STOCKHOLM — Sweden’s government will cut fuel taxes and hike electricity subsidies in its spring mini-budget, it said on Monday, as it strives to ease the pain for households of higher energy bills driven by the war in Iran.
The extra spending, coming ahead of a parliamentary election in September, will total 7.7 billion crowns ($825 million) and comes on top of a bumper 80 billion in new spending already announced in September last year in the full-year budget bill for 2026.
“It is a signal that we will do whatever it takes to … dampen the blow to households of what is happening now,” Finance Minister Elisabeth Svantesson told reporters.
Oil prices have soared since the United States and Israel launched attacks on Iran and there are concerns a long-lasting conflict could push up inflation, hit growth and lead to higher interest rates.
The temporary boost to electricity subsidies for households in the spring budget will cost 2.4 billion crowns and the cut to fuel taxes 1.6 billion. The government has asked the EU to approve a further cut in fuel taxes worth around 8 billion crowns.
Other measures include more money for Sweden’s space program, healthcare, and job creation.
ELECTION BOOST
Swedes go to the polls in September and the ruling coalition currently trails the left bloc in the polls despite promises of tax cuts and more money for schools, healthcare and defense this year.
Households are still feeling the effects of the period of high inflation sparked by the pandemic and the war in Ukraine, alongside US President Donald Trump’s tariffs, with the Iran war now convincing many to hold on to their savings.
While the government can afford to be generous — Sweden’s public finances are rock-solid — Ms. Svantesson said the next administration would need to be careful not to push debt too high.
A right-of-center government — which could include the populist, anti-immigration Sweden Democrats for the first time — would continue to focus on supporting households and on policies to boost jobs and businesses while keeping a lid on new spending. The left plans major tax hikes, she said.
“I hope that Swedes see that what we need is calm, not a four-year experiment by a left bloc with doesn’t agree on anything,” Svantesson said.
“Higher taxes … are not the way to get more growth.” — Reuters
