Swedish Government Now Ready to Defend Job Goals With Deficits

Sweden’s minority government is prepared to raise borrowing to defend its main election pledge of achieving the lowest unemployment in the European Union over the next five years, Finance Minister Magdalena Andersson said.

”We have very low public debt so we have very good margins to meet this challenge,” Andersson said in an interview in Norrkoeping, Sweden. “Costs will of course rise in the near-term for this” from a starting point of very low debt, she said.

Andersson’s comments came after her colleague, Employment Minister Ylva Johansson, warned the government may have to delay the target date amid a surge in refugees to the Nordic nation. The country of 9.8 million people is accepting more refugees per capita than any other EU nation, while grappling with unemployment of more than 7 percent. Germany boasted the EU’s lowest unemployment in September of 4.5 percent.

“Of course it will be harder to reach the unemployment target when there are a lot of people who are new in the labor market,” Andersson said. “That’s of course true but then it’s even more important that we put in place measures.”

The government in September predicted it would post deficits of 0.9 percent of gross domestic product this and next year before reaching balance in 2018. According to Andersson, the forecasts were based on 130,000 new refugees next year.

Sweden’s has debt to gross domestic product ratio of 44.7 percent this year, compared with an EU average of 87.8 percent, according to EU forecasts.

”Given the refugee influx that we’re seeing right now it will take longer until we’re in balance” than the governments latest projection, Andersson said. ”The biggest effect in the near-term is of course that we there have been many more asylum seekers than we had estimated.”

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