Analysis: "The increasingly fragmented political landscape hardly facilitates"

The government has requested that the state's expenditure ceiling be raised by a breathtaking SEK 350 billion for this year. Billions in direct support are now pumped into Swedish companies to survive the crisis and reimbursements are increased in health insurance and unemployment insurance, to take some examples. With today's message from the four January parties, crisis measures equivalent to SEK 185 billion in direct costs for the state have been decided. And there will be more crisis packages.

Of course, it is both necessary and reasonable for the state to try to mitigate the consequences of the corona crisis in this way. But it will also mean that large deficits are now growing in public finances and that government debt is growing.

Future economic growth can certainly do some, but former Finance Minister Anders Borg predicted in an interview in SVT's Agenda on Sunday that Swedish politicians will be forced to pursue a strict economic policy after the corona crisis to turn deficits into balance and surplus in public finances .

No one knows today how big these deficits will be after the corona crisis. Everything is about how extensive the spread of infection will be and how deep the economic crisis will be. The long-term financial impact can be significant.

Not least after the 1990s crisis and its profound effects on the Swedish economy, politicians were forced into comprehensive remediation programs to save public finances. Even after the financial crisis of 2008-2009, a strict fiscal policy was required, albeit not as far-reaching as in the 1990s.

The politicians are now fully occupied with first crisis packages and then stimulus measures, but if Anders Borg is right they then learn to focus on trying to stagnate the economy for the future.

But Swedish politics has fundamentally changed since the 1990s crisis and the financial crisis. The increasingly fragmented political landscape with weak minority governments hardly facilitates the pursuit of strict economic policies.

In the 1990s, it was enough for the Social Democrats to work with the Center Party in Parliament to push through the crisis policy. The term of office 2006-2010 put a bourgeois majority government in power.

Today, Sweden is ruled by a minority government, which is constantly at risk of being voted down in Parliament. The government parties Social Democrats and the Environment Party, cooperate with the Center Party and the Liberals on economic policy, but not even this constitutes a majority in the Riksdag. The opposition in the Riksdag can thus, if agreed, run over the government in important decisions, which has already happened.

In addition, two of the January parties, the Liberals and the Environment Party, are under the parliamentary block in most opinion polls, which is not always the best prerequisite for making difficult decisions. Nor does the fact that January cooperation is based on cooperation between parties with different ideological views in economic policy.

But even to the right in Swedish politics, there are now conditions for a majority government. In this context, the Swedish Democrats are also an unproven card. The extent to which this party would be willing to participate in unpopular decisions is unclear.

Another factor that influences the possibility of pursuing a strict economic policy is the regulation of the budget process. The Budget Act was passed to facilitate minority governments to push through their budget in Parliament, but in recent years this budget framework has been gradually eroded. This can mean difficulties for a minority government, which needs to make difficult and tough budget decisions.

Another factor that may affect is that the corona crisis has also entailed a process for both politicians and voters to see loan-financed proposals as the new normal. That this happens in a deep crisis is not strange in light of Sweden's stable state financial situation, but after the crisis, politicians will need to take another path if deficits can be reduced.

But of course, this is not the politicians' acute headache today when it is all about slowing down the spread of infection and saving jobs. But it can still be good to keep in mind that day will still come.