New Swedish government blames predecessor for 'poor' finances

Published Mon, Oct 13, 2014 · 02:30 PM

[Stockholm] Sweden's new Social Democrat-led government lowered the growth forecast Monday, blaming sweeping tax breaks by the outgoing conservative coalition for a "large hole" in finances.

"These last years of unfinanced tax cuts have contributed to a bigger deficit in public finances, even when the economy has improved," Finance Minister Magdalena Andersson said in a statement.

Andersson revised the growth forecast for 2014 by 0.4 percentage points to 2.1 per cent.

She also scaled down the growth forecast for 2015 to 3 per cent and to 3.2 per cent for 2016.

The centre-right government - which lost power to a left-green coalition last month - pledged to return the budget to a surplus by 2017 but the incoming finance minister told daily Dagens Nyheter it would be "unrealistic" until after 2018.

The new government has maintained its predecessor's objective of a one percent budget surplus which has not been achieved since 2008.

"It's time for a responsible policy. Rules are made to be respected," Andersson said, adding that the country's public finances were in a "troublesome" state.

Annika Winsth, chief economist at Nordea bank, disagreed.

"They give the impression that Sweden is very poorly equipped and when you consider the recession we've been through, it's the contrary - Sweden did very well," she told news agency TT.

The budget will be presented to parliament by October 24 at the latest. AFP

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