Sweden set to spend record $11.5bn in budget

27 Aug 20

The Swedish Government is set to spend an “historic” SEK 100bn ($11.5bn) in its upcoming budget, in bid to help the country’s economic recovery from Covid-19.

The announcement was made by finance minister Magdalena Andersson as the country predicted an improved economic forecast compared to previous forecasts.

The country’s GDP is now expected to shrink 4.6% this year, compared to the 6% contraction seen in June.

Over the next year the government expects a stronger rebound than previously predicted, with GDP set to grow 4.1%.

Commenting on the announcement, Andersson said: “The government is now beginning to shift from temporary crisis-response policies to investments to get the wheels turning again and create new jobs.

“To pull Sweden out of the recession as quickly as possible, we need to restart our economy. That’s why we are presenting an historic budget that includes proposals worth more than SEK 100bn.”

Details on how the funds will be allocated were not disclosed, with the full budget set to be presented in September.

However, Andersson said in a press conference that strong investments will be made in jobs, welfare, care, schools, and the climate.

The Swedish Government said that compared with its previous assessment in June, general government net lending for 2020 has been revised upwards by about two percentage points, as the level of unemployment is set to be lower than expected and the economy stronger than anticipated.

Due to an increase in borrowing, public sector debt is estimated to rise to 42.9% of GDP this year, compared to 35.2% last year.

This figure has been revised down by 2.8 percentage points compared to forecasts made in June.

The unemployment rate in Sweden is still predicted to reach 9% by the end of 2020, and expected to rise further to 9.5% next year.

This is a slight improvement on the previous forecast of 9.3% this year and 10.3% in 2021.

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