By Simon Johnson STOCKHOLM (Reuters) -Sweden’s right-wing coalition promised an 80 billion crown ($8.5 billion) spending bonanza in its 2026 budget on Monday, saying rock-solid finances gave room to speed up sluggish growth ahead of a general election next September. The Nordic country’s financial health is an outlier as others in Europe, like France and […]
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Sweden unveils $8.5-billion budget to boost growth with tax cuts, military spending, before election
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By Simon Johnson
STOCKHOLM (Reuters) -Sweden’s right-wing coalition promised an 80 billion crown ($8.5 billion) spending bonanza in its 2026 budget on Monday, saying rock-solid finances gave room to speed up sluggish growth ahead of a general election next September.
The Nordic country’s financial health is an outlier as others in Europe, like France and Britain, face tough spending choices as they struggle to manage domestic and global threats while keeping a lid on soaring government debt.
“We have world-class government finances; we have low government debt and while others are fighting with high debt costs, we are not,” Finance Minister Elisabeth Svantesson told reporters.
“We have a strong position and we can use our strength.”
Tax cuts for workers, pensioners and companies, lower VAT on food and more money for defence were among the main measures in the most expansive spending bill since the COVID-19 pandemic.
The budget also contained more money for schools, healthcare and civil defence, as well as higher housing allowances for low-income families.
Sweden’s economy, like many in the EU, has been stuck in low gear with households and businesses uncertain about the impact of a global trade war launched by President Donald Trump and still hurting after a bout of inflation that peaked at over 10%.
But unlike countries like France which are struggling to cut spending and reduce debt , Sweden has room for fiscal largesse. Government debt is about 32% GDP compared with about 90% across Europe.
Even after committing to spend 3.5% of GDP on defence and to borrow around 220 billion crowns to fund new nuclear power plants, debt is likely to remain under 35% of GDP.
The spending bonanza could, on the margin, ease pressure on the central bank to cut its policy rate. In August, the Riksbank left the door open to a rate cut before year-end, but inflation remains well above target.
The central bank will announce its next rate decision on September 23.
($1 = 9.4165 Swedish crowns)
(Reporting by Simon Johnson and Stine Jacobsen, editing by Niklas Pollard and Bernadette Baum)