The new government does not need to stimulate the economy this fall, but should instead pull the handbrake, says Hassler.
We are clearly on our way out of the recession and what will be more relevant is a little austerity next year.
The budget deficit is expected to amount to around SEK 200 billion this year.
We need to get our public finances back on track, and we don't have that now.
The government has borrowed too much, says Hassler.
It has been a matter of choice and one thing after another that they have borrowed for. It started with Ukraine and the defense buildup, then various tax cuts this spring on gasoline and diesel and other things. You have to prioritise and the government has not shown itself to be able to do that lately.
Lars Calmfors, professor emeritus at Stockholm University, says that loan financing sends a signal that fiscal policy rules are not taken seriously.
The big problem is that all parties have abandoned the fiscal policy framework by agreeing to finance the increased defense costs with loans. Then it gets worse by simultaneously implementing large economic stimulus measures, says Calmfors.
Wrong focus
Election promises of better personal finances are the wrong focus, according to economists.
We have low inflation and decent real wage increases, so I don't see any urgent need for broad stimulus at all, says Hassler.
Lars Calmfors agrees.
It is less good that there is so much focus on how to spend more or lower taxes in a situation where we should actually be discussing how to finance the increased defense spending.
Don't extend tax cuts
After the election, the government needs to think more long-term when it comes to growth, education and AI issues, says Hassler.
If there is to be more in the wallet in the short term, growth can fix it.
Calmfors wants to see a broad tax reform with slightly higher taxes on capital income and lower taxation on earned income, as well as a clear plan for financing defense spending.
Regardless of which parties form the government, several tax cuts will expire in the next term.
The most important thing is to really let them expire, says Calmfors.
Hassler agrees.
Definitely, but I realize it will be politically difficult.
According to the Swedish National Debt Office's latest forecast , the budget deficit is expected to amount to SEK 196 billion this year.
Fiscal policy measures, higher net lending and negative effects of the war in the Middle East on the Swedish economy explain the increased borrowing requirement, according to the Swedish Debt Office.
According to the State Treasury's latest forecast , the budget deficit is expected to amount to SEK 211 billion.
Source: State Treasury, Swedish National Debt Office.
