Government presents 2023 Spring Fiscal Policy Bill
Today, the Government is presenting the 2023 Spring Fiscal Policy Bill and the Spring Amending Budget for 2023. Sweden’s economy is in recession, with the highest inflation in more than 30 years. In light of this, the Government is presenting a Spring Amending Budget aimed at protecting particularly vulnerable households and lowering inflation. The budget is based on an agreement between the Government and the Sweden Democrats.
“We are in a very challenging economic environment. Many people are struggling to make ends meet, so it is important for the Government to fight inflation and support those in the most difficult circumstances. In the Spring Amending Budget, we are temporarily increasing the housing allowance for financially vulnerable families with children and are investing in vocational education and training to get more people into work. By investing in defence and crime prevention, we will increase security and safety in Sweden. We face major challenges, but we will get through them together. Step by step, we’ll make Sweden even better,” says Minister for Finance Elisabeth Svantesson.
With war raging in its vicinity, strained European energy markets and the country’s highest inflation in more than 30 years, Sweden finds itself in an uncertain environment. High inflation leads to a decline in real wages and reduces the value of savings. High indebtedness and a high proportion of mortgages with variable interest rates make Swedish households and businesses particularly sensitive to the rapidly rising interest rates caused by inflation. At the same time, Sweden’s unemployment is high compared with that of other European countries.
For these reasons, the Government proposes measures in the Spring Amending Budget to protect particularly vulnerable households from rising prices, to get more people into work and to tackle high inflation through increased competition. The Government also sets out a plan for economic policy going forward: the work-first principle will be re-instituted, and structural reforms will be implemented to stimulate growth.
A plan to address the major economic challenges
The Government intends to address the challenging economic environment by implementing a three-part plan:
- Fight inflation and support vulnerable households
In the budget, the temporary housing allowance supplement for families with children is increased and extended, and civil society receives targeted support to better help people in particularly socially vulnerable situations. Funds are also set aside to increase competition in industries with significant price increases. At the same time, the Government intends to keep the tax reduction on agricultural diesel at the EU’s minimum level in 2024 and 2025 to support Swedish food production. In addition to the proposals in the Spring Amending Budget, the Government is providing approximately SEK 27 billion to households and approximately SEK 30 billion to businesses in 2023 to compensate for high electricity prices.
- Re-institute the work-first principle
In the budget, funds are set aside to better enable the Swedish Public Employment Service to address growing unemployment, strengthen adult upper secondary and higher vocational education, and give people with temporary protection – e.g. people from Ukraine in need of protection – access to Swedish as a second language in municipal adult education. In addition to the proposals in the budget, investments will also be made in summer jobs and jobs for young people in municipalities with high unemployment. When the economic situation allows, the Government will also propose that tax on labour be lowered further. The Government also intends to propose a major benefit reform to increase incentives for people to start working.
- Structural reforms to stimulate growth
The Government has expanded the mandate of the Inquiry analysing the 3:12 tax rules for entrepreneurs to include proposals to further promote entrepreneurship and facilitate change of ownership. Work has also been initiated to reduce administrative costs for businesses, and a productivity commission will be appointed during the spring to analyse obstacles and opportunities for boosting productivity growth in the Swedish economy.
Continued work on reforms to solve Sweden’s societal challenges
In addition to efforts to manage the challenging economic environment, the Government intends to continue working in several areas to solve Sweden’s long-term societal challenges.
The Swedish Security Service will be reinforced to increase safety and security. The Swedish Prison and Probation Service will also receive increased funding to enable it to continue its necessary expansion. Increased support to municipalities for foster home placements is also proposed with the aim of providing places for children and young people within the social care system. In addition to the proposals in the budget, the Government will task the National Board of Health and Welfare with, among other things, developing the knowledge support for foster homes to further strengthen the social care system for children and young people.
The Government also proposes increased support for pupils with neuropsychiatric disorders. Higher education institutions will also be given greater opportunity to prepare for enlargement of new shortened teacher training programmes, and the grant to Teach for Sweden for leadership training and coaching of students will increase. At the same time, the Government highlights the need to continue to expand primary care, increase the number of hospital beds and shorten queues for specialist care.
To strengthen defence and crisis preparedness, and pave the way for Sweden’s rapid accession to NATO, SEK 724 million will be set aside this year.
Later in the year, the Government will present to the Riksdag a climate action plan to reduce emissions. In the Spring Amending Budget, funding is set aside for forest owners who voluntarily choose to protect their forest.
The proposals in the Spring Budget amount to a total of SEK 4 billion.