0001104659-13-075445.txt : 20131015 0001104659-13-075445.hdr.sgml : 20131014 20131015060043 ACCESSION NUMBER: 0001104659-13-075445 CONFORMED SUBMISSION TYPE: 18-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20121231 FILED AS OF DATE: 20131015 DATE AS OF CHANGE: 20131015 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SWEDEN KINGDOM OF CENTRAL INDEX KEY: 0000225913 STANDARD INDUSTRIAL CLASSIFICATION: FOREIGN GOVERNMENTS [8888] IRS NUMBER: 000000000 STATE OF INCORPORATION: V7 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 18-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07720 FILM NUMBER: 131148944 BUSINESS ADDRESS: STREET 1: BOX 16 306 S STREET 2: RIKSGALDSKONTORET CITY: STOCKHOLM SWEDEN STATE: V7 ZIP: 103 26 MAIL ADDRESS: STREET 1: BOX 16 306 S STREET 2: RISKGALDSKONTORET CITY: STOCKHOLM SWEDEN STATE: V7 ZIP: 103 26 18-K 1 a13-22118_118k.htm 18-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 18-K

 

For Foreign Governments and Political Subdivisions Thereof

 

ANNUAL REPORT

Of the Kingdom of Sweden

 

Date of end of last fiscal year: December 31, 2012

 

Securities registered as of December 31, 2012

 

 

 

Amounts as to Which

 

 

 

 

Registration is

 

Names of Exchanges

Title of Issue

 

Effective

 

on Which Registered

Kingdom of Sweden 11 1/8 % Bonds with warrants Due 2015

 

$

60 000 000

 

New York Stock Exchange

 

Name and address of person authorized to receive notices and communications from the Securities and Exchange Commission:

 

Charlotte Rydin

General Counsel

RIKSGÄLDSKONTORET

SE-103 74 STOCKHOLM

Sweden

 

 

 



 

The information set forth below is to be furnished:

 

1. In respect of each issue of securities of the registrant registered, a brief statement as to:

 

(a) The general effect of any material modifications, not previously reported, of the rights of the holders of such securities.

 

There have been no such modifications.

 

(b) The title and the material provisions of any law, decree or administrative action, not previously reported, by reason of which the security is not being serviced in accordance with the terms thereof.

 

There has been no such law, decree or administrative action.

 

(c) The circumstances of any other failure, not previously reported, to pay principal, interest, or any sinking fund or amortization installment.

 

There has been no such failure.

 

2. A statement as of the close of the last fiscal year of the registrant giving total outstanding of:

 

(a) Internal funded debt of the registrant. (Total to be stated in the currency of the registrant. If any internal funded debt is payable in a foreign currency it should not be included under this paragraph (a), but under paragraph (b) of this item).

 

The total principal amount of direct internal funded debt of the registrant outstanding as of December 31, 2012 was Swedish kronor (SEK) 761 285 million. (1)

 

In addition, there were outstanding various internal loans, in a total amount of SEK 1 463 057 million guaranteed by the registrant as to principal and interest.

 


(1) Such debt does not include debt of State-owned companies, public enterprises or local authorities.

 

2



 

(b) External funded debt of the registrant. (Total to be stated in the respective currencies in which payable. No statement need be furnished as to intergovernmental debt.)(1)

 

The total principal amount of direct external funded debt of the registrant outstanding as of December 31, 2012 was as follows: (in thousands)

 

U.S. dollars (USD)

 

7 824 667

 

Australian dollars (AUD)

 

200 000

 

Euro (EUR)

 

5 060 101

 

Pounds sterling (GBP)

 

80 102

 

 

In addition, there were outstanding various external loans, which are guaranteed by the registrant as to principal and interest. The total principal amount of these contingent liabilities outstanding as of December 31, 2012 was as follows: (in thousands)

 

External Debt Guaranteed by the Kingdom of Sweden

 

U.S. dollars (USD)

 

3 877 941

 

Euro (EUR)

 

11 618 934

 

Pounds sterling (GBP)

 

60 000

 

Japanese yen (JPY)

 

15 700 00

 

Norwegian kroner (NOK)

 

5 750 000

 

Swiss franc (CHF)

 

243 600

 

Special Drawing Rights and Unit of Accounts (SDR, UA)

 

1 279 780

 

 


(1) Such debt does not include debt of State-owned companies, public enterprises or local authorities.

 

3



 

3. A statement giving the title, date of issue, date of maturity, interest rate and amount outstanding, together with the currency or currencies in which payable, of each issue of funded debt of the registrant outstanding as of the close of the last fiscal year of the registrant.

 

Internal funded debt as of December 31, 2012(1)

(Payable in Swedish kronor)

 

Title and Interest Rate

 

Date of Issue

 

Year of final
maturity

 

Principal amount
outstanding

 

 

 

 

 

 

 

(thousands of SEK)

 

Treasury Bonds:

 

 

 

 

 

 

 

1.50% of 2011

 

30-aug  2011

 

2013

 

9 500 000

 

6.75% of 1997

 

05-maj  1997

 

2014

 

77 750 085

 

Index linked zero coupon bonds of 1994 (1)

 

01-apr  1994

 

2014

 

4 256 627

 

Index linked 3.5% bonds of 1999 (1)

 

26-apr  1999

 

2015

 

56 087 857

 

4.50% of 2004

 

06-sep  2004

 

2015

 

65 490 115

 

3% of 2005

 

19-sep  2005

 

2016

 

47 988 900

 

3.75% of 2006

 

15-sep  2006

 

2017

 

62 025 775

 

Index linked 0.5% bonds of 2010

 

23-sep  2010

 

2017

 

22 779 017

 

4.25 of 2007

 

21-nov  2007

 

2019

 

65 807 120

 

Index linked 4% bonds of 1995 (1)

 

01-dec  1995

 

2020

 

38 166 364

 

5% of 2004

 

28-jan  2004

 

2020

 

50 730 780

 

3.5% of 2011

 

09-feb  2011

 

2022

 

77 444 500

 

Index linked 0.25% bonds of 2011 (1)

 

15-sep  2011

 

2022

 

17 579 709

 

1.5% of 2023

 

22-oct  2012

 

2023

 

30 500 000

 

Index linked 3.5% bonds of 1997 (1)

 

01-dec  1997

 

2028

 

3 850

 

Index linked 3.5% bonds of 1999 (1)

 

19-apr  1999

 

2028

 

53 371 813

 

2.25% of 2032

 

30-mar  2012

 

2032

 

11 000 000

 

3.50% of 2009

 

30-mar  2009

 

2039

 

42 250 450

 

Assigned bonds 2005-2006

 

 

 

2015

 

79 794

 

Total Treasury Bonds

 

 

 

 

 

732 812 756

 

 

 

 

 

 

 

 

 

Lottery Bonds:(2)

 

 

 

 

 

 

 

1.6% of 2008

 

17-nov  2008

 

2013

 

3 600 000

 

0.6% of 2011

 

23-nov  2011

 

2014

 

2 900 000

 

1.0% of 2010

 

02-dec  2010

 

2014

 

6 600 000

 

1.5% of 2011

 

03-maj  2011

 

2015

 

3 900 000

 

1.6% of 2009

 

25-nov  2009

 

2015

 

5 400 000

 

1.6% of 2010

 

19-apr  2010

 

2016

 

4 500 000

 

0.8% of 2017

 

30-apr  2012

 

2017

 

2 000 000

 

Retained

 

 

 

 

 

-427 280

 

Total Lottery Bonds

 

 

 

 

 

28 472 720

 

Total Internal Funded Debt

 

 

 

 

 

761 285 476

 

 


(1)

At time of issue paid in discounted amount.

(2)

Lottery bonds do not bear interest; bonds are selected by lot (two or three times a year) to receive prizes. The interest rates indicated are the aggregate amount of prizes paid annually as a percentage of the nominal value of the bond. The principal amount of all bonds is paid at maturity.

 

4



 

Internal Debt Guaranteed by the Kingdom of Sweden as of December 31, 2012

(Payable in Swedish kronor)

 

 

 

Principal Amount Outstanding

 

 

 

(thousands of SEK)

 

Standing Guarantees Issued by Riksgäldskontoret (the Swedish National Debt Office):

 

 

 

Svenska Skeppshypotekskassan (Swedish Ships’ Mortgage Bank)

 

350 000

 

Others

 

55 000

 

Total

 

405 000

 

Other Guarantees Issued by Riksgäldskontoret (the Swedish National Debt Office):

 

 

 

Deposit Insurance

 

1 225 531 320

 

Pension guarantees

 

8 227 233

 

Öresundsbro Konsortiet (bridge and tunnel construction)

 

12 234 191

 

Bank Guarantee Programme

 

6 068 400

 

Others

 

12 748

 

Total

 

1 252 073 892

 

Guarantees of the State Acting Through the Following State Agencies other than Riksgäldskontoret:

 

 

 

Exportkreditnämnden (The Export Credit Guarantee Board)

 

204 396 000

 

Bostadskreditnämnden (The National Housing Credit Guarantee Board)

 

1 699 865

 

Sida (Swedish International Development Agency)

 

3 259 000

 

Others

 

1 223 000

 

Total

 

210 577 865

 

 

 

 

 

Total Internal Guaranteed Debt

 

1 463 056 757

 

 

5



 

External Funded Debt as of December 31, 2012

(Payable in Foreign Currencies)

 

Title and Interest Rate

 

Date of Issue

 

Year of Final
Maturity

 

Principal Amount
Outstanding

 

Equivalent
in Swedish
kronor(1)

 

 

 

 

 

 

 

(in thousands)

 

US Dollars

 

 

 

 

 

USD

 

 

 

1.750% Bonds of 2010

 

27-apr  2010

 

2013

 

1 000 000

 

 

 

1.0% Bonds of 2011

 

22-mar  2011

 

2013

 

2 000 000

 

 

 

1.0% Bonds of 2011

 

25-maj  2011

 

2014

 

1 500 000

 

 

 

0.375% Bonds of 2012

 

18-maj  2012

 

2015

 

2 250 000

 

 

 

0.375% Bonds of 2012

 

22-dec  2012

 

2015

 

1 000 000

 

 

 

11.125% Bonds of 1985

 

12-jun  1985

 

2015

 

67 081

 

 

 

10.25% Bonds of 1985

 

01-nov  1985

 

2015

 

7 586

 

 

 

Total US Dollars

 

 

 

 

 

7 824 667

 

52 010 740

 

 

 

 

 

 

 

 

 

 

 

Pounds Sterling

 

 

 

 

 

GBP

 

 

 

9.75% Bonds of 1985

 

20-nov  1985

 

2014

 

80 182

 

875 836

 

Total Pounds Sterling

 

 

 

 

 

80 182

 

875 836

 

 

 

 

 

 

 

 

 

 

 

Euro(2)

 

 

 

 

 

EUR

 

 

 

0.875 bonds of 2011

 

23-aug  2011

 

2013

 

1 000 000

 

 

 

3.125% Bonds of 2009

 

28-apr  2009

 

2014

 

4 000 000

 

 

 

0.625% Bonds of 2012

 

13-feb  2012

 

2015

 

1 500 000

 

 

 

9.405% Bonds of 1996 (ESP)

 

09-apr  1996

 

2026

 

60 101

 

 

 

Total Euro

 

 

 

 

 

6 560 101

 

65 666 192

 

 

 

 

 

 

 

 

 

 

 

Australian Dollar

 

 

 

 

 

AUD

 

 

 

5.75% Bonds of 2005

 

03-mar  2005

 

2015

 

200 000

 

 

 

Total Australian Dollar

 

 

 

 

 

200 000

 

1 121 529

 

 

 

 

 

 

 

 

 

 

 

Sum public Debt

 

 

 

 

 

 

 

119 674 297

 

Non public funded debt

 

 

 

 

 

 

 

1 502 248

 

 

 

 

 

 

 

 

 

 

 

Total External Funded Debt

 

 

 

 

 

 

 

121 176 545

 

Total of External Short Term Floating Debt

 

 

 

 

 

 

 

168 239 032

 

Total debt denominated in foreign currency

 

 

 

 

 

 

 

289 415 576

 

 


(1)

The valuation in Swedish kronor of foreign currency loans has been made at the exchange rates in effect on the date of issue.

(2)

Original currency of issuance within parentheses.

