The Budget for 2019 in five minutes

As no new government has taken office, the caretaker government presented the Budget Bill for 2019 to the Riksdag on 15 November. Because of the limited powers of a caretaker government, the budget submitted is based on previous Riksdag decisions and can be adjusted when a new government is formed.

“This is a scaled-down budget without party-political direction that provides good conditions for a new government to propose changes based on its policy direction”, says Minister for Finance Magdalena Andersson.

Principles for the caretaker government’s budget

The budget presented today is based on the budget adopted by the Riksdag for 2018 following proposals in the Budget Bill for 2018. It was subsequently adjusted in line with a number of principles – principles that the government, following contact with the Alliance parties and the Left Party, considers that the Riksdag can accept.

The caretaker government has used the adopted budget for 2018 as the basis for its budget work, subsequently adjusting the appropriations as a result of changed prices and salaries, adopted acts and binding agreements, for example, and politically uncontroversial legislative proposals for which there is political consensus and which cannot be implemented in an amending budget. 

The result of the caretaker government extending the 2018 budget to 2019, with some general adjustments, is naturally that some central government activities have received a higher level of appropriations and some a lower level than the estimates for 2019 that the government presented in the Budget Bill for 2018. But in most cases, central government activities can in principle be carried out to the same extent as in 2018. Where necessary, amendments to the budget can be made in the ongoing fiscal year.

Transfer systems, such as child allowance, study support, sickness benefits and unemployment insurance funds, are not affected by the way in which the budget is designed; rather they will continue to be paid out as previously.

How these adjustments affect expenditure in the budget
(SEK billion)  
Allocated expenditure limits 2018¹ 1 000.5
Change as a result of:  
Decisions on measures 17.1
Macroeconomic changes 12.8
Price and wage indexing 3.9
Volumes -21.8
Other 14.1
Total expenditure limits 2019 1 026.6
¹The amount is based on the Budget Bill for 2018 and thus
excludes decisions on amendments to the central government budget.
Source: Own calculations
 

Tax cuts for people over 65

The proposal on tax cuts for people over age 65 is in line with the principle of a proposal for which there is broad consensus in the Riksdag and that cannot be implemented in the ongoing fiscal year. Income taxes cannot be changed during a calendar year; rather the change must be implemented at year-end.

Economic outlook and follow-up of the budgetary policy goals

Although this is a caretaker government budget, the government must describe the economic outlook. Following relatively high growth in 2018, GDP is expected to grow at a slower rate next year. Unemployment is expected to land at 6.4 per cent in 2018 and remain unchanged in 2019. The forecasts are more relevant for the current year than for the next, since a new government will submit proposals for new policies.

The government must follow up the budgetary policy goals in the Budget Bill. The Riksdag has established that the level of the surplus target is to amount to a third of a per cent of GDP on average over a business cycle from next year. In the Budget Bill, the government considers that structural net lending in 2019 is compatible with the new level for the surplus target.

Key indicators
(Result 2017, forecast 2018–2021)          
  2017 2018 2019 2020 2021
GDP, calendar adjusted, % change 2.4 2.6 2.1 1.4 1.5
Employment, aged 15–74, % change 2.3 1.7 0.9 0.5 0.4
Unemployment, % of labor force aged 15–74 6.7 6.4 6.4 6.4 6.5
General government net lending, % of GDP 1.6 1.0 1.2 2.0 2.6
General government structural balance, % of potential GDP 0.9 0.4 0.8 1.8 2.6

Note: GDP and expenditure components refer to constant prices.
Sources: Statistics Sweden and own calculations

         

Budget proposal in figures

Illustration: Ministry of Finance/Government Offices

Central government budget in figures: revenue, expenditure, budget balance

Next step – Riksdag processing of the draft budget

After the government submits its budget proposal to the Riskdag, the Riksdag begins processing the draft budget. This is divided into two stages:

Stage 1: First, the Riksdag adopts the guidelines for economic policy and the economic framework of the central government budget. The framework decision, i.e. the decision on the limits for how large expenditure can be per expenditure area, guides the continued processing in the Riksdag, as the expenditure frameworks cannot be exceeded.

Stage 2: In the second stage, the Riksdag takes a position on allocating expenditure in each individual expenditure area; in other words how much money (appropriation) different activities will receive. Processing of the Budget Bill is complete when the Riksdag has taken a position on the proposals for all 27 expenditure areas. The Riksdag then finalises the central government budget.

The government then decides on appropriation directions for all government agencies and appropriations based on the Riksdag’s processing.

What is the difference between an ordinary budget and the budget presented by the caretaker government?

This is the first time a caretaker government has presented a Budget Bill. The work has been based on the acts and guidelines that govern work on the budget and on the powers of a caretaker government.

Under the Riksdag Act, a Budget Bill must always be submitted no later than 15 November. The purpose of the time limit is to ensure that there is time before the start of the new fiscal year to take the formal decisions needed for central government activities to continue.

The Instrument of Government, the Riksdag Act and the Budget Act determine the contents of a Budget Bill, which a caretaker government must also follow. But because a caretaker government has limited powers, the Budget Bill should not contain any proposals that are politically controversial or have a clear party-political direction.

The caretaker government’s Budget Bill should only ensure that central government activities can continue until a new government is formed and can design its own policies. Instead of a reform budget, the Budget Bill is based on the decision by the Riksdag in 2018, with some general adjustments.