Economics professor: "Reasonable for the state to borrow money"

- Sweden could easily borrow 1,000 billion, says John Hassler, professor of economics at Stockholm University and former chairman of the government's fiscal policy council.

The difference is monumental compared to the crisis of the 1990s. Sweden had then suffered an unsustainable debt crisis. The fixed exchange rate had been defended with soaring interest rates and austerity, but eventually fell. The crisis hit hard for several years. Banks, households, companies, the public sector, all were affected.

The words from Göran Persson (S), then finance minister, that no more finance minister would be forced to "go to New York and explain the Swedish welfare system for grinding stockbrokers" to borrow money has etched in the memory of many.

A completely new framework for economic policy was created, and rock-hard rules prevented the budget deficits and central government debt from growing uncontrollably.

And now, the tough rules have, in the end, led to government finances that are so strong that there will be problems elsewhere. The government itself states in the state budget that the market for government securities works worse when volumes become small and that it can increase borrowing costs over time.

At the same time, the views and demands of economists and others, including in the social democracy, come that the government should lighten on the state's wallet. There is a great need for investment in society, not least to accelerate the climate change.

- The interest rate situation can be expected to be so low for a long time to come that it is reasonable for the state to borrow money and invest. The only problem is that the government does not count enough on possible investments and therefore it does not know where the money will benefit, says John Hassler.

The current Minister of Finance does not think it is a good idea to borrow money and increase government debt.

- If you end up in crisis mode, space is needed. If you already have high government debt then there will be big problems. I do not envy my Greek colleagues and the debt they have had to deal with, says Magdalena Andersson (S).

In order not to end up in the same impossible and devastating situation again, after the 1990s, politicians introduced the rule that public finances would go into surplus over a business cycle. The target was set at two percent of GDP after the 1990s crisis, but was mitigated in a block-crossing agreement in 2016, to 0.3 percent.

- I do not see a need to continue to repay, but would like to see that the requirement was plus minus zero over a business cycle. But other parties wanted there to remain a demand for surplus, says Magdalena Andersson.

Is it reasonable that your politics are now governed so much by Carl Bildt and Göran Persson being frightened a quarter of a century ago?

- No really not, and neither is it. It is common sense that we take care of government finances. We know that if there is a crisis and you need to cut municipalities and county councils, it is ordinary people who are most affected, says Magdalena Andersson.