 

6



 

External Debt Guaranteed by the Kingdom of Sweden as of December 31, 2012

(Payable in foreign currencies)

 

 

 

 

 

Principal Amount
Outstanding

 

Equivalent in
Swedish kronor(1)

 

 

 

 

 

(thousands)

 

Guarantees Issued by Riksgäldskontoret (the Swedish National Debt Office):

 

 

 

 

 

 

 

Nordiska Investeringsbanken (Nordic Investment Bank)

 

EUR

 

710 107

 

6 118 705

 

Sweden House in St. Petersburg, Russia

 

USD

 

3 263

 

21 258

 

Öresundsbro Konsortiet (bridge and tunnel construction)

 

GBP

 

60 000

 

629 484

 

Öresundsbro Konsortiet (bridge and tunnel construction)

 

EUR

 

215 499

 

1 856 867

 

Öresundsbro Konsortiet (bridge and tunnel construction)

 

JPY

 

9 700 000

 

733 582

 

Öresundsbro Konsortiet (bridge and tunnel construction)

 

NOK

 

5 750 000

 

6 711 400

 

Bank Guarantee Programme

 

EUR

 

1 500 000

 

12 924 900

 

Bank Guarantee Programme

 

USD

 

1 510 000

 

9 838 556

 

Bank Guarantee Programme

 

JPY

 

6 000 000

 

453 600

 

Bank Guarantee Programme

 

CHF

 

150 000

 

1 069 590

 

Total

 

 

 

 

 

40 357 942

 

Guarantees Issued by the Government:

 

 

 

 

 

 

 

International Bank for Reconstruction and Development (IBRD)

 

USD

 

1 810 151

 

11 794 219

 

Multilateral Investment Guarantee Agency (MIGA)

 

USD

 

16 208

 

105 607

 

European Bank for Reconstruction and Development (EBRD)

 

EUR

 

541 590

 

4 666 664

 

European Investment Bank (EIB)

 

EUR

 

6 564 715

 

56 565 520

 

Council of Europe Development Bank (CEB)

 

EUR

 

123 724

 

1 066 080

 

Nordic Investment Bank (NIB)

 

EUR

 

1 963 299

 

16 916 964

 

Inter-American Development Bank (IDB)

 

USD

 

538 319

 

3 507 469

 

Asian Development Bank (AsDB)

 

SDR

 

343 140

 

3 436 204

 

African Development Bank (AfDB)

 

SDR

 

936 640

 

9 379 513

 

Eurofima

 

CHF

 

93 600

 

667 424

 

Total

 

 

 

 

 

108 105 664

 

 

 

 

 

 

 

 

 

Total External Guaranteed Debt

 

 

 

 

 

148 463 606

 

 

 

 

 

 

 

 

 

RECAPITULATION OF GUARANTEED DEBT:

 

 

 

 

 

 

 

Total Internal Guaranteed Debt

 

 

 

 

 

1 463 056 757

 

Total External Guaranteed Debt

 

 

 

 

 

148 463 606

 

Total Guaranteed Debt

 

 

 

 

 

1 611 520 363

 

 


(1)              Translation of amounts in foreign currencies to Swedish kronor has been made at exchange rates in effect as of December 31, 2012 as follows: 6.5156 Swedish kronor per U.S. dollar, 10.4914 Swedish kronor per British Pound Sterling, 0.0756 Swedish kronor per Japanese yen, 8.6166 Swedish kronor per Euro, 1.1672 Swedish kronor per Norwegian krona, 7.1306 Swedish kronor per Swiss Franc, and 10.014 Swedish kronor  per Special Drawings Right.

 

7



 

4. a) As to each issue of securities of the registrant which is registered, there should be furnished a break-down of the total amount outstanding, as shown in Item 3, into the following:

 

(1) Total amount held by or for the account of the registrant.

 

The following have been repurchased by the issuer and cancelled and are no longer outstanding (as of December 31, 2011):

 

11 1/8 % Bonds with warrants of 6/12/1985, due 2015

 

$

532 919 000

 

 

(2) Total estimated amount held by nationals of the registrant (or if registrant is other than a national government by the nationals of its national government); this estimate needs to be furnished only if it is practicable to do so.

 

Not practicable.

 

(3) Total amount otherwise outstanding.

 

As of December 31, 2012:

 

11 1/8 % Bonds with warrants of 6/12/1985, due 2015

 

$

67 081 000

 

 

(b) If a substantial amount is set forth in answer to paragraph (a) (1) above, describe briefly the method employed by the registrant to reacquire such securities.

 

Securities bought in the market.

 

8



 

5. A statement as of the close of the last fiscal year of the registrant giving the estimated total of:

 

a) Internal floating indebtedness of the registrant.

(Total to be stated in the currency of the registrant).

 

Internal Floating Debt as of December 31, 2012

 

(Payable in Swedish Kronor)

 

 

 

Principal amount
outstanding

 

 

 

(thousands of SEK)

 

Treasury Bills

 

105 238 000

 

CCY Swaps

 

-141 975 000

 

Foreign Exchange forwards in SEK

 

73 142 268

 

Liquidity management instruments

 

25 123 939

 

Money market assets

 

29 908 407

 

National Debt Savings

 

21 156 813

 

Collateral

 

17 350 000

 

Total Internal Floating Debt

 

129 944 427

 

 

 

 

 

RECAPITULATION OF INTERNAL DEBT:

 

 

 

Total Funded Debt

 

761 285 476

 

Total Floating Debt

 

129 944 427

 

Total Internal Debt

 

891 229 903

 

 

9



 

b) External floating indebtedness of the registrant.

(Total to be stated in the respective currencies in which payable).

 

External Floating Debt as of December 31, 2012

 

Title and Interest Rate

 

Principal
Amount
Outstanding

 

Equivalent in
Swedish
kronor(1)

 

 

 

(thousands)

 

EUR

 

 

 

 

 

Eurocommercial Paper Program of 1988 (2)

 

 

 

 

 

Total USD

 

 

 

76 623 355

 

Collateral

 

 

 

23 538 357

 

Liquidity management instruments

 

 

 

-755 412

 

CCY Swaps

 

 

 

141 975 000

 

Foreign Exchange forwards

 

 

 

-73 142 268

 

Total External Floating Debt

 

 

 

168 239 032

 

 


(1)              The valuation in Swedish kronor of foreign currency loans has been made at the exchange rates in effect on the date of issue.

(2)              In addition to U.S. dollars, Swiss francs, Japanese yen and Pound sterling, the notes may also be issued in Euro, Australian dollars, Canadian dollars and Danish kroner with a maximum maturity of 365 days. The interest on the notes is variable and a function of market conditions at the time of issuance.

 

RECAPITULATION OF EXTERNAL DEBT:

 

 

 

Total External Funded Debt

 

121 176 545

 

Total External Floating Debt

 

168 239 032

 

Unrealised currency gains/loss (3)

 

-27 983 849

 

Total External Debt

 

261 431 728

 

 


(3)              According to exchange rates per December 31, 2012.

 

10



 

6. Statements of the receipts, classified by source, and of the expenditures, classified by purpose, of the registrant for each fiscal year of the registrant ended since the close of the latest fiscal year for which such information was previously reported. These statements should be itemized as to be reasonably informative and should cover both ordinary and extraordinary receipts and expenditures; there should be indicated separately, if practicable, the amount of receipts pledged or otherwise specifically allocated to any issue registered, indicating the issue.

 

Central Government Revenues and Expenditures(1)

 

Revenues on cash flow basis

 

Fiscal year 2012

 

 

 

(millions of SEK)

 

Revenues

 

 

 

Taxes:

 

 

 

Taxes on income, capital gains and profits (2)

 

-25 400

 

Statutory social securities fees

 

362 500

 

Taxes on property

 

32 600

 

Value added tax

 

303 800

 

Petrol tax (3)

 

 

 

Tobacco tax

 

11 900

 

Alcoholic beverage tax

 

12 300

 

Tax on energy consumption

 

65 000

 

Taxes on road traffic

 

11 200

 

Other taxes

 

-56 300

 

Total taxes

 

717 600

 

Non-tax revenues

 

 

 

Operating surpluses (4)

 

8 000

 

Interest received by the Government

 

5 800

 

Other non-tax revenues (5)

 

35 000

 

Total non-tax revenues

 

48 800

 

 

 

 

 

Capital revenues

 

300

 

Loan repayment

 

1 300

 

Computed revenues (6)

 

9 700

 

Contributions from the European Union

 

9 800

 

Total other revenues

 

21 100

 

Total Revenues

 

787 600

 

 

 

 

 

Exenditures

 

 

 

The Swedish political system

 

11 529

 

Economy and fiscal administration

 

13 511

 

Tax administration and collection

 

10 272

 

Justice

 

38 213

 

Foreign policy administration and international co-operation

 

1 550

 

Total defence

 

45 462

 

International development assistance

 

30 197

 

Immigrants and refugees

 

8 248

 

Health care, medical care, social services

 

58 690

 

Financial security in the event of illness and disability

 

94 853

 

Financial security in old age

 

41 342

 

 

11



 

Financial security for families and children

 

75 579

 

Financial security in the event of unemployment

 

6 753

 

Labour market and working life

 

66 633

 

Study support

 

21 068

 

Education and university research

 

53 837

 

Culture, the media, religious organisations and leisure

 

12 318

 

Planning, housing supply and construction

 

981

 

Regional balance and development

 

3 408

 

General environment and conservation

 

4 831

 

Energy

 

2 713

 

Communications

 

42 861

 

Agriculture and forestry, fisheries etc.

 

16 387

 

Business sector

 

5 882

 

General grant to municipalities

 

85 138

 

Interest on Central Government Debt. etc.

 

27 381

 

Contribution to the European Community

 

31 452

 

Total expenditures (all areas of expenditure)

 

811 087

 

Budget deficit

 

23 514

 

Transactions outside closed accounts

 

 

 

Net lending by Riksgäldskontoret

 

1 009

 

Adjustment to cash basis (7)

 

384

 

Transfer from the National Pension Fund (8)

 

 

 

Net borrowing requirement (9)

 

-24 907

 

 


(1)

No receipts/revenues are pledged or otherwise specifically allocated to any issue registered.

 

 

(2)

 

 

2012

 

 

Net personal income taxes

 

-110 300

 

 

Corporate income taxes

 

77 800

 

 

Other income taxes

 

7 100

 

 

 

(3)

From 1995/96 Petrol tax is included in tax on energy consumption.

(4)

Primarily net surplus of public enterprises, other agencies and the Riksbank and income from lotteries, etc.

(5)

Primarily revenues from real estate investments, dividends on state-owned shares, administrative fees and changes and revenues from sales.

(6)

Primarily cash payments by public utilities to the Government representing depreciation on capital funds invested in them by the state and revenues and expenditures for Government pensions. Expenditures for Government pensions can be in excess of revenues and therefore the remainder of this revenue heading can be in excess of revenues and can show a deficit.

(7)

Excluding Transfer from National Pension Fund.

(8)

The old-age pension reform has taken on a partially new role as of 1999. The funding responsibility for disability and survivor pensions has been transferred to the Central Government budget.

(9)

As of 1997, the Net borrowing requirement is identical to the Central Government budget balance. A negative Net borrowing requirement is equivalent with a budget balance surplus.

 

12



 

7. (a) If any foreign exchange control, not previously reported, has been established by the registrant (or if the registrant is other than a national government, by its national government), briefly describe the effect of any such action not previously reported.

 

None.

 

(b) If any foreign exchange control previously reported has been discontinued or materially modified, briefly describe the effect of any such action, not previously reported.

 

Virtually all exchange control regulations were abolished on July 1, 1989. Foreign exchange control may, in accordance with the treaties of the European Union, only be reintroduced under certain extraordinary circumstances such as if Sweden is involved in a war.

 

8. Brief statements as of a date reasonably close to the date of the filing of this report, (indicating such date) in respect of the note issue and gold reserves of the central bank of issue of the registrant, and of any further gold stocks held by the registrant.

 

 

 

(In millions of SEK)

 

 

 

Aug 31, 2013

 

Notes and coins (excluding bank holdings)

 

88 160

 

Gold reserves of Sveriges Riksbank

 

33 473

 

 

13



 

9. Statements of imports and exports of merchandise for each year ended since the close of the latest year for which such information was previously reported. The statements should be reasonably itemized so far as practicable as to commodities and as to countries. They should be set forth in terms of value and of weight or quantity; if statistics have been established only in terms of value, such will suffice.

 

FOREIGN TRADE BY COMMODITY GROUP

 

 

 

Year ended December 31, 2012

 

 

 

(millions of SEK)

 

%

 

Exports (f.o.b.)

 

 

 

 

 

Food Products, Beverage and Tobacco

 

57 921

 

5

 

Wood Products

 

23 680

 

2

 

Pulp

 

17 435

 

1

 

Paper and Board

 

75 861

 

6

 

Petroleum Products

 

108 553

 

9

 

Coal and other Fuels

 

8 663

 

1

 

Iron and Steel

 

57 111

 

5

 

Iron Ore

 

22 731

 

2

 

Non-Ferrous Metals

 

27 032

 

2

 

Other Minerals

 

11 120

 

1

 

Other Raw Materials

 

2 747

 

0

 

Manufactured Metal

 

32 832

 

3

 

Machinery and Equipment

 

325 265

 

28

 

Motor Vehicles and Spare Parts

 

122 051

 

10

 

Ships

 

3 892

 

0

 

Chemicals and Plastics

 

130 991

 

11

 

Clothes, Shoes and Leather

 

16 716

 

1

 

Other Manufactured Products

 

117 230

 

10

 

Other Products

 

7 866

 

1

 

Total Exports

 

1 169 694

 

100

 

 

14



 

 

 

Year ended December 31, 2012

 

 

 

(millions of SEK)

 

%

 

Imports (c.i.f.) by country of consignment

 

 

 

 

 

Food Products, Beverage and Tobacco

 

101 529

 

9

 

Wood Products

 

6 782

 

1

 

Pulp

 

3 553

 

0

 

Paper and Board

 

13 795

 

1

 

Petroleum Products

 

57 042

 

5

 

Crude Oil

 

113 893

 

10

 

Coal and other Fuels

 

7 161

 

1

 

Iron and Steel

 

39 792

 

4

 

Non-Ferrous Metals

 

18 667

 

2

 

Other Minerals

 

15 448

 

1

 

Other Raw Materials

 

9 773

 

1

 

Manufactured Metal

 

30 766

 

3

 

Machinery and Equipment

 

279 929

 

25

 

Motor Vehicles and Spare Parts

 

107 317

 

10

 

Ships

 

1 375

 

0

 

Chemicals and Plastics

 

124 487

 

11

 

Clothes, Shoes and Leather

 

39 485

 

4

 

Other Manufactured Products

 

130 183

 

12

 

Other Products

 

981

 

0

 

Total Imports

 

1 101 959

 

100

 

 

15



 

GEOGRAPHIC DISTRIBUTION OF FOREIGN TRADE

 

 

 

Year ended December 31, 2012

 

 

 

millions
of SEK

 

%

 

Exports (f.o.b.)

