Swe­den turns on spend­ing taps to re­vive stum­bling econ­omy

The Daily Telegraph - Business - - Business -

◆ Swe­den has loos­ened the purse strings to un­veil a £9.3bn spend­ing and tax cuts boost for its econ­omy af­ter suf­fer­ing a ma­jor slump de­spite its light-touch lock­down, writes Tom Rees.

The So­cial Demo­crat and Green coali­tion turned on the spend­ing taps with a “record-large bud­get to restart the Swedish econ­omy” de­spite be­ing spared from the worst of the Covid-19 dam­age.

The coali­tion re­laxed fis­cal pol­icy with a pack­age fo­cused on cre­at­ing jobs, boost­ing wel­fare and fight­ing cli­mate change.

Swe­den suf­fered a record plunge in GDP in the sec­ond quar­ter, down 8.6pc com­pared to the pre­vi­ous three months.

Af­ter ini­tially surg­ing, Covid in­fec­tions in Swe­den have fallen to low lev­els and there is lit­tle sign of a sec­ond wave. Its ap­proach has re­lied on vol­un­tary so­cial dis­tanc­ing and bans on large gath­er­ings in a marked dif­fer­ence from its Nordic neigh­bours.

“The Nordic coun­tries in­clud­ing Swe­den have per­formed bet­ter than the eu­ro­zone in ag­gre­gate,” said David Ox­ley at Cap­i­tal Eco­nomics. “It was not un­scathed but less than a sud­den stop in ac­tiv­ity as other places have seen.”

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