Sweden's Fiscal Power Play: An Economic Boost Before Elections

Sweden's right-wing coalition announced an ambitious 80 billion crown budget for 2026, aiming to accelerate economic growth ahead of the general election next year. This significant fiscal stimulus comes at a time when other European countries grapple with high government debt and limited spending options.

Finance Minister Elisabeth Svantesson highlighted Sweden's strong financial position, with government debt at just 32% of GDP. The budget includes tax cuts for workers and pensioners, lower VAT on food, and increased funding for defense, schools, and healthcare. These measures reflect Sweden's ability to spend generously after years of fiscal restraint.

While other nations face rising debt costs, Sweden remains stable, with debt set to rise slightly to 36.8% of GDP by 2027. Increased spending is expected to bolster growth to 3.1% in 2026, potentially easing pressure on the central bank for major policy shifts.

(With inputs from agencies.)