 

 

 

 

 

 

 

 

 

 

 

European Union (EU15)

 

 

 

 

 

United Kingdom

 

90 031

 

8

 

Germany

 

114 591

 

10

 

Denmark

 

74 593

 

6

 

Finland

 

75 249

 

6

 

Other EU15 countries (1)

 

242 194

 

21

 

Total EU15

 

596 658

 

51

 

 

 

 

 

 

 

European Free Trade Association (EFTA)

 

 

 

 

 

Norway

 

120 458

 

10

 

Other EFTA countries (2)

 

15 456

 

1

 

Total EFTA

 

135 914

 

12

 

 

 

 

 

 

 

Central and Eastern Europe (3)

 

70 789

 

6

 

Russia

 

23 668

 

2

 

United States

 

74 999

 

6

 

Japan

 

17 076

 

1

 

State trading countries in Asia and America (4)

 

38 128

 

3

 

OPEC countries (5)

 

31 426

 

3

 

Other countries

 

181 036

 

15

 

 

 

 

 

 

 

Total Exports

 

1 169 694

 

100

 

 


(1) France, Netherlands, Belgium, Luxembourg, Italy, Ireland, Greece, Spain, Portugal, Austria

(2) Switzerland, Liechtenstein, Iceland

(3) Albania, Bosnia and Herzegovina, Bulgaria, Estonia, Croatia, Latvia, Lithuania, Former Jugoslav Republic of Macedonia, Poland, Romania, Slovakia, Slovenia, Czech Republic, Hungary, Kosovo, Serbia, Montenegro

(4) China, North Korea, Cuba, Mongolia

(5) Algeria, United Arab Emirates, Indonesia (until 2008), Iraq, Iran, Kuwait, Libyan Arab Jamahiriya, Nigeria, Qatar, Saudi Arabia, Venezuela, Angola (from 2007), Ecuador (from 2007)

 

16



 

 

 

Year ended December 31, 2012

 

 

 

millions
of SEK

 

%

 

Imports (c.i.f.) by country of consignment

 

 

 

 

 

 

 

 

 

 

 

European Union (EU15)

 

 

 

 

 

United Kingdom

 

72 195

 

7

 

Germany

 

190 924

 

17

 

Denmark

 

93 291

 

8

 

Finland

 

55 876

 

5

 

Other EU15 countries (1)

 

243 145

 

22

 

Total EU15

 

655 431

 

59

 

 

 

 

 

 

 

European Free Trade Association (EFTA)

 

 

 

 

 

Norway

 

100 720

 

9

 

Other EFTA countries (2)

 

10 190

 

1

 

Total EFTA

 

110 910

 

10

 

 

 

 

 

 

 

Central and Eastern Europe (3)

 

92 538

 

8

 

Russia

 

58 036

 

5

 

United States

 

35 682

 

3

 

Japan

 

12 665

 

1

 

State trading countries in Asia and America (4)

 

44 884

 

4

 

OPEC countries (5)

 

13 981

 

1

 

Other countries

 

77 832

 

7

 

 

 

 

 

 

 

Total Imports

 

1 101 959

 

100

 

 


(1) France, Netherlands, Belgium, Luxembourg, Italy, Ireland, Greece, Spain, Portugal, Austria

(2) Switzerland, Liechtenstein, Iceland

(3) Albania, Bosnia and Herzegovina, Bulgaria, Estonia, Croatia, Latvia, Lithuania, Former Jugoslav Republic of Macedonia, Poland, Romania, Slovakia, Slovenia, Czech Republic, Hungary, Kosovo, Serbia, Montenegro

(4) China, North Korea, Cuba, Mongolia

(5) Algeria, United Arab Emirates, Indonesia (until 2008), Iraq, Iran, Kuwait, Libyan Arab Jamahiriya, Nigeria, Qatar, Saudi Arabia, Venezuela, Angola (from 2007), Ecuador (from 2007)

 

17



 

10. The balances of international payments of the registrant for each year ended since the close of the latest year for which such information was previously reported. The statements of such balances should conform, if possible, to the nomenclature and form used in the “Statistical Handbook of the League of Nations”. (These statements need to be furnished only if the registrant has published balances of international payments).

 

Balance of Payment

 

 

 

December 31, 2012

 

 

 

(billions of SEK)

 

Current account

 

212.1

 

Trade in goods (f.o.b.-f.o.b.)

 

84.3

 

Net trade of goods

 

61

 

Correction items

 

23.4

 

Services

 

112.3

 

Transportation

 

20.1

 

Travel

 

34.6

 

Other services

 

126.8

 

Compensation of employees

 

-2.4

 

Investment income

 

81.1

 

Direct investment

 

80

 

Portfolio investment excl.fin derivatives

 

-8.5

 

Income on equity

 

43.5

 

Income on debt (interest)

 

-52

 

Other investment

 

9.6

 

Current transfers

 

-63.2

 

Contributions etc. to/from the EU

 

-23.4

 

Development assistance grants

 

-11

 

Other current transfers

 

-28.8

 

Capital account

 

-4.4

 

Contributions etc. to/from EU, investmest

 

0.1

 

Developmenst assistance grants, investment

 

-5.7

 

Other

 

1.2

 

Financial account

 

-88.7

 

Direct investment

 

-97.2

 

Abroad

 

-206.5

 

Equity capital

 

-55.6

 

Loans etc.

 

-25.4

 

Reinvested earnings

 

-125.5

 

In Sweden

 

109.3

 

Equity capital

 

155.3

 

Loans etc.

 

-96

 

Reinvested earnings

 

50.1

 

Portfolio investment excl. fin derivatives

 

97.8

 

Assets (change in Swedish inv abroad)

 

-219.8

 

Equity securities

 

-201.7

 

Debt securities

 

-18.1

 

Liabilities (change in foreign inv in Sw.)

 

317.6

 

Equity securities

 

26.9

 

Debt securities

 

290.6

 

Financial derivatives

 

36.2

 

Other investment

 

-122

 

Assets (change in Swedish inv abroad)

 

-82.3

 

Loans

 

-111

 

Trade credits & other

 

28.7

 

Liabilities (change in foreign inv in Sw.)

 

-39.6

 

Loans

 

-9.3

 

Trade credits & other

 

-30.3

 

Reserve assets

 

-3.5

 

Net errors and omissions

 

-119

 

 

18



 

This annual report comprises:

 

a) Pages numbered 1 to 20 consecutively.

 

b) The following exhibits:

 

Exhibit a) None

Exhibit b) None

Exhibit c) Budget Statement

 

This annual report is filed subject to the Instructions for Form 18-K for Foreign Governments and Political Subdivisions Thereof.

 

19



 

Signature

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this annual report, to be signed on its behalf by the undersigned, thereunto duly authorized, at Stockholm, Sweden, on the 10th day of October, 2013.

 

 

Kingdom of Sweden

Acting through Riksgäldskontoret

 

 

By:

/s/ Thomas Olofsson

 

 

Thomas Olofsson

 

 

Director and Head of Funding

 

 

 

 

 

 

 

By:

/s/ Charlotte Rydin

 

 

Charlotte Rydin

 

 

General Counsel

 

 

20


EX-99.C 2 a13-22118_1ex99dc.htm EX-99.C

Exhibit c

 

1

 

Budget Statement

 

 



 

1                                         Budget Statement

 

1

Budget Statement

2

 

1.1

Political starting points and summary

4

 

1.1.1

Investing in the future

4

 

1.1.2

Measures in the Budget Bill for 2013

5

 

1.2

Outlook for the Swedish economy

9

 

1.2.1

The debt crisis dampens the Swedish economy

9

 

1.2.2

The risks of a weaker development dominate

10

 

1.3

Public finances, scope for reforms and expenditure ceiling

11

 

1.3.1

Temporary deficit in public finances

11

 

1.3.2

The scope for reforms in 2013

12

 

1.3.3

The expenditure ceiling for 2016

13

 

1.3.4

Continued work to develop the fiscal policy framework

14

 

1.4

Stronger conditions for growth and competitiveness

15

 

1.4.1

Infrastructure investments for a growing Sweden

15

 

1.4.2

Research and innovation for the future

17

 

1.4.3

A more effective education system

18

 

1.4.4

Better conditions for enterprise and entrepreneurship

19

 

1.4.5

Increased access to housing

23

 

1.5

More people into work

27

 

1.5.1

Increased opportunities for young people

27

 

1.5.2

Increased opportunities for integration

32

 

1.5.3

Increased opportunities for the long-term unemployed

38

 

1.5.4

Increased opportunities for people with disabilities

39

 

1.5.5

Strengthening the work-first principle and clarifying requirements

39

 

1.5.7

More social partner agreements are desirable

41

 

1.6

A stable financial system and enhanced consumer protection

41

 

1.6.1

Stricter capital adequacy regulations

42

 

1.6.2

Empowering consumers

43

 

1.7

Welfare for all and a more equitable distribution

44

 

1.7.1

More accessible and secure health care and social services

44

 

1.7.2

Greater choice and security for parents

45

 

1.7.3

Stronger judicial system for greater security in everyday life

46

 

1.7.4

Support for the financially vulnerable

47

 

1.7.5

Lower taxes for pensioners

48

 

1.8

An effective energy, climate and environmental policy

49

 

2



 

 

1.9

Other

52

 

1.9.1

A future fighter jet system

52

 

1.9.2

The upper secondary school reform

52

 

1.9.3

Income tax regulations for the non-profit sector

53

 

1.10

Effects of the Government’s policy

53

 

1.10.1

Government policy contributes to higher employment

53

 

1.10.2

Distribution effects of the Government’s policy

54

 

1.10.3

Effects of the Government’s policy on economic equality between women and men

55

 

3



 

1.1                               Political starting points and summary

 

1.1.1                     Investing in the future

 

International developments affect Sweden

 

Considerable uncertainty still surrounds the global economy, primarily because of the lack of sustainable solutions to the debt crisis in the euro area. This will dampen growth prospects in Sweden over the coming years. The growth rate in 2012 will therefore be low. This in turn will result in a weaker labour market. Growth is expected to gradually pick up momentum in 2013, with the economy growing at a healthy rate in the following years.

 

Table 1.1 Summary

 

Percentage change unless otherwise stated

Outcome 2011, forecast 2012–2016

 

 

 

2011

 

2012

 

2013

 

2014

 

2015

 

2016

 

GDP

 

3.9

 

1.6

 

2.7

 

3.7

 

3.5

 

3.0

 

Employed(1)

 

2.1

 

0.4

 

0.4

 

1.3

 

1.7

 

0.8

 

Unemployment(2)

 

7.5

 

7.6

 

7.5

 

6.7

 

5.5

 

5.2

 

Unemployment, previous definition(3)

 

5.3

 

5.5

 

5.5

 

4.5

 

3.5

 

3.5

 

GDP gap(4)

 

-0.9

 

-1.4

 

-1.7

 

-0.4

 

-0.1

 

0.0

 

Net lending(5)

 

0.1

 

-0.3

 

-0.6

 

0.3

 

1.7

 

2.5

 

Gross debt(5)

 

38.4

 

37.7

 

36.9

 

34.7

 

31.2

 

27.1

 

 


(1) Aged 15–74.

(2) As a percentage of the labour force aged 15–74.

(3) Number of unemployed people excluding jobseekers in full-time studies as a percentage of the labour force (‘open unemployment’). This figure refers here to the 15–74 age group, originally it referred to the 16–64 age group. The difference between the age groups is marginal in terms of the unemployment ratio.

(4) Per cent of potential GDP.

(5) Consolidated general government. Per cent of GDP

Sources: Statistics Sweden and own calculations.

 

The Swedish economy has shown good resilience

 

The Government is pursuing responsible financial policies that safeguard sustainable public finances, maintaining secure safety margins to deal with a deeper and more protracted crisis. At the same time, the Government has been able to boost jobs and welfare.

 

The policies pursued have contributed to better growth and employment in Sweden than in most other EU countries. So far, the Swedish economy has shown great resilience. The public finances are among the strongest in the EU, with net lending virtually in balance and declining debt, a position few other countries are in. The historically low interest premiums on Swedish government bonds indicate strong confidence in the Swedish state.

 

Sweden has successfully defended and improved its strong position. Responsible policies have preserved our economic policy room for manoeuvre during the crisis. Sweden’s strong position makes it possible to continue to counter the impact of the financial and debt crisis on jobs and welfare, while continuing to strengthen the country’s long-term capacity to grow and enabling more people to obtain work. This allows further steps to be taken to achieve the Government’s foremost economic policy objective — full employment.

 

The Government’s policies are founded on sound public finances. The combination of fragile banking systems and vulnerable state finances in many euro countries means that the risk of even worse developments dominates with respect to the main scenario. Safety margins are still needed, primarily so as to be able to pursue a more expansionary fiscal policy in the event of a deeper crisis in the euro area. In the light of the outlook for public finances, the economic situation and the need for safety margins, a scope for reforms of approximately SEK 23 billion in 2013 is considered reasonable. This scope for reforms is compatible with the expenditure ceilings and with a return to positive net lending of around 1 per cent of GDP when the resource situation normalises in the years ahead.

