80 billion kronor in budget investments for next year, is the government's message.
It's good, Sweden needs it. I fully share that view, says Mattias Persson.
But it's not enough to get the economy going, he thinks.
We still need interest rate cuts from the Swedish Central Bank. Fiscal policy can't pull the whole load, says Persson.
Uncertain about interest rate cut
Nordea's chief economist Annika Winsth says that 80 billion kronor is "more than most have thought of".
It's quite a lot. But we are in a low cycle, we have strong public finances and it's an election year as well. In that environment, it's not so surprising that you have an expansive budget, she says.
According to Winsth, however, the expansive fiscal policy means a greater likelihood that the Swedish Central Bank will not cut interest rates in the fall.
We have an inflation rate that exceeds three percent and we unfortunately believe it will continue to be high, we have high food prices, she says and continues:
Many households think it's expensive to live. So it's hard for the Swedish Central Bank to cut interest rates even if the economy is weak. Then it's reasonable to use fiscal policy instead.
Focus on jobs
Both LO and Svenskt Näringsliv welcome the message.
"Now it's about making wise reforms that create growth and jobs", writes LO's chief economist Torbjörn Hållö in a comment.
Sven-Olov Daunfeldt, chief economist at Svenskt Näringsliv, is on the same track:
"It's good that the reform space is well-sized. What's important now is what the money is used for. If we're going to get the economy going, we need reforms that strengthen the incentives to work, invest and hire. That would strengthen both companies and households", he says in a comment.
