The OECD Economic Survey of Sweden has just been released after 18 months of preparation. It shows that Sweden had dealt well with the financial and banking crisis because of lessons learnt in the past, a government surplus which was available as it entered the crisis and flexible labour market conditions.
Sweden is also well placed to deal with an ageing population, needs to find more economically efficient ways of reducing emissions and needs to find the right incentives for the workforce to increase the number of hours worked.
The report has a number of suggestions including formally linking life expectancy to retirement age, looking at the activities of Svensk ExportKredit with a view to scaling back, and rethinking the formula for the Consumer Price Index as utilised by Riksbank.
The report praised the foresight of Swedish fiscal policy enacted after the 90’s recessions:
“One of Sweden’s main strengths going into the crisis was its sound fiscal position, with a relatively low gross government debt and a sizeable structural budget surplus. This allowed the automatic stabilisers to work and provided room to inject fiscal stimulus, without storing up long-term fiscal problems.”
Anders Borg, the Swedish Finance Minister, commented on the findings of the report, promising to take Sweden’s labour and public finances forward:
“Due to the Government’s reforms to get more people into work, we are now in a stronger position than many other countries. But we must continue to improve the functioning of the labour market by making it more worthwhile for low and middle-income earners to work.
“At the same time, the Government must also safeguard Sweden’s position with strong public finances. We will protect and strengthen the methods we use to deal with crises in the financial system and banks in crisis, without great burden on public finances. The problems that countries around the world are experiencing with their public finances underline the importance of this.”