 

Direction of policy

 

Given the persistently subdued prospects of growth in Europe, the outlook for Sweden’s exports to this region is weak. The positive trend in the growth markets on other continents means Swedish businesses have large potential markets there, though facing extremely tough competition moving further up the value chain. To equip Sweden to cope with increasingly intense international competition, we must invest in the future, in getting more people into work and in further improving Sweden’s strong position. In the world market, Swedish enterprises must compete on knowledge and quality, not low pay and poor conditions. Major investments in infrastructure and research are proposed, together with improvements in conditions for business and the functioning of the housing market, so as to strengthen conditions for growth and create more jobs in growing businesses.

 

The Government will continue to act to increase employment and reduce exclusion. A

 

4



 

job of their own gives people a sense of security and community, as well as freedom to shape their everyday life. A weak attachment to the labour market is the main cause of financial vulnerability. Policies must therefore continue to promote reduced exclusion and to provide more paths into employment for those who are far from the labour market. Swedish society must stand together.

 

1.1.2                     Measures in the Budget Bill for 2013

 

In the Budget Bill for 2013, the Government proposes measures to strengthen the potential for growth and prevent unemployment persistence. The Government is prioritising reforms to promote:

 

·                  stronger conditions for growth and competitiveness through increased investments in infrastructure, research and innovation, lower corporate taxes and the introduction of a tax credit for investors;

 

·                  more people in work, with an emphasis on young people and people born abroad;

 

·                  a stable financial system and enhanced consumer protection;

 

·                  welfare for all and a more even distribution of wealth; and

 

·                  effective energy, climate and environmental policies.

 

Stronger conditions for growth and competitiveness

 

Infrastructure investments for a growing Sweden

 

Infrastructure connects the different parts of the country with one another and is an essential prerequisite for a growing economy. Improved infrastructure makes it easier to travel between home and work and gives jobseekers access to more vacancies. At the same time, it becomes easier for enterprises to access intermediate goods and to deliver their products.

 

The volume of traffic has been increasing for a long time, leading to a very high level of capacity utilisation in parts of the transport system. This is particularly apparent in the urban regions, on heavily used railways and along major routes. In recent years, the rail system has had serious problems. Despite a 75 per cent increase in maintenance since 2006, major additional measures are needed. Furthermore, a range of ongoing and planned industrial investments around the country will require increased transport capacity.

 

During autumn 2012, the Government will present an infrastructure bill to meet future transport needs. The Government proposal constitutes a vigorous response to the problems in the rail system and people’s and businesses’ needs. The sharply higher financial frameworks for infrastructure that the Government proposes for 2013—2025 provide scope for both extensive new investments and the largest increase ever in railway maintenance. This will create conditions for a robust and modern transport system that can contribute to growth and jobs throughout the country.

 

An important part of this commitment is the beginning of construction on a new main high-speed train line in the form of the Ostlänken (Eastern Link) between Stockholm/Järna and Linköping, and an extension of double track on the first part of the Gothenburg—Borås line. This will allow more, faster and more punctual passenger and goods rail transport.

 

To improve the traffic situation in the Stockholm region, the Government intends to appoint negotiators to negotiate with the responsible authorities in Stockholm County on the construction of a metro extension to Nacka and possible connecting measures in the road and rail infrastructure.

 

Other proposals include key mining infrastructure investments.

 

Research and innovation investments for the future

 

Sweden will continue to be a leading research nation with knowledge-intensive companies. Sweden is a competitive research nation and strong research environments have emerged in collaboration between higher education institutions and knowledge-intensive companies.

 

To enable Sweden to maintain and further improve its position as a prominent research nation in the future, the Government proposes a major investment in research and innovation within the framework of the Research and Innovation Bill to be presented in autumn 2012.

 

5



 

Substantial investments are proposed in universities and other higher education institutions, and in research funding institutions. In addition, priority will be given to targeted measures, including in life sciences research and in improving cooperation between research and business, for example by establishing strategic innovation areas. To further enhance the quality of research, a recruitment programme for internationally prominent researchers will be launched. The Government will propose additional initiatives in the Energy Research Bill that will also be presented in autumn 2012.

 

Conditions for enterprise and entrepreneurship will be strengthened.

 

Corporate tax conditions have a substantial influence on investment and growth in Sweden. Sweden must have a competitive corporate tax rate to encourage jobs and investment. The Government therefore proposes a reduction of the corporate tax rate to 22 per cent, which would put it just below the EU average. A lower corporate tax rate will provide strong incentives for the business sector to increase its investments, which will lead to increased productivity, higher real wages and higher employment. To ensure that corporate taxes are fair and the tax base is protected, the Government proposes to make the existing interest deduction limitation rules more widely applicable. The introduction of a tax credit for investors is proposed to stimulate access to capital in new and expanding enterprises. Measures are also proposed to strengthen legal certainty in tax issues.

 

Increasing access to housing

 

Access to housing affects people’s freedom of choice in life and their opportunities to move to study or work. Most new jobs emerge in growth regions. To enlarge the supply of housing, the existing housing stock needs to be better used and new construction needs to increase. In this bill, the Government presents concrete proposals in the areas announced in the 2012 Spring Fiscal Policy Bill, including a reduction of the real estate charge for rental and tenant-owner apartments and measures to encourage the letting of private housing.

 

More people into work

 

To help more people find jobs, the Government proposes permanent and temporary measures intended mainly to improve the functioning of the labour market, but also to respond to the weak economic trend.

 

Increased opportunities for young people

 

Youth unemployment has grown over a period of decades and has remained high since the crisis in the 1990s. Measures are therefore needed to ensure a high-quality education system and create a smooth transition from school to working life. In addition, labour market demand for young workers needs to increase, as does the number of young people who are willing to accept a job.

 

Education and training measures are proposed to bring down the high level of youth unemployment in the long term, focusing on strengthening upper secondary school vocational programmes. Several other countries have very positive experiences of apprenticeship programmes and Sweden has good reason to learn from them. The Government is therefore acting to firmly establish apprenticeship training programmes by permanently extending the provider allowances for apprentices and raising the part of the allowance paid to employers.

 

In response to the weakening of the economic outlook, action is being taken to temporarily increase places in adult vocational education, apprenticeship training for adults, vocational higher education, folk high schools, and universities and other higher education institutions. A large proportion of these measures will benefit young people. Proposals in labour market policy include enhanced resources for new start jobs, increased support from employment services and measures to encourage young people to study.

 

The Government also intends to support further initiatives for young people in collaboration with trade unions and employers within the framework of an employment pact. Such a pact would make the parties responsible for ensuring that substantially more young people are recruited via vocational introduction agreements, while the state could contribute to supporting recruitment under such agreements. Dialogue with the social partners will continue during autumn 2012.

 

6



 

Increased opportunities for integration

 

In general, people born abroad are in a weaker position in the labour market than people born in Sweden. In the integration area, reinforcement of the establishment reform is proposed, including measures to stimulate prompt reception by municipalities and increased opportunities for workplace-based measures. The establishment reform will also be broadened to cover more newly arrived people. A change in the parental benefit system is proposed to counter delays in labour market establishment for foreign-born women. The Government also proposes a temporary initiative aimed at stimulating work by municipalities to reduce exclusion in certain urban districts. Education and training measures for people born abroad are also proposed.

 

Increased opportunities for the long-term unemployed

 

The persistence of the weak economic situation means there is great need for early intervention to help people at high risk of long-term unemployment. The Government therefore proposes that funds be allocated to create more places in the labour market policy programmes. In addition, under the proposal, the special recruitment incentive scheme will continue at a higher level and the possibility of employment training during the employment phase of the job and activity guarantee scheme will be extended.

 

Increased opportunities for people with disabilities

 

Further action is proposed to improve job prospects for people with disabilities. This includes, for example, improved individual support at a new place of work.

 

Strengthening the work-first principle and clarifying requirements

 

Under the work-first principle, requirements that individuals should attempt to find their own means of earning a living are combined with support and encouragement to work. The Government proposes measures to clarify the requirements that apply to all recipients of labour market-related benefits or income support from the public authorities.

 

To strengthen incentives for people on social assistance to begin working or to work more, the Government intends to propose a change in the way income support is calculated so that only part of earned income will affect the assessment of entitlement to assistance.

 

A stable financial system and enhanced consumer protection

 

Financial stability is a prerequisite for a functioning economy. Since Sweden has a large banking sector relative to its GDP, a financial crisis risks becoming very costly. To reduce the danger of taxpayers having to pay for irresponsible risk-taking by banks, the Government intends to continue to take measures to secure financial stability.

 

To reinforce the consumer perspective, the Government intends to take measures to increase transparency in how banks finance their housing loans. Further, the Government intends to present legislative proposals aimed at creating a simpler and fairer model for calculating the interest rate differential, i.e. the compensation charge that applies when borrowers pay off fixed-rate mortgages prior to the maturity date.

 

Welfare for all and more equitable distribution

 

More accessible and more secure health care and social services

 

Health care and social services must be characterised by quality and accessibility. Their design must be governed by patient and user needs. Empowerment and freedom of choice are essential tools to achieve this, together with stricter supervision and follow-up.

 

The Government proposes stricter state supervision to promote better quality in health care and social services. Over and above this, the Government intends to present a proposal to the Riksdag in autumn 2012 on establishing a dedicated inspection agency. The Government also proposes action to develop and offer ‘health accounts’, which will give the individual access to personal care information, e.g. medical records.

 

Diversity and ownership criteria in the welfare sector

 

To ensure the quality of tax-financed welfare services, the Government will study possible conditions, in addition to existing requirements, that should be set for owners or corporate managements in the welfare sector in connection with authorising them to provide services.

 

7



 

Stronger judicial system for greater security in everyday life

 

Everyone should be able to feel secure in their everyday life. During the previous and current terms of government, the Government has sought to strengthen the judicial system so as to improve crime-fighting and crime prevention activities and make them more effective. Despite the measures taken, many people feel unsafe and far too few crimes are solved. Processing times, moreover, are too long. Several measures are therefore proposed to strengthen the judicial system, including tougher sentences, early and clear intervention against young people who commit crimes and measures to increase the efficiency and effectiveness of the judicial system.

 

Support for financially vulnerable

 

For the sake of social cohesion, and to ensure that economic growth benefits all, certain targeted measures are proposed for financially vulnerable groups. Their incomes will be boosted by measures in the systems for financial aid for studies, parental insurance and the housing supplement for pensioners.

 

Lower taxes for pensioners

 

To improve the financial situation of pensioners, the Government proposes a reduction of income taxes for people aged 65 or older totalling SEK 1.15 billion from 1 January 2013. This tax reduction will be implemented by raising the higher basic income tax allowance. Depending on local government tax rates, this proposal would increase the net income of a pensioner with an annual income of SEK 150 000 by between SEK 664 and SEK 790 per year.

 

Energy, climate and environmental policy

 

Sweden is, and will continue to be, a leader in energy, climate and environmental policy. The Government seeks to promote sustainable and cost-effective energy, climate and environment policies that reduce harmful emissions and environmental impacts in Sweden and the rest of the world.

 

The Government is proposing a number of reforms in energy, climate and environmental policy, including more efficient permit processes, support for renewable energy sources and increased resources to protect valuable natural environments. In addition, a number of tax changes are proposed, aimed at improving the environment and making climate and energy policies more cost-effective.

 

8



 

Table 1.2 Reforms in the Budget Bill for 2013, impact on general government net lending(1)

 

SEK billion

 

 

 

2013

 

2014

 

2015

 

2016

 

Stronger conditions for growth and competitiveness

 

 

 

 

 

 

 

 

 

Infrastructure

 

1.50

 

5.17

 

4.75

 

6.50

 

Research and innovation

 

1.74

 

2.70

 

3.06

 

4.00

 

Enterprise and entrepreneurship

 

8.33

 

8.05

 

8.05

 

8.05

 

Housing

 

0.65

 

0.64

 

0.63

 

0.63

 

 

 

 

 

 

 

 

 

 

 

More people into work

 

 

 

 

 

 

 

 

 

Young people(2)

 

2.20

 

2.36

 

2.08

 

1.46

 

Integration

 

0.88

 

1.28

 

0.98

 

0.77

 

Long-term unemployed

 

0.95

 

0.66

 

0.33

 

0.32

 

People with disabilities

 

0.10

 

0.17

 

0.17

 

0.14

 

Strengthen work-first principle and clarify requirements

 

-0.12

 

0.05

 

-0.06

 

-0.06

 

 

 

 

 

 

 

 

 

 

 

Welfare for all and more equitable distribution

 

 

 

 

 

 

 

 

 

Health care and social services

 

0.22

 

0.73

 

0.56

 

0.56

 

Justice

 

1.50

 

1.50

 

2.00

 

2.10

 

Support for financially vulnerable

 

0.78

 

0.78

 

0.78

 

0.78

 

Lower taxes for pensioners

 

1.15

 

1.15

 

1.15

 

1.15

 

 

 

 

 

 

 

 

 

 

 

Energy, climate and environment

 

 

 

 

 

 

 

 

 

Measures for the climate and environment(3)

 

0.56

 

0.55

 

0.61

 

0.83

 

Tax changes in the climate and energy area

 

-0.26

 

-0.35

 

-0.44

 

-0.53

 

 

 

 

 

 

 

 

 

 

 

Other expenditure reforms

 

6.31

 

2.82

 

2.08

 

1.95

 

Other income reforms

 

-0.54

 

-0.43

 

-0.46

 

-0.48

 

Total reforms not affecting net lending

 

3.02

 

0.34

 

0.34

 

0.34

 

Weakening of net lending from proposals in Budget Bill for 2013

 

22.7

 

27.2

 

25.6

 

27.3

 

 


Note: Amounts are rounded.

