M and S promise to curb state borrowing next term

Moderate Party leader Ulf Kristersson and Social Democratic Party economic policy spokesperson Mikael Damberg have pledged to tighten Sweden’s public finances during the next parliamentary term if their parties win the election, Swedish broadcaster SVT reports.

“All permanent spending reforms during the next term must be funded,” Kristersson said.

The Moderate Party and the Social Democrats have repeatedly criticised each other’s economic policies in recent months. Moderate Finance Minister Elisabeth Svantesson has warned that the opposition is making promises it cannot afford.

Damberg has accused the government of acting irresponsibly by borrowing to fund new reforms while also implementing major tax cuts.

“Both the Moderates and the Social Democrats have a history of taking responsibility for public finances. But I have to say that I no longer recognise the Moderate Party,” Damberg said.

If the Social Democrats take power after the election, Damberg said there would be no more borrowing to fund reforms.

“The reforms implemented during the next term need to be funded. We have tried to adapt our election promises to the available fiscal space,” he said.

Less money available for reforms

The amount available for new reforms will depend on Sweden’s economic performance. The National Institute of Economic Research estimates that the total fiscal space for the next parliamentary term will be about 94 billion kronor.

That is less than the government spent on reforms during the past year alone. Measures in the autumn budget, spring budget and an additional amendment budget totalled more than 100 billion kronor. The money was used partly for a temporary cut in fuel tax, a temporary reduction in public transport fares and defence upgrades.

Kristersson said the current term had been marked by exceptional events, including an oil crisis, war and an economic downturn, which he said justified increased borrowing.

“We have managed the public finances very well,” he said.

However, the Moderates would borrow less during the next term, according to Kristersson. If he remains prime minister, the government would tighten public finances.

“We are now entering a period of better economic development. All permanent spending reforms during the next term must be funded,” Kristersson said.

He added that stronger economic growth would reduce the need to borrow to support the economy, unless something dramatic occurred.