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Europe, Forex

Swedish Fin Min sees no need for budget cuts despite slowing economy -paper

STOCKHOLM, Aug 9 (Reuters) – Sweden’s slowing economy will not lead to major cuts in the budget due in September, Finance Minister Magdalena Andersson said on Friday.

Gross domestic product shrank in the second quarter amid worries about a trade spat between the United States and China and the overhanging threat of the United Kingdom leaving the European Union without a deal.

But Sweden’s public finances are robust. Debt levels are at their lowest since 1977 and Andersson said there was no need for drastic cuts.

“To implement a policy of powerful fiscal saving in this environment would not be well-balanced, I believe,” she said in an interview in daily Dagens Nyheter.

Earlier this month the government’s top think tank, NIER, cut its forecast for growth this year to 1.5 percent from an earlier expectation of 1.8 percent.

It said that the government had almost no room for unfinanced spending measures in the budget for 2020, which Andersson will publish on Sept. 18. However, the NIER said it expected the government to announce new spending totalling 20 billion crowns ($2.09 billion).

The government will present its pre-budget forecasts for the economy on Aug. 21.

Graphic Sweden’s economy:

Graphic Riksbank rate, inflation and the Krona: ($1 = 9.5902 Swedish crowns)

(Reporting by Simon Johnson; editing by Darren Schuettler)

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