A dispute has broken out between a number of Sweden’s top economists and the government, which wants MPs from the Committee on Finance to have a say as to who is to be appointed to Sweden’s influential Fiscal Policy Council (Finanspolitiska rådet).
The council, whose remit is to provide an independent evaluation of the government’s fiscal policy, has frequently criticised government policy.
Professor John Hassler warns that there is a clear risk of politicisation and that the council might as well close down.
At this weekend’s annual meeting of the International Monetary Fund in Washington, head Christine Lagarde will be urging finance ministers around the world to implement reforms to spur on inflation and growth.
However, Sweden’s Magdalena Andersson has no intention of expanding policy. Ahead of her trip to Washington she tells SvD: “We are pursuing a tight fiscal policy. We have chosen a different path”. The minister does add though that the leeway has increased somewhat, given the move to lower the surplus target level in 2019.
She believes a fairer distribution of profits is needed if the vicious cycle of sluggish global growth, populism and protectionism is to be reversed. Highlighting the way in which the widening gap between rich and poor in the United States creates frustration, she says: “the only way to reverse this is for politicians to ensure that the gains to be made from globalisation and free trade benefit everyone”.
A PMP Marknadskonsult survey shows that 65% of Sweden’s listed companies are unhappy with the centre-left government’s fiscal policies, saying they have done little or nothing at all to contribute to growth and job creation. They also say that the government will need to up its game if it is to win the vote of corporate leaders in 2018.
The poll also showed that companies want to see lower payroll charges and taxes. This would allow them to invest in research and employees, which in turn would boost the economy. Highest on the companies’ wish list is better integration of new arrivals on the labour market.