(1) A positive figure signifies deterioration in net lending.

(2) Of which SEK 1.8 billion for 2013 is attributable to temporary places in adult education, vocational higher education and higher education institutions. A substantial proportion of these places will reach young people, but other groups such as people born abroad and long-term unemployed may also benefit from this measure.

(3) This figure includes funds for energy research (SEK 0.25bn in 2013, SEK 0.25bn in 2014, SEK 0.27bn in 2015 and SEK 0.47bn in 2016). These funds are also included in the figure for research and innovation above, but are included only once in the total.

 

1.2                               Outlook for the Swedish economy

 

1.2.1                     The debt crisis dampens the Swedish economy

 

The debt crisis in the euro area is a burden on the Swedish economy. After strong growth in 2010 and 2011, the Swedish economy has slowed. In 2012, growth will be subdued, and employment will increase only slightly.

 

The Swedish economy has so far, however, shown good resilience to the past year’s economic turmoil, and growth has been stronger than anticipated in the 2012 Spring Fiscal Policy Bill. Confidence among Swedish households has been strong in the past year compared with that in other countries. This is partly due to the safeguarding of public finances, the high level of household savings and the high competitiveness of Swedish companies.

 

The turmoil in the financial markets persists

 

The turmoil in the financial markets remains great, mainly due to developments in certain heavily indebted euro countries. In conjunction with the meeting of the European Council in June 2012, the euro countries presented new measures to help these countries, but there remain a number of issues that need to be resolved if the agreed measures are to be implemented. Uncertainty about how long this will take, and whether these measures are adequate and appropriately designed, is partly reflected in high government bond yields in the indebted countries.

 

Recovery will be protracted

 

Economic activity in the euro area will continue to flag in the near future, and it will take time for a long-term solution to the fiscal problems to be put in place. In both the United States and the euro area, growth will slow due to a contractionary fiscal policy, a weak labour market and the continued need of households to reduce their debt. International recovery is expected to be protracted, and therefore the demand for Swedish exports will rise slowly.

 

The growth of the Swedish economy during the first half of 2012 was unexpectedly strong. However, uncertainty about the global economic situation has a negative effect on the expectations of Swedish households and companies about the future. This is partly responsible

 

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for subduing household consumption and business investment in 2012 and 2013. Overall, GDP is expected to increase by 1.6 per cent in 2012 and 2.7 per cent in 2013. The moderate growth in the Swedish economy will lead to reduced resource utilisation in 2012 and 2013.

 

The slowdown in the Swedish economy means a decrease in the employment needs of companies, giving a relatively weak employment increase in 2012. At the same time, the supply of labour will continue to increase, which means a slight rise in unemployment.

 

Growth in GDP will gradually become stronger during 2013. In 2014, the economy will recover in step with credible measures beginning to be implemented as a means of solving the fiscal problems in Europe and as international demand increases. Reduced uncertainty, a long period with a high savings ratio and gradually brighter prospects in the labour market will contribute to Swedish household consumption increasing at a good rate in 2013–2016. Internationally, recovery, though slow, will contribute to an increase in exports. This higher demand will lead to a rapid rate of increase in business investment. Overall, GDP will increase by an average of 3.4 per cent per year in 2014–2016. Resource utilisation in the economy as a whole will rise gradually and normalise in 2015.

 

Resource utilisation in the labour market is currently low. When demand increases in 2014, businesses will have great employment needs. As a result of the Government’s structural reforms and a growing population of employable age, employment will increase at a rapid rate. Unemployment will decline in 2014–2016 and is estimated at just over 5 per cent in 2016.

 

Inflationary pressure remains low

 

Low resource utilisation, in combination with relatively low unit labour costs, will lead to the underlying inflation, CPIF, rising slowly and only approaching 2 per cent in 2016. The low resource utilisation and low rate of inflation warrant an expansionary monetary policy. As growth improves, the repo rate is expected to rise gradually in 2014 and 2015 to a level of 3.5 per cent.

 

Table 1.3 Key indicators

 

Outcome 2011, forecast 2012–2016 Percentage change, unless otherwise stated

 

 

 

2011

 

2012

 

2013

 

2014

 

2015

 

2016

 

GDP

 

3.9

 

1.6

 

2.7

 

3.7

 

3.5

 

3.0

 

GDP gap(1)

 

-0.9

 

-1.4

 

-1.7

 

-0.4

 

-0.1

 

0.0

 

Employed(2)

 

2.1

 

0.4

 

0.4

 

1.3

 

1.7

 

0.8

 

Employment rate(3)

 

80.0

 

80.0

 

79.8

 

80.4

 

81.4

 

81.7

 

Hours worked(4)

 

2.3

 

0.3

 

0.6

 

1.5

 

1.5

 

0.8

 

Productivity(4), (5)

 

2.5

 

2.4

 

2.2

 

2.6

 

1.8

 

2.1

 

Unemployment(6)

 

7.5

 

7.6

 

7.5

 

6.7

 

5.5

 

5.2

 

Unemployment, previous definition(7)

 

5.3

 

5.5

 

5.5

 

4.5

 

3.5

 

3.5

 

Wages(8)

 

2.4

 

3.2

 

3.1

 

3.4

 

3.5

 

3.6

 

CPI(9)

 

3.0

 

1.0

 

1.2

 

1.7

 

2.4

 

2.6

 

 


(1) Difference between actual and potential GDP, as a percentage of potential GDP.

(2) Aged 15–74.

(3) Under the EU 2020 target, i.e. employed persons as a percentage of the population aged 20–64.

(4) Calendar-adjusted.

(5) Productivity in the business sector.

(6) Per cent of the labour force, aged 15–74.

(7) Number of unemployed people excluding jobseekers in full-time studies as a percentage of the labour force (‘open unemployment’). This figure refers here to the 15–74 age group; originally it referred to the 16–64 age group. The difference between the age groups is marginal in terms of the unemployment ratio.

(8) According to short-term wage statistics.

(9) Annual average.

Sources: Statistics Sweden, the Swedish National Mediation Office and own calculations.

 

1.2.2                               The risks of a weaker development dominate

 

There is considerable uncertainty about future economic developments. Overall, the risks of a weaker development dominate in relation to the main scenario.

 

There is considerable uncertainty about how the sovereign debt crisis in the euro area will develop, how long it will persist and how it will affect the world economy. The financial turmoil is great, as seen, for example, in the difference between various countries’ government bond yields. There is also considerable uncertainty as to the ability of the European banking system to cope with a worsened economic development. In several euro countries, the banking sectors are in need of additional capital, and the uncertainty surrounding the financing of the banks’ capitalisation needs increases concern about the sustainability of public finances in several euro countries.

 

There is also uncertainty about the development of the Swedish exchange rate. The Swedish krona has become much stronger during the summer of 2012, particularly against the euro.

 

10



 

Sweden’s relative strength, with sustainable public finances and relatively high growth, is an important factor in explaining this strengthening of the krona. It is possible that the krona will become significantly stronger than the assessment in the main scenario. Such a development could lead to weaker growth in exports and higher imports.

 

At the same time, it is possible that the recovery will come earlier and stronger than forecast in the main scenario. The debt crisis in Europe may fade more quickly than expected, which would lead to a stronger growth and lower unemployment in the coming years. Furthermore, it is possible that Sweden’s healthy public finances, good household balance sheets and competitive businesses mean that Sweden has a greater resilience to the debt crisis than forecast in the main scenario.

 

1.3                               Public finances, scope for reforms and expenditure ceiling

 

1.3.1                     Temporary deficit in public finances

 

Swedish public finances have become stronger in recent years. General government net lending has increased from a deficit of 1 per cent of GDP in 2009 to a small surplus in 2011. As a result of the subdued economic development and the measures proposed in this bill, it is assessed that net lending will decrease and show a deficit in both 2012 and 2013. Thereafter, lending will gradually improve to 2.5 per cent of GDP in 2016 (see Table 1.4).

 

Net lending will become stronger as of 2014 because expenditure will decrease relative to GDP, while revenue will increase in line with GDP. The strengthening of general government finances will take place within central government. Net lending in the old age pension system is positive in 2012 but will be negative in 2013. In 2014—2016, net lending in the old age pension system will be in balance. The finances of the local government sector are expected to remain strong over the forecast period, with a slightly negative net lending, but a positive result according to the accounting principles applicable to the balanced budget requirement for local governments.

 

Table 1.4 Consolidated general government finances

 

SEK billion

Outcome 2011, forecast 2012—2016

 

 

 

2011

 

2012

 

2013

 

2014

 

2015

 

2016

 

Revenue

 

1 735

 

1 778

 

1 824

 

1 905

 

2 008

 

2 105

 

Per cent of GDP

 

49.7

 

49.4

 

48.8

 

48.5

 

48.6

 

48.6

 

Taxes and charges

 

1 546

 

1 583

 

1 633

 

1 714

 

1 806

 

1 893

 

Per cent of GDP

 

44.3

 

44.0

 

43.7

 

43.6

 

43.7

 

43.7

 

Other revenue

 

189

 

195

 

191

 

191

 

202

 

212

 

Expenditure

 

1 731

 

1 791

 

1 848

 

1 892

 

1 938

 

1 997

 

Per cent of GDP

 

49.6

 

49.8

 

49.5

 

48.1

 

46.9

 

46.1

 

Net lending

 

5

 

-13

 

-23

 

13

 

70

 

108

 

Per cent of GDP

 

0.1

 

-0.3

 

-0.6

 

0.3

 

1.7

 

2.5

 

Consolidated gross debt

 

1 341

 

1 356

 

1 378

 

1 363

 

1 290

 

1 172

 

Per cent of GDP

 

38.4

 

37.7

 

36.9

 

34.7

 

31.2

 

27.1

 

 

Sources: Statistics Sweden and own calculations.

 

Net lending has been revised downwards by just over 1 per cent of GDP per year in 2013—2016 compared with the forecast in the 2012 Spring Fiscal Policy Bill. The reforms that the Government is proposing in this bill have contributed to lending being revised downwards by approximately 0.6 per cent of GDP per year. Wage bill development has been revised upwards, particularly for 2012, which has led to revenue from tax on labour being revised upwards. However, the higher revenues from tax on labour are offset by the profit outlook of companies being revised downwards, leading to lower tax revenues from tax on capital. Furthermore, the HUS tax credit (tax credit for household work) has been revised upwards, which also leads to lower tax revenues. Overall, revenues have been revised downwards compared with the assessment in the Spring Fiscal Policy Bill. Expenditure is expected to be higher than estimated in the Spring Fiscal Policy Bill. Changes in macroeconomic conditions and new volume forecasts now cause expenditure for ill health to be given a higher assessment. Furthermore, the situation in Syria and a changed approach to the immigration of close relatives have meant that expenditure for integration has been revised upwards. In addition, expenditure for the pension system is expected to be higher than assumed in the Spring Fiscal Policy Bill.

 

The consolidated gross debt is estimated at 37.7 per cent of GDP in 2012, which gives a good margin to the reference value in the EU Stability and Growth Pact of 60 per cent of GDP. This debt is expected to decline to approximately 27 per cent of GDP in 2016. This

 

11



 

is primarily due to the expected surpluses in net lending starting in 2014, but also to some extent to the calculation assumption of sales of central government shareholdings.

 

1.3.2                     The scope for reforms in 2013

 

At the beginning of this term of office, the Government announced a series of reform ambitions (see the Budget Bill for 2011, Section 1.7.4). The conditions laid down for these were that it could be ensured that the surplus target would be reached, the expenditure ceiling maintained and long-term scope for reforms created. The deteriorated economic global development and the more negative risk situation that has followed in the wake of the European debt crisis have caused the Government to decide to prioritise measures to prevent unemployment from becoming sticky. At the same time, safety margins beyond the surplus target in public finances have been maintained. The rationale for this strategy has been that there must, in a substantially weaker economic development than in the main scenario, be scope to take vigorous measures to support employment and economic development without deficits becoming excessively large and thus a source of anxiety and reduced confidence in the Swedish economy. This strategy has also helped to give greater scope for managing a much more difficult situation in the financial markets. The strategy has also ensured that there can be a return to positive net lending when the economic situation normalises and that the expenditure ceiling and the public finances are not put at risk. Furthermore, the strategy has led to the risk premiums on Swedish government bonds having been at historically low levels, which in itself has contributed to a favourable public financial situation.

 

In the domestic debate, it has been argued that the Government should have pursued a more expansionary fiscal policy during the crisis, especially in 2011 and 2012. Also at the international level, it has been argued that countries with relatively good public finances and with large foreign trade surpluses, such as Sweden and Germany, should pursue a more expansionary fiscal policy that can help to raise the aggregate demand in Europe.

