Sweden's Growing Deficits: NATO Membership's Economic Impact
Sweden's debt office forecasts larger budget deficits for 2025 and 2026 due to increased defense spending post-NATO membership and declining tax revenues. The national debt is rising, though it remains low historically and internationally. The government is loosening budget constraints amidst Europe's security challenges.
Sweden is set to face larger budget deficits in 2025 and 2026, as the country's debt office announced on Thursday. This financial outlook comes on the heels of increased defense spending following Sweden's recent NATO membership, which coincides with a drop in tax revenues.
The National Debt Office revealed projected deficits of 93 billion crowns for this year and 89 billion crowns for 2026, significantly more than the previous forecasts of 65 billion and 35 billion crowns. The rising expenses, especially for defense, have been identified as a primary cause.
Despite the rising central government debt, it remains low by historical and international standards. To accommodate this, Sweden plans additional government bond issuance and has relaxed budget restrictions. The government also revised its GDP growth forecasts, citing global trade tensions as a factor clouding economic prospects.
(With inputs from agencies.)
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