Good growth continues in the United States, where there is a positive trend in the labour market and unemployment has continued to fall this year.

Stronger growth throughout the world is boosting the economic situation in Sweden and the outlook is better compared with the June forecast. In Sweden, employment looks set to grow somewhat stronger and unemployment is expected to be lower than in the last forecast. This is because the economy is expected to grow stronger in the months ahead and the effects of new policies[1] have been incorporated into the forecasts.

However, there is a substantial risk of growth being weaker than expected. Apart from the risk of stagnation in the euro area, there are major concerns about the emerging economies, and more and more indicators are pointing to a more dramatic slowdown in China than in previous forecasts. Moreover, there are problems in Sweden’s immediate neighbourhood, where the Norwegian economy is growing more slowly than a few years ago and the Finnish economy looks set to continue its relatively weak growth.

The forecast for public finances is somewhat higher than the assessment made in June. The deficit is expected to shrink more quickly and net lending is expected to reach balance in 2019.

“Last year the public sector had a deficit of SEK 75 billion – that is not sustainable. Step by step we are shrinking the deficit. This means setting tough priorities in several areas, but that is all part of taking responsibility. We will therefore need to fully finance our reforms in the Budget Bill for 2016. That’s what we did in the spring and it’s what we’re doing now,” says Ms Andersson.

“The Government’s priorities ahead of the Budget Bill for 2016 are clear. In our Sweden, more people will have a job, attainment in schools will be turned around and climate emissions will be reduced. And we will not solve unemployment, low attainment levels in schools or the challenge of climate change by making further cuts and short-term tax reductions. To tackle these challenges, we need to invest in Sweden. In homes and infrastructure, in knowledge and competitiveness, and in the transition to a sustainable society,” concludes Ms Andersson.



[1] Budget negotiations are still under way, which may mean adjustments will be made.

Contact

Fredrik Kornebäck
Press Secretary to Minister for Finance Magdalena Andersson
Phone (switchboard) +46 (0)8-405 10 00

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