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economy

Borg presents cautious spring budget

Published måndag 16 april 2012 kl 08.53
"Government in disagreement"
(3:45 min)

The government has published a cautious spring budget, predicting economic growth of only 0.4 percent this year - down from an earlier forecast of 1.3 percent. Unemployment is also expected to grow during 2012. However Finance Minister Anders Borg says the outlook is positive for next year.

Borg expects the Swedish economy to "normalise" during the year, but given the current instability of the European economy he says is essential to keep safety margins in place.

"It is a little like the weather in April," he tells Swedish Radio during the budget launch on Monday morning.

Next year the picture is expected to be more rosy, with an expected growth rate of 3.3 percent, which Borg believes will continue for several years. He told journalists that there are signs that households are becoming more optimistic and will be prepared to spend more in the years to come.

But Robert Bergqvist, chief analyst at SEB-bank says Anders Borg's growth prognosis is "confusing".

"He tries to bring attention to the need to be cautious and that we are in a recession with low growth this year. I agree with that. But the judgement of as high as 3.5 percent growth from 2013 and four years ahead means that Sweden will very quickly move into a boom period," Bergqvist tells news agency TT.

Bergqvist also thinks the budget should be more forward-looking, making strategic investments for the long term.

"We have never had such low interest rates for the state's borrowing. When the surrounding world is forced to be defensive, there is now a possibility for Sweden to move its positions forward."

The trade unions also criticise the budget which they say is too cautious. "It is wrong to hold back when the economy is folding and unemployment is rising," says Eva Nordmark, at the blue collar union TCO.

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