Svantesson's next challenge: Unemployment

The battle against inflation is won, but not the fight against unemployment. Economic growth with the help of an unusually offensive budget is the recipe for creating more jobs, according to Finance Minister Elisabeth Svantesson (The Moderate Party). But it costs, the state's finances are going backwards for four years in a row.

» Published: Thu 19 Sept 2024 08:09 CEST

We are in a time where we still find ourselves in a low economic cycle, says Elisabeth Svantesson, who nevertheless describes it as relatively mild, at a press conference.

But it will be long, she says.

Unemployment is not expected to decrease until in a couple of years, from 8.3 percent this year and next year to 7.9 percent in 2026, according to the prognosis.

The government's primary remedy against unemployment is to get the economy growing. Then the jobs will come, responds Svantesson to questions about the relatively limited investments against unemployment compared to the large tax cuts.

We want to support households to get growth going, both in the short and long term.

"The light in the tunnel"

Positively, inflation seems to be gone, a prioritized goal for the government, according to the Minister of Finance.

Now it's been defeated, inflation, says Svantesson, who describes the future prospects as positive.

It's important that we see the light in the tunnel.

The government now expects the Swedish economy to take a significantly better turn in the coming years. GDP grows by 2.5 percent next year and 3.2 percent in 2026, according to the prognosis. This year, growth will remain at a more modest 0.8 percent.

Minus for four years

Inflation, measured as CPI, falls from 2.8 percent on average this year to 0.9 percent next year.

In the budget for 2025, which includes unfunded investments of 60 billion kronor, the government prioritizes reforms in three areas: strengthening households' purchasing power, restoring the work line, and increasing growth, according to Svantesson.

But the investments cost, the state's finances will be in deficit for four years in a row, measured as the public sector's financial savings, from 2023 to 2026, according to the Ministry of Finance's prognosis.

According to Svantesson, this is largely due to Sweden's aid to Ukraine and should be seen as an exception from the rule where the state should achieve a surplus in public finances over an economic cycle.