 

The Government has repeatedly stated that it has been difficult, in this problematic global situation, to weigh the importance that is to be assigned to the need to maintain adequate safety margins in the public finances, allowing scope to manage a possibly deeper and more prolonged crisis, and the importance that is to be assigned to temporary stimuli. With reference to the uncertain international situation, the assessment has been that it was more important to maintain adequate safety margins in the public finances to safeguard confidence and to secure scope to manage a deeper and prolonged crisis. This is particularly important for a small open economy such as that of Sweden, with public finances that are sensitive to economic trends and with a large financial sector relative to GDP. The Government assesses that it has been justified for a certain period for fiscal policy to have greater safety margins and buffers than those already provided by the surplus target in more normal circumstances. The Government still assesses that if the financial markets, households and businesses lose confidence in public finances and in Sweden’s ability to manage the crisis, this will have far greater negative consequences for the development of the Swedish economy and labour market compared with the positive effects of greater stimuli in the short term. In addition, the Government has taken relatively large measures to address the crisis. For example, according to the OECD, Sweden was one of the countries that pursued the most expansionary fiscal policy at the beginning of the crisis.(1)

 

A responsible fiscal policy and previously implemented structural reforms have contributed to the Swedish economy showing a surprisingly strong resilience to the negative global economic development. Where other countries have been forced to restructure their public finances, Sweden has been able to take measures that have prevented unemployment from becoming entrenched, strengthened welfare, improved the economic situation of especially vulnerable groups and contributed to a more efficient economy.

 

Downside risks still dominate, and therefore there is still need for safety margins in fiscal policy. The low level of public debt, historically

 


(1) See OECD (2009), Economic Outlook, June 2009.

 

12



 

low risk premiums on government bonds and a relatively large distance down to the Stability and Growth Pact’s deficit boundary mean that net lending can be allowed to fall further in the event of a considerably weaker development than is currently expected. Therefore there are, in this regard, safety margins and scope to allow fiscal policy to accommodate a more negative development of this kind without threatening confidence in public finances.

 

There is at present no need for broad temporary measures to stimulate demand. The resilience that the Swedish economy has, for a period, demonstrated against the global economic downturn, and the strong confidence that the Swedish economy and Swedish public finances enjoy, mean that the Government now assesses that there is instead scope to take further urgent structural measures — measures that contribute to even greater investment in Sweden and that at the same time support the economic recovery.

 

Overall, a scope for reforms in 2013 of approximately SEK 23 billion is assessed to be well balanced. A package of this magnitude and with the above mentioned focus will help to strengthen the Swedish economy in the long term and to support the economic recovery. This will be done at the same time as sufficient safety margins are maintained in the future in order to deal with a more problematic economic development than that assumed in the main scenario.

 

1.3.3                     The expenditure ceiling for 2016

 

The expenditure ceiling sets an upper limit on how high expenditure may be for each individual year. The expenditure ceiling gives the Riksdag and the Government improved opportunities to control and manage appropriation funding and the development of expenditure. The expenditure ceiling highlights the need for prioritisations between expenditure areas and prevents a development in which the tax levy must be increased as a result of inadequate expenditure control.

 

Economic developments in the next few years are highly uncertain, and it is important that an uncertain future scope for reforms is not committed in advance but that it is always checked prior to each new budget year. The expenditure ceiling is a fixed upper limit on the level of expenditure for several years to come.

 

The Swedish Budget Act (2011:203) stipulates that the Government shall, in the Budget Bill, propose an expenditure ceiling for the third year ahead. The 2010 Spring Fiscal Policy Bill extended this time frame by one year, and the Government reported an assessment of the expenditure ceiling for the fourth year ahead in order to clarify the strategy for a return to surplus in the public finances. At the same time, the Government confirmed that there was considerable uncertainty regarding future economic developments and the sustainable growth rate, and that there were significant risks of setbacks. The Government further stated that the extended time frame could also contribute to increased uncertainty. The expenditure ceiling is set in nominal terms and is not changed. Therefore, its relationship to other macroeconomic quantities, such as GDP, will change if the assessment of the economy in general changes. The Government has since then kept to the four-year perspective.

 

A responsible fiscal policy and previously implemented structural reforms have contributed to the Swedish economy showing a surprisingly strong resilience to the negative global economic development. This applies particularly to the public finances.

 

The risk situation, however, remains significant, and there is still need for safety margins in fiscal policy. In a manifestly inferior economic development than in the main scenario, there must be scope to take vigorous measures on the expenditure side of the budget to bolster employment and economic development.

 

The Government presents an assessment of the level of the expenditure ceiling for 2016 in this Budget Bill. In accordance with the Budget Act, the Government intends to propose expenditure ceilings for 2016 in the Budget Bill for 2014.

 

The Government assessed in the 2012 Spring Fiscal Policy Bill that the expenditure ceiling should increase by SEK 30 billion between 2015 and 2016. The Government currently believes that this assessment is reasonable.

 

The expenditure ceiling is an instrument for the Government to achieve the surplus target. The budget margin, that is, the difference between the expenditure ceiling and the actual

 

13



 

expenditure subject to the ceiling, should be large enough to handle uncertainties, primarily those due to a different economic development.(2) The budget margin can also be utilised for expenditure reforms provided that this is consistent with the surplus target and the need for a safety margin. In relation to the assessment of the surplus in the public finances for 2016, the budget margin for 2016 is not assessed to be so large as to prevent the expenditure ceiling from providing a stable support for the surplus target.

 

Table 1.5 Expenditure ceilings 2012—2016

 

SEK billion, unless otherwise stated

 

 

 

2012

 

2013

 

2014

 

2015

 

2016

 

The Government's proposed expenditure ceiling

 

1 084

 

1 095

 

1 105

 

1 125

 

1 155

(1)

Expenditure ceiling, percentage of potential GDP

 

29.7

 

28.8

 

27.9

 

27.2

 

26.8

 

Expenditures subject to the ceiling

 

1 026

 

1 066

 

1 078

 

1 092

 

1 119

 

Budget margin

 

58

 

29

 

27

 

33

 

36

 

Budget margin, percentage of expenditures subject to the ceiling

 

5.7

 

2.7

 

2.5

 

3.0

 

3.2

 

Budget margin, percentage of GDP

 

1.6

 

0.8

 

0.7

 

0.8

 

0.8

 

General government structural balance, percentage of GDP

 

0.2

 

0.3

 

0.6

 

1.8

 

2.5

 

 


(1) The Government presents an assessment of the level of the expenditure ceiling for 2016 in this Budget Bill.

Source: Own calculations.

 

1.3.4                     Continued work to develop the fiscal policy framework

 

Experience of fiscal crises points to the importance of clear budget policy objectives and constraints and a well-designed budget process so as to achieve the overall objectives of economic policy. Sweden introduced a new fiscal policy framework in the wake of the economic crisis in the 1990s. The Swedish fiscal policy framework includes the surplus target, the expenditure ceiling, the balanced budget requirement for local governments and a stringent budget process.(3)

 

As part of its work to strengthen confidence in public finances, the Government, since taking office in 2006, has engaged in a continuous effort to develop the fiscal policy framework. The work to develop the framework was intensified as the financial and debt crisis demonstrated the cost of having a non-functioning framework.

 

During the previous term of office, a number of measures were implemented to strengthen the fiscal policy framework. For example, in 2010, it was made mandatory for the Government to use expenditure ceilings and surplus targets. In addition, the Government has established a fiscal policy council, improved the reporting of fiscal policy in the fiscal policy bills and created a process to better monitor the implementation of the fiscal policy framework.

 

Since Sweden’s framework has proved to be effective, the Government considers it central to adhere to the foundational parts of the framework, at the same time as the necessary work of further developing the framework continues. This is to ensure that the framework also continues to provide support for a sustainable economic policy of full employment. Sweden’s relatively strict fiscal policy framework and sound public finances, with a low and declining public debt, have contributed to the great confidence in the Swedish economy and the direction of economic policy. This means that Sweden has a greater degree of freedom than other countries to test the design of the framework with respect to fiscal sustainability while maintaining the confidence of both citizens and markets. This freedom must be used responsibly, of course, if this confidence is to be maintained.

 

The Government announced in the 2011 Spring Fiscal Policy Bill that it will continue the work to develop the fiscal policy framework also during the current term of office. In this continued work, the Government intends to initiate a review of the budget process and consider whether it is desirable to increase the flexibility of the system of expenditure ceilings.

 


(2) According to the Government’s guideline, the margin should be at least 1 per cent of the expenditure subject to the ceiling for the current year, at least 1.5 per cent for the year t+1, at least 2 per cent for the year t+2 and at least 3 per cent for t+3 and t+4.

 

(3) For an overview of the fiscal policy framework, see Government Communication The Swedish fiscal policy framework (Skr. 2010/11:79).

 

14



 

The review of certain parts of the budget process should include an analysis of the extent to which current budget management practice should be regulated. The aim should be to clarify the existing order. Furthermore, the need for new or amended provisions that clarify certain EU requirements on the Member State’s budgetary frameworks should be considered, including the requirement for a medium-term budgetary perspective.

 

For reasons of stabilisation policy, the surplus target is defined as an average over a business cycle. A comprehensive analysis has been made of the design of the surplus target that has found that its flexibility is appropriate.(4) The expenditure ceiling is not assessed to have the same flexibility as that of the surplus target in certain respects, and the Government therefore intends to further investigate whether the application of the system of expenditure ceilings can also be made a little more adaptable, in part from a stabilisation policy perspective. The Government wishes to point out that a fundamental condition in this analysis must be that the expenditure ceiling’s central role of budgetary discipline is preserved. The Government intends to revisit this issue in the 2013 Spring Fiscal Policy Bill (see Section 4.7).

 

1.4                               Stronger conditions for growth and competitiveness

 

The Swedish economy is becoming increasingly integrated internationally, both as a result of technological developments and of reduced regulation in various markets. Internationalisation encompasses the production of goods and services, but also labour and capital mobility.

 

International competition contributes to technological development and results ultimately in higher productivity and growth. If companies are to remain competitive, investment is important. At the same time, changing conditions mean that certain industries and companies may find it harder to compete, while others strengthen their position. This development means that the composition of the business sector is changing and that new jobs are being created, while others disappear. This structural transformation, in the short term, results in certain localities and individuals being affected, such as in the case of business closures.

 

From a historical perspective, Sweden has had a good ability to adapt to changing conditions for both companies and workers. If the Swedish economy is to continue being well placed to meet the challenges resulting from internationalisation, it is necessary to have an education system that ensures the availability of skilled labour, high-quality research and innovation as well as an efficient transport system and labour market. Furthermore, good conditions for enterprise and entrepreneurship form the foundations of a dynamic business sector that invests in research and production in Sweden. An effective housing market and good commuter transport increase labour mobility and therefore facilitate the adjustment resulting from the ongoing structural transformation.

 

1.4.1                     Infrastructure investments for a growing Sweden

 

Sweden is dependent on a reliable transport system to secure the transportation needs of individuals and businesses. The country’s geographical location reinforces the importance of effective infrastructure.

 

The volume of traffic has been increasing for a long time, leading to a very high level of capacity utilisation in parts of the transport system. This is particularly evident in the metropolitan areas, to which many people move, and along certain major transport routes for freight and passenger services where great congestion occasionally arises. A number of current and planned business investments will also create an additional need for enhanced transport capacity. In the rest of the country, congestion is less manifest, but there, great distances, poor maintenance and limited access to public transport can cause problems for people and businesses.

 

In recent years, problems in the railway system have been significant, and this has demonstrated a need for operations, maintenance and reinvestment resources to increase. Both capacity shortages and the disruption resulting from neglected maintenance lead to great

 


(4) Ministry memorandum Ds 2010:4.

 

 

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economic costs and adversely affect the Swedish economy.

 

An efficient transport system is a prerequisite for companies to operate throughout the country and to easily find staff with the right skills. For individuals, good communications make it easier to commute to and from work and increase the possibility to choose their place of residence.

 

Government measures

 

Sweden’s conditions for international competitiveness and growth need to be strengthened for the future. The Government therefore proposes major investments in infrastructure to create conditions for a robust, efficient and reliable transport system that meets the commuter needs of citizens and the transportation needs of businesses. For 2016, additional appropriations amount to SEK 6.5 billion. The Riksdag has previously approved a planning framework for transport infrastructure measures of SEK 417 billion for the period 2010—2021 (Govt. Bill 2008/09:35). In the forthcoming infrastructure bill, the Government intends to propose that the planning framework for the period 2014—2025 shall amount to SEK 522 billion. The Government’s forthcoming proposal thus entails an increase of the framework by approximately 19 per cent in comparable prices. In the forthcoming infrastructure bill, the Government will propose a new planning framework for transport infrastructure measures for the years 2014—2025.

 

In the autumn, the Government will present an infrastructure bill. The point of departure for the proposals in the bill are the positions taken by the Government in the bills Travel and transport in the future — infrastructure for sustainable growth (Govt. Bill 2008/09:35) and Objectives for future travel and transport (Govt. Bill 2008/09:93).

 

The proposals will entail a substantial increase in the financial frameworks for infrastructure measures in relation to previous decisions. This raising of ambition applies both to operations and maintenance and to investments in new infrastructure. Approximately 75 per cent of the additional funding to the infrastructure frameworks in 2016 relate to investments in railways. In addition, higher track access charges and efficiency improvement measures are assessed to lead to further increases in ambition.

 

The Government believes that economically effective measures that increase capacity and contribute to a more efficient use of the transport system should be prioritised as a whole. The resources should be spent firstly on operations and maintenance and on tuning measures for existing infrastructure. In addition, investments in the increased capacity of the transport system should be prioritised in order to meet the changed conditions of businesses and citizens. The measures in the Government’s initiatives focus on the most important transport routes and lines that are important for commuting. The initiatives also mean that scope is created to bring forward the already planned investments that are urgent from the point of view of capacity and of improved road safety.

