Sweden's dilemma: massive household debt amid zero interest rates

Stockholm

SWEDEN'S new centre-left government and its financial authorities are under huge pressure when they meet on Tuesday to tackle a mountain of household debt that is casting a long shadow over one of Europe's few economic bright spots.

Having slashed rates to zero to fight the risk of deflation, Swedish officials are now in a quandary over how to rein in borrowing and house price rises without sending the real estate market into a downward spiral. The country's AAA-rated economy is still one of Europe's strongest, with low public debt, sound state finances and banks among the best capitalised and most profitable in Europe.