The Council's Advice to the Government: Be Frugal until the Shock Comes

In the midst of a toxic customs chaos, the government is presenting its spring budget. Most of the money will go towards increasing the ROT deduction, to support the construction industry and households that want to renovate. It's nothing that I would have prioritized, says Nordea's chief economist Annika Winsth.

» Published: April 12 2025

The Council's Advice to the Government: Be Frugal until the Shock Comes
Photo: AP/TT

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On Tuesday, the government will present its spring amending budget. It contains measures worth 11.5 kronor and the largest single investment is the increased tax deduction for home repairs. This accounts for 40 percent of the budget, or 4.35 billion, and is motivated by the desire to support the construction industry, so that companies can avoid laying off staff.

Rising unemployment is just one of the government's problems. Just when the recession was about to turn upwards, the US President Donald Trump strikes with tariffs that affect the entire global economy. Stock markets plummet – and then suddenly soar again when Trump suddenly takes a tariff break. The situation is completely unpredictable.

The government's task now is to be a counterweight to chaos, according to Annika Winsth.

The sudden shifts from Trump make the economic situation very uncertain and then it is important to have reserves to be able to support if needed. If the situation rapidly deteriorates globally, it can affect the entire economy and then it is broad stimulus packages to households, companies, municipalities, and regions that apply, says she.

Ready to act

The government hopes that people who are thinking of renovating will bring forward the work when the tax deduction for home repairs is increased. But there is a risk that many will now wait and hold tight to their wallets instead. Winsth, however, does not believe that it will mean so much.

There are always people who have money. But housing construction needs to be adapted to a smaller budget, since the population is increasing more slowly. In that case, it is not primarily the construction industry that should be supported, says Winsth.

Her main message is that the government must be ready to act if necessary, and therefore should be cautious now.

Right now, we have got a 90-day reprieve, and hopefully it means that we are back to a gradual recovery of the economy. But the situation can deteriorate again, says Annika Winsth.

Hold back

The National Institute of Economic Research's CEO Albin Kainelainen does not want to comment on individual measures or priorities. For him, it is important that it is kept small.

We are not in a situation now where we should go into a pandemic mode and do very big things. For we have not seen a clear shock to the Swedish economy yet and then one should be careful not to do too much in advance, says he.

One must first know what is needed and have clear indications of where the problems are, in what extent it affects the financial system, manufacturing industry, or service sector.

The spring amending budget contains measures worth 11.5 billion kronor. Here is part of what has already presented:

Temporary increase of tax deduction for home repairs: 4.35 billion kronor

More places at vocational colleges and vocational adult education: 700 million

Road maintenance: 500 million

Psychiatric care: 500 million

Prison service: 484 million

Investment to prevent youth crime: 357 million

Improved school safety: 353 million

Source: The Government

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By TTEnglish edition by Sweden Herald, adapted for local and international readers

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