The Swedish government today presented its budget plan for 2025.
This plan includes tax cuts to boost competitiveness and economic growth at the expense of the climate and the social security system, as its critics claim.
Sweden has seen anaemic growth over the past two years, with GDP shrinking by 0.3% in the second quarter of 2024, but it has managed to beat inflation which has fallen below 2% (to 1% in June).
“The primary obligation is to combat inflation”
Since the right-wing government, backed by the far-right Sweden Democrats (SD), came to power in 2022, “the main obligation of economic policy has been the fight against inflation,” Finance Minister Elisabeth Svandesson said at a press conference. “That battle has already been won.”
“The obligation facing us now is to ensure that high inflation does not return and, at the same time, to implement reforms and investments that will contribute to building a richer and more secure Sweden for future generations,” he said.
The draft budget for 2025 foresees new measures worth 60 billion crowns (5.3 billion euros), in addition to defense spending. More than half of these will involve tax cuts in order to strengthen families’ purchasing power.
“The tax burden is expected to reach its lowest level since 1980,” the Finance Ministry said in a statement.
Tax on gasoline and diesel will also be reducedwhile the tax on investment accounts will be abolished, SEB bank said in a statement.
“This budget marks the transition from a prudent fiscal policy, aimed at combating inflation, to a more expansionary policy, aimed at creating growth and competitiveness in the long term,” according to SEB.
Sweden has one of the lowest public debt levels in Europe. It is expected to increase slightly to 33% by 2025.
The abolition of air transport taxcoupled with tax cuts on petrol and diesel, however, will “increase emissions” of greenhouse gases, Swedbank noted in its analysis of the budget, which is “growth-friendly but climate-harmful”.
Opposition criticism
For the opposition, the winners of this fiscal policy are “the richest”.
“The needs of schools and the social security system have been ignored,” Social Democrat official Karin Vangrad told the TT news agency.
The government estimates spending 7.5 billion crowns on health, education and other social benefits, which is not enough to meet the needs of these sectors, according to the opposition.
Sources: AMPE, AFP