16 April 2012
Ministry of Finance
A policy to promote jobs and welfare - the 2012 Spring Fiscal Policy Bill
The Swedish economy is expected to slow down markedly in 2012 in the wake of the European debt crisis. Given the risk of significantly weaker economic growth, the need remains for good safety margins in the public finances so as to continue to have the capacity to cushion the impact of a deeper crisis on jobs and welfare. Consequently, there will be limited scope for reforms in the budget for 2013. This scope should be used primarily for measures that prevent unemployment becoming persistent, strengthen the functioning of the economy, improve the financial position of vulnerable groups and strengthen welfare.
"The Government continues to put jobs and welfare first. Apart from managing the direct consequences of the debt crisis, the Government needs to tackle the challenges facing Sweden. This requires measures to achieve permanently higher employment and lower equilibrium unemployment, more robust welfare, better conditions for business and a more sustainable climate," says Minister for Finance Anders Borg.
Growth will be weak in 2012 as a result of problems in the public finances of several euro countries. The Government is therefore revising downwards its GDP forecast for 2012, from 1.3 per cent to 0.4 per cent. However, household and business confidence is expected to gradually revive as the uncertainty surrounding European public finances decreases. This will lead to a gradual increase in demand.
However, there is still a risk of poorer growth. Sweden therefore still needs safety margins in the public finances, even if the need has decreased slightly since the Budget Bill for 2012. In view of this, there is limited scope for reforms in the Budget Bill for 2013. The Government will focus on the following areas.
More people in work in an inclusive labour market
The Government's foremost objective is full employment. While the reforms that have already been implemented to put more people into work have been effective, more needs to be done. The Government will therefore propose measures to improve employment opportunities for young people, people with foreign backgrounds and groups that have been unemployed for a long time, improve matching in the labour market and make public employment services more effective. Attention will also be given to the possible need to adjust the reforms implemented in the social security systems.
Our jointly financed welfare services must be of the highest possible standard and must benefit everyone. In the Budget Bill the Government will propose measures to make the transition from school to work easier, continue to improve the accessibility of care services and work to ensure an effective and efficient justice system.
By improving the climate for business, the Government has made Sweden more competitive, which is a prerequisite for long-term sustainable growth. The work of the Corporate Tax Committee is an important part of the ongoing process. The Government is now processing the Committee's proposal on tax deductions for venture capital but has also submitted proposals on measures to combat tax planning with interest deductions. This can be a means of creating scope for lower corporate taxes. Two upcoming government bills, on research and innovation and on infrastructure, will also contain measures to promote competitiveness.
A stable financial system
A stable and well-functioning financial system is of key importance to the economy. While a range of measures have been taken to promote greater stability, the size of the Swedish banking sector relative to GDP is a risk factor. The Government therefore intends to raise capital adequacy requirements in two steps by 2015. In addition to this, the Government is working actively to strengthen the position of consumers vis-ā-vis financial companies.
Improved access to housing
A housing shortage hinders opportunities for individuals, not least young people, to move to where the jobs are or to study elsewhere. To tackle this problem, the Government is continuing its efforts to reform and improve the housing market. In the Spring Fiscal Policy Bill, the Government announces proposals to facilitate sub-letting and stimulate more housing construction.
Effective climate policy
Climate change is the Government's top environmental priority, alongside the preservation of biodiversity, the marine environment and a non-toxic environment. This requires an ambitious environmental policy in Sweden, in the EU and in other international contexts. The Government's ambition is for Sweden to have a sustainable and resource-efficient energy supply without net emissions of greenhouse gases by 2050.
The Government's continued reform ambitions
The Government wants to further strengthen the earned income tax credit and raise the lower threshold for state income tax. It also intends to continue to improve the business climate and conditions for entrepreneurship, investment and employment, by revising corporate taxation and other measures. In 2013 and 2014, the Government will present additional proposals on lower taxes for pensioners, provided that public finances are in balance.
These ambitions will be implemented when there is scope for reforms and the economic situation allows, on condition that important reforms in priority welfare areas can be secured.
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Press Secretary to Anders Borg
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