The sharp economic downturn puts great pressure on central government finances
The sharp economic downturn is continuing to put great pressure on central government finances, confirming the picture from our previous forecast at the beginning of April. The central government budget shows a deficit throughout the forecast period. Next year the deficit in net lending will amount to just over 3% of GDP, so exceeding the limit set in the EU Stability and Growth Pact. Weak growth and large deficits mean that the debt-to-GDP ratio will rise during the next three years. The debtto-GDP ratio has not risen for three successive years since the early 1990s. However, the deficits in central government finances are primarily cyclical and are not expected to last. Structural net lending remains positive, and Swedish central government finances are strong by international standards. However, we believe that further decisions on fiscal easing should be taken with great care: it is important in the current situation that confidence in the long-term sustainability of central government finances is not undermined.Read more in our Summery and in Appendix.
For further information:
Patrik Andreasson, Phone +46 8 690 44 56
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