The Nordic country's financial health is an outlier as others in Europe, like France and Britain, face tough spending choices as they struggle to manage domestic and global threats while keeping a lid on soaring government debt.
“We have a strong position and we can use our strength.”
Tax cuts for workers, pensioners and companies, lower VAT on food and more money for defence were among the main measures in the most expansive spending bill since the COVID-19 pandemic.
Heading into an election year, the government - which relies on support from the populist, anti-immigration Sweden Democrats - will be hoping that opening the fiscal taps will reverse its deficit in opinion polls.
Room for largesse after years of fiscal restraint
But years of fiscal restraint since a domestic financial crisis in the early 1990s mean that Sweden has room for fiscal largesse.
Government debt is about 32% GDP compared with about 90% across Europe.
Lofty debt levels in Britain, France
France's sovereign debt rating has been cut while yields on British gilts recently hit their highest in 27 years, adding to the government's debt service burden.
“My (European) colleagues ... who have to build up their defence but have debt of 80%, 90%, 100% of GDP, it’s very hard for them,“ Svantesson said.
Sweden's budget set to boost growth in 2026
The prospect of stronger growth could ease pressure on the central bank to cut its policy rate. But lower VAT on food is likely to reduce inflation next year, giving the central bank more room to act.
The central bank will announce its next rate decision on September 23 - REUTERS
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