Sweden predicted a budget surplus and raised its economic growth forecast for the next two years, allowing Europe’s fastest-growing economy to cut taxes while the rest of the region struggles through austerity cuts.
The largest Nordic economy will expand 4.6 percent this year, compared with the 4.8 percent predicted last month, the government said in its spring fiscal policy bill released today in Stockholm. The government raised its forecast for growth in 2012 and 2013 and predicted a widening surplus over the next four years as unemployment falls.
“In a situation when many other countries are experiencing austerity and weak economies, Sweden’s economy is growing stronger,” Finance Minister Anders Borg said. “We must use this to ensure that more people find work and that welfare initiatives can be implemented.”
Prime Minister Fredrik Reinfeldt’s government, which won another four years in office in September, said yesterday it plans to reduce taxes for a sixth consecutive year in 2012 as other nations such as the U.K. slash spending to pare deficits. The Swedish economy grew 5.5 percent in 2010, the most since 1970, as exports recovered from the global financial crisis.
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