The Swedish Economy August 2012

The Swedish Economy August 2012 13SPECIAL ANALYSISA Brief Comment on theGovernment’s AnnouncedProposal for Unfunded Measures2013The NIER’s forecast is based on the assumption that the Governmentwill implement unfunded measures totallingSEK 14 billion in 2013. The calculations were completed onAugust 23. On August 24 at Harpsund, Minister of FinanceAnders Borg presented the Government’s new forecast. Fromthe presentation it could be seen that the Minister of Financewas assuming that the Government would implement unfundedmeasures totalling SEK 23 billion in 2013, that is, SEK 9 billionmore than in the NIER’s forecast. 4 This special analysis presentsa general calculation of how the central variables in the forecastare affected by the more expansionary fiscal policy for 2013announced by the Government.It is not yet clear what measures the Government intends topropose in the Budget Bill for 2013. Negotiations between theGovernment parties are in progress, and it will be necessarythereafter to seek the support of the Swedish Parliament. In theNIER’s assessment, however, it is considered probable that theunfunded measures will amount to SEK 23 billion in 2013.A MORE EXPANSIONARY FISCAL POLICY IN 2013 WILLREQUIRE A MORE CONTRACTIONARY FISCAL POLICY IN2014–2016According to the NIER’s assessment, there will be a margin forunfunded measures totalling SEK 21 billion in 2013–2016. 5 Asthe Government is already planning to implement unfundedmeasures totalling SEK 23 billion in 2013, there will be no marginleft, in the NIER’s assessment, for additional unfundedmeasures in 2014–2016. In the overall calculations presentedbelow, it is assumed that the level of cyclically adjusted net lendingin 2016 will be the same as in the forecast, a necessity if thesurplus target is to be met. This means that there will beSEK 9 billion less in unfunded measures for 2014–2015 comparedwith the forecast. The situation may be viewed as onewhere the margin for permanent unfinanced measures is usedearlier than in the forecast. With this policy, cyclically adjusted4 The Finance Minister also announced that the margin for unfunded measures in2014 would be SEK 27 billion, or an addional SEK 4 billion this year. This figurecould be both higher and lower in the Budget for 2014 to be presented nextautumn.5 See the chapter ”Macroeconomic Development and Economic Policy 2012–2016”.