 

A distribution of the investment frameworks on individual objects will be proposed in the Government’s infrastructure planning process for 2014.

 

The Government will propose that the construction of a new main line begins with the Eastern Link, which makes possible the use of high-speed trains between Stockholm and Linköping. Furthermore, new double tracks between Mölnlycke and Bollebygd will be built as a first step in bringing the two largest cities in the west of Sweden, Gothenburg and Borås, closer together. This will significantly improve the communications for Stockholm— Skavsta and Gothenburg—Landvetter airports.

 

In order to achieve a significant improvement to the traffic situation in the Stockholm region, the Government intends to appoint negotiators to negotiate with the responsible authorities in Stockholm County on the construction of a metro extension to Nacka and possible connecting measures in the road and rail infrastructure. Objects linked to the existing route of the metro may also be reviewed. In connection with this, an eastern road link (Österleden) shall also be discussed, among other projects. An extension of the metro will enable a sharp increase in the construction of housing around the lines in question, something that is central for Stockholm’s continued role as a growth engine. The negotiators will produce proposals for funding the metro extension, partly through higher

 

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and broader revenues from congestion tax or various forms of co-financing.

 

In addition, initiatives on the route Pajala–Svappavaara and on Malmbanan that are key to the mining industry will be given priority.

 

In order to improve conditions for jobs and entrepreneurship throughout Sweden, the Government proposes to reserve additional funding for broadband expansion.

 

1.4.2     Research and innovation for the future

 

Research is of great importance for providing the wider community and industry with long-term skills. As a basis for innovation, it also helps to improve and develop new products and services and to create conditions for developing new and more efficient methods of production, organisation and distribution. This leads to higher productivity and thereby to higher long-term growth.

 

Investments in research and development are extensive in Sweden. In an international comparison, only three countries have invested a higher proportion of their GDP on research and development than Sweden in 2010.(5) Even if public investments are extensive, it is the business sector that accounts for the largest share of investment in research and development. A number of large international companies account for a significant portion of these initiatives, which means that the total investment in research and innovation in Sweden is partly dependent on the decisions of a few companies.

 

In international comparisons of research and innovation, Sweden ranks highly also in terms of indicators other than the quantity of resources directed to the area. The number of patents and scientific articles in relation to population size is high, as is the proportion of researchers in the labour force. Even in comparisons of national innovation capacity, Sweden is at the top.

 

International competition is on the rise in the research area because many countries are increasing their investments in research and development. In addition, active measures are being implemented to induce companies to invest in research within the borders of their own countries.

 

If Sweden is to continue maintaining and further improving its position as a leading research nation in the future, the Government believes that it is important to continue to offer high-quality research environments, skilled labour and a business climate that yields good opportunities for companies to invest.

 

Government measures

 

The Government has in recent years implemented several initiatives to strengthen research in Sweden. The research and innovation bill from 2008, A Boost to Research and Innovation (Govt. Bill 2008/09:50), made the largest ever public investment in research and innovation.

 

The Government is now proceeding to further strengthen Sweden’s position as a leading research nation. Overall, resources for research and innovation are being increased by SEK 4 billion in 2016 compared to 2012 levels. This means an increased investment totalling SEK 11.5 billion for the years 2013–2016.

 

The Government intends to submit a research and innovation bill to the Riksdag in autumn 2012. The bill will set the direction of central government research and innovation policy for the period 2013–2016. The initiatives in the bill aim to make Sweden a leading research nation, where research and innovation is of high quality and contributes to societal development and business competitiveness. The focus is on creating a better quality of research, securing major research infrastructure and on shaping better conditions for the harnessing of research-based knowledge.

 

Research must be of a higher quality and become more effective if Sweden is to retain its position as a strong knowledge nation. The model for the allocation and reallocation of higher education funding, as introduced in the previous research and innovation bill, is being developed in order to further tighten the requirements on research quality. In addition to this, it is also proposed that higher education funding be increased to secure good long-term conditions for high-quality, independent research.

 

Parallel to increased funding to higher education, the posting of research funding under

 


(5) OECD (2012), Main Science and Technology Indicators Database.

 

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competitive conditions is an effective means of promoting high-quality research. More resources are therefore also proposed to the research funding institutions, the Swedish Research Council, the Swedish Council for Working Life and Social Research (FAS) and the Swedish Research Council for Environment, Agricultural Sciences and Spatial Planning (Formas), which have well-developed systems for the quality assurance of research.

 

To further promote the quality of research, a specific programme is proposed that will aim to attract internationally prominent researchers to Sweden.

 

Researcher access to high-quality research infrastructure is an important part in the development of research. This often involves huge investments which might not be realised unless central government provides funding. An initiative is therefore proposed to secure important research infrastructure, where the research facility European Spallation Source (ESS) in Lund will be given particular priority.

 

Research and innovation are key elements in the development towards a sustainable energy system. The Government proposes increased and extended initiatives in energy research within the Swedish Energy Agency. Focus and objectives will be presented in a specific energy research bill in autumn 2012 (see also Section 1.8).

 

Sweden, like most other European countries, faces a major demographic challenge to adapt society to an ageing population. This will include significant challenges in health care and elderly care, and for this reason, a specific initiative is proposed for research in the field of life sciences.(6) As part of this initiative, the Government proposes to further develop the Science for Life Laboratory (SciLife Lab) and strengthen the prerequisites for life sciences research of high international standard. Research in this area also aims to create positive synergies with the already successful Swedish life science industry. Also proposed is an investment in research on ageing and health and on care research.

 

The Government also proposes initiatives in strategic innovation areas. Some of the innovation areas being specifically highlighted are mining and minerals. More research is needed in the entire value chain, from exploration to recycling. Research in forestry, forest raw materials and biomass and in sustainable societal development is also being prioritised.

 

The Government wishes to further strengthen the link between academic research and commercialisation and proposes to strengthen the research institutions under RISE Holding AB and to reserve funding for testing and demonstration facilities. The prerequisites of universities to link research and innovation will be strengthened through the Government’s proposed initiative for more innovation offices.

 

In autumn 2012, the Government will present a national innovation strategy.

 

1.4.3     A more effective education system

 

High-quality higher education is essential for long-term growth and competitiveness. At the same time, basic education is central for all to have the necessary skills to pursue further studies or enter the labour market.

 

International comparisons suggest that the skills of Swedish pupils have deteriorated, especially in the subjects of mathematics and science. It is also problematic that the proportion of young people who do not complete primary and upper secondary school is relatively high. More than one in ten primary school pupils are not qualified for upper secondary school, and of the pupils who begin upper secondary school education, only about two thirds complete their studies on time, that is, receive a final grade after three years.

 

Shortcomings in the school system have repercussions in higher education and the labour market (see also Section 1.5 and the box The causes of youth unemployment). For pupils who never begin their upper secondary education or drop out, the transition from school to working life can be too great. In upper secondary vocational education, dropout problems are particularly large. In addition to the problem of many leaving upper secondary school without a final grade, it has been found that the school system is not sufficiently preparing pupils for the labour market.

 

For those who go on to higher education, inadequate prior knowledge constitutes a problem, especially in mathematics. Swedish students are

 


(6) Life sciences encompass the scientific study of living organisms.

 

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also relatively old when they begin their higher education studies. As a result of changes in admission regulations, however, the age of those recently entering higher education has fallen slightly.

 

Government measures

 

Since taking office, the Government has implemented a long series of reforms to address the problems within education. Among other things, measures have been taken to improve student performance and to facilitate the transition from education to working life. It is still too early to see the full results of all the education reforms. To ensure that the education system really is improving, there is reason to monitor progress and, if necessary, take further measures.

 

As part of a broad youth package, the Government proposes measures to motivate and support unemployed young people so that they complete their upper secondary education. In order to raise student completion levels and the quality of upper secondary education, the Government proposes further quality improvements of, for example, upper secondary vocational programmes. The continued development of apprenticeship programmes is another important part of improving young people’s opportunities for gaining employment (see Section 1.5.1).

 

Swedish industry has an increasing demand for skilled workers, and to meet this demand it is proposed that the number of places for the Bachelor and Master of Science programmes in engineering be increased.

 

1.4.4    Better conditions for enterprise and entrepreneurship

 

The sustainment of Sweden’s competitiveness requires a dynamic business sector throughout the country where new businesses emerge and grow, while unprofitable companies are reorganised or wound up. Barriers to business creation and development should be as low as possible, while effective competition is maintained.

 

According to international comparisons, barriers to entrepreneurship are relatively low in Sweden. For example, the OECD indicator demonstrates that only the United Kingdom and the Netherlands have lower barriers of this kind.(7)

 

The business climate and access to venture capital are important factors for investment and production decisions and thereby affect the competitiveness and long-term growth of companies.

 

Measures to improve conditions for businesses and entrepreneurship are a natural part of many countries’ policy for increased productivity. Also for Sweden, it is necessary to continuously improve the business climate in all areas so that competitiveness is maintained.

 

The importance of corporate tax for investment and increasing international tax competition

 

Corporate tax conditions have a substantial influence on investment and growth in Sweden. In studies on taxes and growth, the OECD makes the assessment that corporate tax is the tax that is most harmful to growth.(8) The Swedish corporate tax rate has previously had a competitive design, but in the last two decades, corporate tax rates have come down on an international level. Today, the Swedish corporate tax rate is above average in both the OECD and the EU (see the box The importance of corporate tax for investment and growth).

 

A lower corporate tax rate would strengthen the incentives for the business sector to increase its investments in Sweden, which will lead to increased productivity, higher real wages and higher employment.

 

At the same time, internationalisation means that international companies have great opportunities for tax planning by exploiting differences in national tax systems. Reports from the Swedish Tax Agency state that there is a very strong incentive for companies to establish intragroup debt for tax purposes (see also Section 6.17). Furthermore, it appears that foreign direct investment through loans has increased. Competition for investment and the opportunities for tax planning in international groups demands an active tax policy. In order to

 


(7) OECD (2011),     Product    Market    Regulation    Database, www.oecd.org/economy/pmr.

 

(8) OECD (2010), Tax Policy Reform and Economic Growth, OECD Tax Policy Studies, No. 20 and OECD (2008), Tax and Economic Growth, WP No. 620.

 

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attract investment and provide good conditions for entrepreneurship in Sweden, it is important to have a competitive corporate tax rate. At the same time, it is important to ensure that the tax system is not exploited in unintended ways.

 

Capital is needed for investments

 

International comparisons show that there is a relatively good supply of central government and private venture capital in Sweden. However, in relation to several other comparable countries, relatively little capital is available in the earliest stages of a company’s establishment. In recent years, the scope of financing for private market companies in the very earliest stages has also decreased. Here, central government funding initiatives have an important function to fill as a supplement to the market.

 

Government measures

 

Reduced corporate tax and more effective restrictions on interest deduction

 

A reduction of corporate tax improves the business climate and makes Sweden more attractive to domestic and foreign investment. The effect is assessed to be particularly great for a small open economy such as that of Sweden.

 

The Government proposes that the corporate tax rate be reduced from 26.3 per cent to 22.0 per cent as of 1 January 2013. To equate sole proprietorships and partnerships with limited companies, the Government proposes a simultaneous reduction of the expansion fund tax to 22.0 per cent.

 

In lowering the corporate tax rate, Sweden will belong to that half of the OECD countries with the most competitive corporate tax rates.

 

In order to protect the Swedish corporate tax base against tax planning using interest deductions, the Government proposes that the existing regulations to restrict interest deductions be extended to cover interest expenses on all debts within a single community of interests. The proposal includes restricting the possibility of deducting interest expenses that have arisen primarily for tax purposes. Without the regulation change, there is a significant risk that the Swedish corporate tax base will be eroded. Moreover, there is a clear international trend towards restricting the opportunities for tax planning using interest deductions. The Netherlands, Denmark, Germany and Spain have, among other things, introduced restrictions on interest deduction, and in Finland, the work to do so is in progress. The proposal will create more equal conditions between international groups and companies that are not able to take internal loans from abroad.

 

Improved access to capital

 

To stimulate access to capital for small businesses, the Government intends in 2013 to propose the introduction of a deduction for investors. This investor’s deduction means that a natural person who acquires shares in a small company in connection with its formation, or in a new share issue, may deduct half the acquisition cost of the shares in the income tax schedule for capital. Deductions will, however, be permitted to a maximum of SEK 650 000 per person per tax year, provided that a number of conditions are met (see Section 6.12). The additional funds that give the right to investor’s deductions may not exceed SEK 20 million per company per tax year. A follow-up of the investor’s deduction shall be carried out after the end of the second calendar year following the calendar year in which the proposal enters into force.

 

The Government intends to return to the Riksdag in 2013 with a proposal for an investor’s deduction. Before a system of investor’s deductions can enter into force, it must be notified to and approved by the European Commission. In light of this, it is assessed that a system of investor’s deductions will be able to enter into force no earlier than 1 September 2013.

 

The Government announced in the Budget Bill for 2011 that a review of the central government venture capital structure would be conducted. A starting point was to create a clearer actor structure, where funding for central government venture capital investments is focused on fewer actors, and a greater focus on the early stages of company development. One result of the review is that the Government in its 2012 Spring Budget Amendment Bill (Govt. Bill 2011/12:99) announced a merger of Almi Företagspartner AB and Innovationsbron AB. The new actor will begin operations as of 1 January 2013. The Government also intends to continue the work of creating conditions for a systematic evaluation of the central government

 

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actors’ operations and of the system’s effectiveness.

