The Swedish government yesterday presented its 2012 Budget Bill, forecasting a balanced budget allowing for spending to combat the effects of the global crisis on Sweden’s economy.
“The Ministry of Finance estimates that the Swedish economy will slacken considerably in 2012,” it said in a statement as Finance Minister Anders Borg presented the proposed budget to Parliament.
“In the Budget Bill for 2012, the government gives priority to measures to address the slowdown, achieve sustainably higher growth and employment, ensure that everyone shares in welfare and increase the stability of the financial system,” it said.
The government had in April forecast a surplus of 65 billion kronor for 2012, but the global economic slowdown was seen wiping out that surplus and Mr Borg now predicted a balanced budget.
Yet the proposal did allow for spending of 15 billion kronor (€1.6 billion) in 2012 and 17.3 billion kroner the following year.
“People must be able to feel confident that schools, health care and social services will function even when other countries are experiencing unsettled times,” Mr Borg said.
“And by safeguarding a security buffer, we are also making sure we have room to manoeuvre so as to meet worse developments,” he added.
Sweden is a member of the European Union but not of the eurozone, and its export-heavy economy is heavily dependent on the economies of its main trading partners in Europe and abroad.
At the end of August the government revised downwards its growth forecast and budget surplus for 2012, to 1.3 and 0.1 per cent of gross domestic product (GDP) respectively.
The figures were confirmed in the budget bill. For 2011, GDP is expected to come in at 4.1 per cent.
Yesterday, Statistics Sweden said the economy had grown by 0.9 per cent in the second quarter and 4.9 per cent in the past 12-month period. Among the reforms included in the Budget Bill are measures to help the long-term unemployed, with the government predicting the jobless rate will rise from 7.5 per cent in 2011 to 7.8 per cent next year, before dropping to 5.5 per cent in 2015.
The costliest measure is a cut in the value-added tax (VAT) on restaurant services, from 25 to 12 per cent, “to create jobs for young people and stimulate entrepreneurship”.
The move is expected to lead to 3,500 new jobs, but cost the state 5.40 billion kronor in lost revenue in 2012 and 4.10 billion in 2013, the government said.
Unions said they were not convinced.
“We want stronger measures for the labour market and more incentives for companies to create new jobs,” said Carin Wallenthin of blue-collar union IF Metall.
The Budget Bill also forecast an increase of some 100-million-kronor for the operations of Sweden’s intelligence agency Saepo following the suicide bombing in Sweden in December and twin attacks in neighbouring Norway in July, to 1.04 billion kronor.