After the Social Democrats made a deal with the Tidö parties (M, KD, SD, and L) to abolish the surplus target and move towards a balance target from 2027, critical voices were raised within the party itself.
Not against abolishing the surplus target, but that the Social Democrats should have joined forces with the Left Party and the Green Party and advocated for a deficit target, which would release significantly more funds to invest in, among other things, infrastructure and climate transformation.
Took the initiative
But Magdalena Andersson stands firm and wants to make a historical reminder – that it was the Social Democrats who already in 2015 took the initiative to abolish the surplus target.
Yesterday was a day of victory for us Social Democrats. Finally, we have got other parties in Sweden to agree that we should have a balance target, says Andersson.
But apparently, there are those who think that the Social Democrats should have gone even further now.
Absolutely, there are some who advocate that we should drive the state budget with large deficits and build up a much larger national debt. That has never been Social Democratic policy and it was also rejected at the party congress, says Andersson.
"Small minority"
Criticism of the balance target came partly from LO, but also from within the party, including during Thursday's meeting of the Social Democratic Riksdag group.
But no one who was there would describe the meeting as tumultuous. We had this discussion at the congress as well. It was a small minority who thought we should drive the state finances with large deficits. It's the same people who stick to that opinion, says Magdalena Andersson.
The surplus target in public finances was lowered by the Riksdag to 0.33 percent (as a percentage of GDP) over a business cycle five years ago, from previously one percent. In three years, it may disappear altogether, according to the conclusions of a report presented on Thursday by a committee with all Riksdag parties represented.
This is expected to increase the budget leeway for future governments by approximately 25 billion kronor per year.
The budget rule that the state should always be in surplus – initially with 2 percent – originated from the large banking and real estate crisis and subsequent state financial problems that plagued the Swedish economy in the 1990s.
The debt anchor that the committee wants to preserve states that the total debt for the entire public sector – i.e., the state, municipalities, and regions – should be 35 percent of GDP.