 

Reducing company liquidity problems

 

Long payment periods and overdue payments give rise to costs and liquidity problems for companies, which can be particularly difficult for smaller companies. If invoice payments are made on time and faster than today, economic benefits can be realised. Within the EU, work to shorten payment periods and combat overdue payments has been in progress for some time. A directive has been adopted and will be implemented no later than March 2013. In light of this, an inquiry has submitted proposals for measures (SOU 2012:11). The Government especially intends, partly in light of the inquiry’s proposals, to improve the situation of small and medium- sized businesses, and plans to return to the Riksdag with a bill on faster payments in the business sector.

 

Strengthened legal certainty in tax issues

 

To further strengthen legal certainty in taxation, a revision is proposed. The Government intends to appoint an inquiry to review the institution of advance rulings and analyse whether there is a need for any other form of binding decision in individual cases. The Government will also instruct the Swedish Tax Agency to improve their handling of cases in order to strengthen legal certainty and to improve its service to and communication with businesses. The Government also intends to appoint an inquiry to produce further proposals for the creation of a modern, effective and legally secure administrative process. A major task of this mission will be to review whether there is a need for further strengthening legal certainty with regard to tax cases, mainly through the specialisation of tax cases in court. The Government assesses that the inquiry should be able to commence its work on 1 April 2013.

 

Improved tax conditions

 

The work to investigate the possibilities of improving tax conditions for entrepreneurship continues in the Corporate Tax Committee (dir. 2011:1), which will present its final report in autumn 2013. The assignment includes developing proposals that will further broaden the tax base so as to make it possible to lower the tax rates paid by the company sector at the same time as reducing existing distortions in the tax system.

 

Prerequisites for further simplification and improvement

 

The work of reducing the administrative burden on businesses continues.

 

To encourage more people to dare to take the step of becoming an entrepreneur, it is important to have a simple and predictable system of regulations. The Government intends to appoint an inquiry chair to review, and make proposals for simplifications of, the tax regulations for sole proprietorships and partners in partnerships. The Government’s objective is to make it easy and profitable to run a business in Sweden, regardless of the form in which activities are conducted.

 

The business sector has indicated a desire to see simplified tax reporting for small businesses. The Government will analyse possible measures to facilitate reporting for these companies. One such measure, for example, is a straight cash method.

 

Many close companies are facing a generation change. To make it possible to harness established values in existing businesses with growth potential, it is important that there are good conditions for this generation change. The Government therefore believes it is a matter of urgency to review the taxation of transfers of qualifying shares in connection with generation change. The regulations on voluntary tax liability for VAT on the letting of business premises have been criticised for being complicated and administratively burdensome. The Government intends to conduct a broader review with the aim of simplifying the regulatory framework.

 

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The importance of corporate tax for investment and growth

 

Sweden is a small open economy where capital can move freely across national borders. In this type of economy, the required return on business investment is determined on the international capital markets. Investors in these markets compare the return after tax on various investment projects in different countries. Investment decisions are thus directly influenced by corporate tax.

 

A high corporate tax rate can mean that more investments become unprofitable because it leads to a comparatively high required return before tax. For that reason, if the corporate tax rate is lowered, more investment projects become profitable. In such a situation, businesses adjust to a new and greater optimal capital stock by increasing investment. A higher capital intensity in companies increases productivity, creating scope for higher wages. Higher wages increase the supply of work and, in the long term, also employment.

 

According to studies by the OECD on taxes and growth, corporate tax is the tax that is deemed most harmful to growth.(9) Good tax conditions for investment are therefore a prerequisite for Swedish companies, also in the future, to be able to compete successfully and contribute to high economic growth.

 

The international trend towards lower corporate tax rates has been manifest over the past two decades. In the early 1990s, Sweden had one of the most competitive corporate tax systems among the OECD countries, measured by its effect on the incentives for new investments. From an EU perspective, the Swedish regulations were competitive as late as 2002. Since then, new Member States have joined the EU, with many of them choosing to have a relatively low corporate tax rate, while several of the older Member States have lowered their corporate tax rates. The United Kingdom lowered its corporate tax rate to 24 per cent in 2012 and has announced a further reduction to 22 per cent in 2014. In Sweden, the corporate tax rate was reduced from 28 to 26.3 per cent in 2009. The most recent reduction before that took place in 1993, when the tax rate was lowered from 30 to 28 per cent.

 

The development of the corporate tax rate in Sweden in relation to other countries is illustrated in Figure 1.1. The figure shows that the Swedish corporate tax rate is currently higher than the averages in the OECD and the EU (25.5 and 23.4 per cent, respectively).

 

Figure 1.1 Nominal corporate tax rates in Sweden, the OECD and the EU 2000-2011

 

Per cent

 

 

The trend towards lower corporate tax rates in other countries has led to Sweden currently having a relatively high corporate tax rate. At the same time, companies that are part of international corporate structures have found ways to reduce their tax base in Sweden, for example, by means of artificial interest arrangements. However, through the legislative changes in the area of taxation that are proposed in this Bill, these opportunities will be restricted, while the nominal corporate tax rate will be lower than the average for the OECD and EU countries. In this way, Swedish companies will be given internationally competitive tax conditions for investments.

 


(9) OECD (2010), Tax Policy Reform and Economic Growth, OECD Tax Policy Studies, No. 20 and OECD (2008), Tax and Economic Growth, WP No. 620.

 

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1.4.5                     Increased access to housing

 

Mobility in the labour market is closely bound up with how the housing market is functioning, and currently, the housing market in many municipalities is in imbalance. In metropolitan areas, but also in centres of higher education and other growth regions, there is a housing shortage. If the availability of housing is to be improved, both the utilisation of the existing housing stock and new construction need to increase.

 

A number of measures in the housing area were announced in the 2012 Spring Fiscal Policy Bill, and the proposals are now being presented in this bill.

 

Government measures

 

Better utilisation of existing housing stock

 

In order to facilitate the letting of private dwellings, the Government proposes a system that enables owners to set a rent that covers their own costs for the dwelling and changes that will make it easier for tenant-owners to obtain permission to rent out their dwelling. However, it should be pointed out that the tenant-owners’ association, as in the past, can oppose sub-letting if this is necessary to safeguard the proper management of the association. In order to further stimulate the letting of private dwellings, it is proposed that the standard deduction for the taxation of income for letting private dwellings be increased from SEK 21 000 to 40 000.

 

An inquiry (dir. 2011:108) has been commissioned to submit proposals on how the market for rental housing can be developed. The inquiry chair will analyse how the conditions for those living in rented accommodation can be promoted and identify the differences in the conditions between forms of tenure that pose obstacles to an effective housing market. There will also be an inquiry to review taxation on rental dwellings, on non-private housing companies or cooperative rentals (dir. 2012:32). The Committee’s mandate includes a review of various regulatory frameworks in order to increase the supply of housing.

 

Facilitate new construction

 

In order to make it more attractive to build and manage rental residential properties, a reduction of the real estate charge for rental and tenant-owned dwellings is proposed.

 

With the aim of increasing the incentives for new construction, it is proposed that the period of exemption from the real estate charge be extended to 15 years. Furthermore, it is proposed that the permitted period for market-based rents for newly produced housing, known as ‘presumption rates’, be extended from the current 10 years to 15 years.

 

Measures are also proposed to shorten the county administrative boards’ processing times for appealed cases under the Planning and Building Act (2010:900). This will be achieved by defining alignment targets for processing times in combination with an increase in resources for processing at the county administrative boards and at the land and environment courts. The judicial chain for appeals will be examined as well as the application of the Environmental Code’s provisions on national interests in connection with municipal planning.

 

In order to influence the supply of housing for young people and students in the long term, the Swedish National Board of Housing, Building and Planning will be instructed to conduct a review of current building regulations, carry out information activities and provide support for innovative construction for young people.

 

The Government wishes to stimulate the new construction of student housing by improving information on which building regulations are relevant to temporary building permits and to examine the availability of suitable land for temporary student housing. In trials, universities and university colleges have been given the opportunity to provide housing to students. The Government proposes that the trials be extended by one year, until the end of 2016, in order to facilitate university and university college planning and to allow the trials to be evaluated.

 

The Government has set up a number of inquiries and has issued agencies with instructions to improve the conditions for housing construction and to improve the function of the housing market. For example, the Building Requirements Inquiry (dir. 2011:100) has been instructed to analyse issues that facilitate

 

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construction. The inquiry chair’s task includes a survey of the municipalities’ application of the regulations on technical requirements in the Planning and Building Act.

 

As regards improvements in the planning process, the Government has taken a number of initiatives. Among other things, the municipal land allocation process is being evaluated, the provisions on the implementation of detailed development plans are being reviewed, the provisions on competition and growth in the Planning and Building Act are being evaluated in order to improve decisions on building permits and advance rulings, and proposals on how to increase advanced planning are being produced.

 

There are indications to suggest that the amendment of the shoreline protection regulations that entered into force in 2009 and 2010 has not had the intended effect. Its purpose in part was to make certain construction in shoreline locations easier, but the rules have been applied differently throughout the country and have led to unintended effects. The Swedish National Board of Housing, Building and Planning and the Swedish Environmental Protection Agency will be instructed to review the shoreline protection regulations in autumn 2012 and submit proposals for statute amendments.

 

Improving the function of the housing market

 

In order to promote competition in the construction market, the provision of building and construction standards, known as Eurocodes, will be reviewed. The Swedish National Board of Housing, Building and Planning increasingly refers to standards in its regulatory framework. These must currently be purchased from the standardisation body SIS at a cost that may be significant for small companies, something which is likely to restrict competition. For this reason, the standards to which the Swedish National Board of Housing, Building and Planning refers in its regulations should be made more inexpensive for users.

 

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Components of growth

 

Economic growth means that the value of all goods and services produced in a country in one year increases. Economic growth is normally measured as the change of GDP.

 

When economic growth increases overall resources, overall prosperity also increases, provided that the growth occurs in a sustainable manner. The increase in prosperity can in turn lead to a rise in real wages, and private and public consumption may increase. Historically, economic growth has contributed to an increase in the household consumption of goods and services and to the opportunity of expanding general government welfare services. Growth has thus contributed to more people being able to obtain a better and longer education. In addition, more people have access to increasingly advanced health care, which in turn has contributed to both better health and increased life expectancy.

 

Economic growth may be due to more resources in the form of, for example, labour or capital being used in production. Growth may also be due to resources being used more efficiently than in the past. Productivity, that is, the value produced per unit of input resource, is thus able to increase. Over the past few decades, The economy growth is the most important factor explaining growth in Sweden.

 

The fact that growth can be explained by gowth path various factors also means that reforms may influence trend growth in different ways, as illustrated in Figure 1.2.

 

 

Reforms that, for example, contribute to a period of investment increase mean that growth increases during a transition period, but that the long-term growth rate does not change. This is illustrated in the figure by line 1. Reforms in this case lead to a permanent raising of GDP to a higher level, even though the long-term growth rate has not changed. Reforms that allow productivity to develop faster in the long term mean that the growth rate increases in the long term. In the figure, this is illustrated by line 2, where the curve has become steeper.

 

Investment and growth

 

For businesses and individuals to choose to invest in activities and production, confidence in the Swedish economy is of great importance. Macroeconomic stability in the form of low inflation as well as good order in public finances mean that investments in Sweden have a lower level of risk. Stability can thus contribute to greater investment and growth. For a country to be attractive to investors, effective regulatory frameworks and financial markets are required, as well as good access to infrastructure and The economy grows skilled labour. In a small open economy such as with a new and steepe that of Sweden, business investment is also growth path affected by the required return on the faser international capital markets. This means that the design of the tax system and taxes, not least corporate tax, are of great importance for the investment decisions of companies.

 

Supply of work and growth

 

The conditions for growth are also affected by the development of the total number of hours worked in the economy. Changes in the size of the labour force, employment rate and average hours worked per year are significant. In the long term, population development sets a limit as to how much the total supply of work may contribute to growth. As long as there is potential for an increased labour force participation, a higher employment rate or an increase in average nal growt path hours worked, an increased labour input may contribute to a period of increased growth.

 

The economic incentives to work in the form of wage levels and the design of social insurance systems affect an individual’s supply of work. Taxes too are important, where reduced tax on work, such as in the form of the earned income tax credit, can promote a greater supply of

 

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labour. Furthermore, the cost of labour relative to its productivity is significant for a company’s employment decisions. Other important factors for the supply of work are labour market regulations and agreements, labour market policy and the education system.

 

Productivity is central to long-term growth

 

Although the labour input in terms of the total number of hours worked in Sweden has only grown to a limited extent over the past fifty years, GDP has more than tripled. Higher productivity has contributed to a sharp increase in prosperity.

 

Using resources more efficiently is about doing what is already being done in a better way. But it also involves innovations that help to create something new, such as a new product, a new way of organising activities or a new business. To bring about such a development, it is important to have a dynamic business sector where new ideas are developed and improved and new technologies and companies gain market shares from established, but less efficient operations.

 

Sound frameworks provide the basis for a healthy business climate

 

The basis of a healthy business climate is an institutional framework with functioning regulations and institutions, clear property rights and low corruption. This, together with good standards and values in society, helps to reduce company transaction costs. Sound institutional frameworks also create good incentives for innovation, entrepreneurship and growth, at the same time as they counteract companies that engage in tax avoidance. Well-designed regulatory frameworks can also help to reduce the potential negative effects of market failures, such