2010 Spring Fiscal Policy Bill

The economic recovery appears to be arriving sooner and turning out stronger than the Government estimated in the Budget Bill for 2010. Growth of 2.5 per cent is expected this year, followed by 3.9 per cent next year. Unemployment is expected to begin to decline and employment to increase in the course of this year.

"There are various indications that Sweden has coped with the crisis better than many other countries, thanks to responsible financial policies,"says Minister for Finance Anders Borg. "But the economy is still fragile and certain groups have been hit hard by the crisis. Moreover, it is important to ensure that a high rate of unemployment does not become persistent. Consequently, in connection with this Spring Fiscal Policy Bill too, we are proposing a number of measures to continue to lessen the impact of the crisis and nurture economic recovery."

Measures to lessen the impact of the crisis and nurture recovery

Pensioners and families with children have been hit particularly hard by the crisis. It is important that these groups do not get left behind. The Government therefore proposes:

• a further reduction in income tax for pensioners
• a rise in the large-family supplement to the child allowance.

The Government is also working to ensure that jobs return early in the recovery and to prevent bottlenecks arising that may prevent employment from growing. A series of labour market policy measures have already been implemented but they are now being further reinforced. Some of the measures proposed in the Spring Fiscal Policy Bill are:

• a temporary shortening of the qualifying period for new start jobs for older people from 12 to 6 months, which will make it easier for older unemployed people to return to the labour market
• a temporary summer initiative for young people in school, in the form of summer jobs and summer school
• special action for the Västra Götaland region including more places in training schemes.

To further strengthen employment, certain planned infrastructure investments are also being brought forward. In addition, resources will be made available to enable several major infrastructure projects to be carried out over the next ten years in Stockholm, Gothenburg, Sundsvall and Motala.

To create a better business climate so as to increase productivity, the Government proposes to eliminate audit obligations for small enterprises and simplify VAT reporting.

Important to bring public finances back into surplus

As a result of the brighter outlook for the Swedish economy, the public finances will develop more favourably than the Government estimated in its Budget Bill for 2010. It now looks as if the public finances will strengthen to approach the surplus target at a satisfactory pace without measures needing to be taken to bolster the budget. The forecasts show a public finances surplus of more than 1 per cent as early as 2013. However, this is conditional in part on phasing out the temporary measures taken to combat the crisis as the state of the economy improves.

"It is important for several reasons that we bring public finances back into surplus. One of the reasons is so that we are in a strong position to meet future economic downturns. Another is to respect the targets we have set so as to maintain confidence in financial policy and long-term sustainable finances."