New Swedish government presents budget surplus for 2023

Abolishes electric car subsidies, predicts deep and painful recession

Sweden holds national elections once every four years, and on September 11, 2022, a coalition of four parties secured a new majority in the 349 seat Parliament.  After about a month of negotiations about a detailed policy agreement for the next four years, the new government assumed power in October 2022.  

On November 8, the incoming finance minister Elisabeth Svantesson presented the government budget for 2023, which has the full support of the four parties constituting a majority in the new parliament.  Thankfully this budget is presented in English, in three levels of detail on this official government website:

https://www.government.se/government-of-sweden/ministry-of-finance/central-government-budget/

The finance minister held a press conference, in Swedish, in the morning of November 8, to explain the new budget to the press, and to take questions.  Here are my notes, in English, from the press conference:

 

• Fighting inflation is the top priority of our new government. 

• The previous government printed too much money from 2020 until 2022.

• We must fight inflation with higher interest rates.

• Sweden will be in a recession in 2023.  GDP to fall by 1.7%.  And unemployment is already high at around 7%. 

• The Chinese economy is also slowing, which will impact Sweden. 

• The Swedish real estate market is falling. 

• Our new budget will be restrictive, with a slight budget surplus so we can pay down the government debt. 

• Normally, going into a recession, it would be the opposite -- we would be running an increasing government budget deficit.  We cannot do that anymore, because the priority is to fight inflation and to save the value of the Swedish currency, even if the price is a deeper recession. 

• The government budget surplus will be 0.6% of GDP and remain roughly at that level for the next few years. 

• Government debt will fall from 36% of GDP last year (2021), to 32% this year (2022) and 29% next year (2023), then eventually reaching 26% in 2025. 

• Overall, taxes will remain about the same as before, only modest tinkering in a few areas such as gasoline and diesel. 

• We are abolishing electric car subsidies. 

• We are reducing taxes on gasoline and diesel. 

• Swedish diesel prices used to be 15 SEK per liter not so long time ago.  If you don’t know what it costs right now, I urge you to consult Google. 

• The most important energy policy is to increase production. 

• We are abolishing CO2 taxes. 

• Our new emphasis will be to expand nuclear power, which is the cleanest and best form of electricity generation. 

• Even though we are abolishing electric car subsidies, we will continue to favor expansion of electric car charging infrastructure, especially in rural areas.  Lack of charging infrastructure is a problem in the sparsely populated countryside. 

• We will conduct a new form of census that will try to find out who has made it into the country illegally, and living on subsidies fraudulently. 

• The recession of 2023 will be extremely deep and painful.  It will be an ice-cold economic Winter.

• There is no higher priority than to fight inflation.  Not even the deepest recession would cause us to take our eyes off the inflation fighting priority.  Inflation is the source of all evil.  We will combine a budget surplus, paying down government debt, with a restrictive monetary policy, so that inflation comes down. 

• Income taxes on those over 65 years of age will be reduced, to encourage people to work longer.