Sweden was on the road to economic recovery
The government expects Swedish economic recovery to be delayed by at least half a year as a result of high US tariffs and the global trade war, Finance Minister Elisabeth Svantesson told a press conference announcing Sweden's spring amendment budget.
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"We had good conditions for kickstarting the economy, but then this happened, which we've spoken about a lot ‒ the trade war materialised," Svantesson said, while adding that President Donald Trump's actions have damaged trust in the US.
"It will take a lot of time to rebuild that trust," she added.
She also expressed disappointment in the US' treatment of its allies and trade partners.
"If I'm being honest, it's sad that one of our partners, which we hope the US will be for the long-term, is treating other countries, which it should be allied with, and who are important trade partners, in this way," she added. "It doesn't benefit anyone, on the contrary it makes the situation worse for the vast majority."
"What we're experiencing now is something we've never seen before."
According to Svantesson, the US' decision to raise tariffs has essentially broken the positive trend in the economy which began at the end of last year.
"That doesn't mean it won't come at the end of this year," she said, "but there's no doubt that it will inhibit growth."
Despite this, Sweden has stable finances, she added.
"Sweden is in a fantastic position, the financial framework that was put into place in Göran Persson's era has put us in an unbelievably strong position."
Göran Persson, a Social Democrat, was Sweden's finance minister between 1994 and 1996, later becoming prime minister between 1996 and 2006. He created a financial framework with strict rules for the budget process, limits on spending and a surplus target of 1 percent. This means among other things that Sweden has comparatively low government debt compared to similar countries.
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The spring amendment budget (vårändringsbudgeten) is usually mainly used to tweak or add bits and pieces to Sweden's main annual budget, which was presented last autumn. This year's spring budget includes proposals amounting to 11.5 billion kronor.
The biggest post is an 4.35 billion kronor increase to the ROT tax reduction which currently allows households to claim back 30 percent of the cost of labour on maintenance work such as repairs, conversions and extensions.
Under the new proposal, the ROT reduction will be increased temporarily to 50 percent from May 12th until the end of the year, which the government hopes will boost the economy by encouraging construction and renovation work. This will take up 40 percent of the budget.
There are also posts on defence, security, increasing study places on vocational courses in order to get more people into work, increasing the number of spaces in prisons and detention centres and preventing youth crime.
"In uncertain and worrying times, Sweden stands strong," Svantesson wrote in a statement.
"With world class public finances, the government can submit a spring budget that supports the economy while investing in safety and security. Step by step we are building a stronger and safer Sweden, not only for today but also for our children and grandchildren."
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