Sweden is increasing spending to compensate for the inflationary effect, the Ukraine War
STOCKHOLM (Reuters) – Sweden’s center-left government said on Tuesday that its mini-budget for the spring would increase spending by 35 billion Swedish kronor (3.64 billion USD) as it juggles the effects of the war in Ukraine, soaring inflation and the lingering effects of coviden. -19 pandemic.
The economy bounced back quickly from the pandemic and despite Russia’s invasion of Ukraine, it is expected to remain relatively strong.
Rising inflation has, however, forced the government to take measures to mitigate the effects of higher energy and fuel prices on consumers, while at the same time promising a rapid rise in defense spending.
“Now we are in a new situation with war in a region near us,” said the Social Democrat finance minister Mikael Damberg.
“We have a better position than many other European countries. But we are still affected. We expect growth in Sweden to be a little lower while inflation will be higher.”
Over time, military spending will rise to 2% of GDP, the level that NATO recommends to its members, and the defense will receive an additional SEK 2.8 billion already this year.
Sweden is not a member of the 30-nation alliance, but the government is reconsidering its security policy in the light of Russia’s invasion of Ukraine, which Moscow calls a “special operation”.
The budget also set aside 9.8 billion to help Ukrainian refugees who have fled to Sweden to escape the war and 8 billion for pandemic-related health measures, including funding for a fourth vaccine dose to cover the 10 million population.
The government estimates that the pandemic has cost taxpayers around SEK 600 billion so far.
Pensioners received an increase of SEK 4.2 billion. Despite the extra spending plans, most of which had already been announced, public finances are in good shape with central government debt falling to around 31% of GDP next year.
At the beginning of the month, the government predicted growth of 3.1% this year. Inflation averaged 4.6% this year.
(Report by Simon Johnson; Edited by Kim Coghill and Niklas Pollard)