Swedish mortgage lending growth has stabilised at around 7-8 per cent, while consumer lending growth has risen considerably in recent months. In June consumer lending rose to 9.4 per cent at an annual rate, the highest figure recorded since 2008.
Economists are concerned by the trend, warning that unsecured loans could lie behind the growth.
Handelsbanken’s head economist Ann Öberg has predicted an economic downturn just around the corner. In Sweden growth has already hit its peak and unemployment has reached its lowest level, predicts the bank.
Across the entire western world central bank interest rates remain minus or around zero. In combination with record high state, corporate and household debt, this makes an imminent downturn extra frightening, she warns. “Neither the central banks nor fiscal policy have any ammunition for a shrinking economy.”
She also expects unemployment to rise from its current 7% to 7.3% in 2018.
Anders Borg, the former finance minister, has warned of lower growth in the wake of Brexit and wants to see structural reform in Europe, which is lagging behind China and India, where GDP growth is around 5-6%.
Risk has increased following the UK’s referendum, and it is time for the EU to deliver on growth and jobs. “We are not just going to see strong opposition to the EU in the Netherlands and Austria, we will see it in Germany and France as well,” he said in Almedalen on Tuesday.
Mr Borg, who is an advisor to Citi, also said that Sweden needed to sort its housing market out and called on Peter Eriksson, the housing minister, to re-start cross-party talks. He even advised Swedish politicians to take a trip to Finland to study the labour market there.
The former minister stressed the need for Sweden to boost growth, believing that if the country could return to growth of 2.5%, living standards would increase two-fold within 30 years.