The 2024 Spring Budget in five minutes
Published
The Government presented its Spring Budget on 15 April. The budget has been presented against the background of significantly falling inflation while the Swedish economy is in recession, with low GDP growth and rising unemployment.
Swedish economy in recession as unemployment rises
The Swedish economy has been in recession since 2023 and is expected to remain there until 2025. GDP is expected to increase by 0.7 per cent in 2024 and 2.5 per cent in 2025.
Lower inflation and increasing wages are expected to successively improve the economic situation for households in 2024. A major contributing factor to the decreasing inflation is lower energy prices, where electricity prices in particular have fallen since late 2022. Fuel prices have also decreased with assistance from tax reductions and lowered reduction obligation. Persistent comparatively weak demand in the economy is expected to continue to slow inflation in future. This opens up the possibility of interest rate cuts, which are expected to make household consumption and housing investment increase comparatively quickly in 2025. The economic outlook internationally is also expected to improve in 2025, which would benefit Swedish exports.
However, household interest expenditure is expected to remain high in 2024, with the effect of a sluggish purchasing power trend and slow growth of household consumption. Higher costs in combination with weak household demand are also expected to continue to hamper housing investments in 2024.
The labour market situation is expected to further worsen in 2024. Demand for labour has decreased, and the numbers of redundancy notices and bankruptcies have increased. Low demand for labour is expected to lead to somewhat increased unemployment that continues to rise in 2024. Demand for labour is also expected to be relatively low in 2025.
Fighting inflation has been the Government’s foremost economic policy priority. A combination of restrained fiscal policy, austere monetary policy and responsible wage negotiations is now yielding results. The inflation target is expected to be met this year, but it will remain necessary to fight inflation. There are still major uncertainties in the global economy that can cause inflation to rise once again, which is why the Government is monitoring the situation closely. As inflation drops and the effects of the recession become increasingly obvious, the primary aim of the economic policy is to lay the foundations for recovery – higher growth and better welfare. Sweden will be built to be more prosperous again.
Key indicators forecast 15 april 2024
Percentage change unless otherwise stated.
| 2023 | 2024 | 2025 | 2026 | 2027 | |
| GDP | -0.2 | 0.7 | 2.5 | 3.2 | 2.4 |
| Employment, aged 15–74 | 1.4 | -0.4 | 0.7 | 1.3 | 0.9 |
| Unemployment, % of labour force aged 15–74 | 7.7 | 8.3 | 8.4 | 7.8 | 7.6 |
| CPI | 8.5 | 3.1 | 0.8 | 1.6 | 2.1 |
| CPIF | 6.0 | 2.1 | 1.7 | 2.0 | 2.0 |
| General government net lending, % of GDP | -0.6 | -1.2 | -0.3 | 0.7 | 1.7 |
| General government gross debt, % of GDP | 31.2 | 31.8 | 31.5 | 30.0 | 28.0 |
Note: Based on published statistics up to and including 5 March 2024 resp. 14 March 2024 for general government net lending, structural balance and gross debt (accounted outcome from 28 March 2024). GDP and expenditure components refer to constant prices.
Sources: Statistics Sweden, Macrobond and own calculations
A plan to navigate the challenging economic situation, support the economy and increase safety and security
The Government intends to address the challenging economic siutation with a three-part plan:
- Fight inflation and support households and welfare. The Government is pursuing a well-balanced fiscal policy that helps drive down inflation while more evenly distributing the burden of high prices. The recent trend shows that the fight against inflation is well on its way to succeeding. It is therefore important to support the recovery of household purchasing power with the aim of restoring it for everyone.
- Re-institute the work-first principle. Due to the recession, an additional 40 000 people are expected to become unemployed this year. This should be addressed first and foremost through training and education initiatives to better equip jobseekers. At the same time, the labour market’s structural problems need to be remedied. In particular, this is about reinforcing the motivating factors behind work and self-sufficiency. The Government is therefore continuing its efforts to re-institute the work-first principle in Sweden.
- Structural reforms to stimulate growth. High growth rates and good productivity development over time have been key factors in making Sweden one of the world’s wealthiest countries. However, recent GDP growth per capita has been low. It is time to shift the focus back to economic development with structural reforms that increase productivity and improve long-term growth.
Proposals in the Spring Amending Budget for 2024
In the Spring Amending Budget for 2024, the Government proposals include measures in the following areas, among others:
- Navigating Sweden through the recession and safeguarding the welfare system
- Law enforcement and improved safety and security
- Stronger defence and crisis preparedness
The proposals amount to a total of SEK 17.3 billion.
Passage through the Riksdag
After the Spring Fiscal Policy Bill and Spring Amending Budget have been presented to the Riksdag, the Members of the Riksdag have the opportunity to submit motions with alternative proposals for the subsequent two weeks. Proposed guidelines for fiscal policy and budget policy included in the Spring Fiscal Policy Bill will considered by the Committee on Finance. The proposed amending budget, including changes in appropriation frames, revenue estimates and any legislative proposals, will also be processed by the Committee on Finance. The Riksdag will take a decision on the budget bills in June (the tentative date of decision is 12 June 2024).
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