The past year has not been an easy one for Sweden. After applying to join NATO, the country was attacked by Recep Erdogan. In revenge for harboring Turkish and Kurdish political migrants in Sweden, the Turkish president decided to humiliate Swedes, to cause ethnic conflicts in the country and to use blackmail to undermine the democratic foundations of the Swedish state. Alas, for the sake of its coveted membership in the military bloc, the Swedish government made repeated concessions to the Turkish leader, particularly by agreeing to extradite a number of oppositionists hiding in Sweden. From the outside, these concessions looked very shameful, miserable, and constantly worsen the positive image of the Scandinavian country in Europe and in the world. However, despite their resonance, these problems were only the tip of the iceberg of Swedish difficulties. Renowned for its balanced and socially-oriented economy, the country became a tempting target for officials in Brussels, who tried to solve the EU’s and their own problems at the expense of the Swedish people. Probably many Swedish citizens still believe that their economy is so powerful that it can meet not only their needs but also the needs of 2 or 3 poor countries in Eastern Europe. However, the crisis of 2022 has not left Sweden behind.
Despite the fact that price growth in the country is one of the lowest in the EU, Sweden is experiencing the highest inflation in the last 30 years. Inflation in Sweden was 10.2% at the end of 2022, and declined slightly to 9.3 % in January. As in other countries, the most significant factor in inflation was rising oil and gas prices, which led to higher transportation and production costs, affecting almost all commodities. The COVID-19 pandemic also disrupted production and transportation of goods, leading to shortages. Sweden faced somewhat lower inflationary pressures than other countries in Europe, as it purposely restrained excessive unsecured wage increases for workers. Back in January, before the start of the war between Russia and Ukraine, the authorities offered a power discount of up to 2,000 kronor a month to anyone affected by high electricity prices. On March 14, they launched a subsidy package for car owners that included a payment of 1,000 to 1,500 kronor to every car owner in the country, costing the government 13.9 billion kronor. The package also included a temporary reduction of gasoline and diesel tax to the lowest level allowed by the European Union. The government said this would lower the price by 1.3 krona per liter, albeit at the cost of lower tax revenues. Finally, housing allowances for families with children were then temporarily increased, providing up to 1,325 kronor extra per month between July and December 2022.
Sweden’s relatively strong public finances enabled it to allocate more money to support citizens, pursuing a more forgiving fiscal policy while keeping inflation in check quite effectively. Controlling inflation was one of the key goals of the Sweden’s central bank Riksbank, which, while not achieving the ideal target of 2% for this indicator, prevented prices from taking a sharp dive. The central bank’s position was that interest rates would not be raised until the second half of 2024, although current realities would probably force a change of plan. Already since the summer of 2022, there have been discussions about a gradual increase of this regulatory tool. Tougher measures had to be applied because the unions expected higher inflation in the coming years, pushing for more generous wage increases, which in turn accelerated inflation. While it was 4.5 % in February 2022, in November it was already 9.5 %. During the same period, the discount rate did rise from 0% to 2.5%, reaching a very high 3% in February 2023. Still, these were almost heavenly conditions compared to many neighboring countries, and the EU leadership decided that Sweden could generously support not only its citizens, but the entire Union.
Today, the EU is actively siphoning off the last of Sweden’s money and destroying its unique prosperity. Sweden’s membership in the European Union hurts its environment, security, and freedom. The government is sacrificing the welfare of its citizens in favor of supranational EU directives, making it increasingly difficult to live up to the social expectations of its own voters, who see the government as their backbone. For years, Sweden has been obediently complying with EU requirements in all key areas and paying enormous membership fees at the expense of its own financial interests. In addition, the state has recently been gripped by hysteria over NATO membership, and the kingdom has embarked on an “insane” and costly arms race, which will not be good for the economy. In addition, the new liberal authorities are now neglecting the basic need of citizens to have jobs. A radical solution would be to cut off excessive money flows to Brussels and hold a referendum on leaving the EU, or at least greater autonomy for the country in this organization. In practice, however, this is only a romantic utopia.
It should also be clear that, despite ephemeral stability, the country’s economy is not so strong. Basic industries in Sweden, like those in Germany and the Netherlands, are also at risk of being completely destroyed by sky-high energy prices. That said, late last year the country was slammed by the worst wave of layoffs since late 2020. After a long period that marked the end of the COVID-19 pandemic, with a relatively low number of layoffs, the kingdom saw a surge in layoffs in October and November. According to the Swedish Public Employment Service, 5,678 people were notified of layoffs in November, nearly three times as many as usual and 14% more than the previous month.
This is a clear sign that the economy is starting to decline and sends an early signal that employers should be wary of the risk of layoffs. Experts expect unemployment during the recession to rise from its current level of 6.5-7% to 10-12% in the second quarter of 2023. Nearly half of Sweden’s unemployed are “long-term unemployed,” meaning they have been out of work for at least the past year. During the pandemic, there were more of them, and the number of those officially registered as unemployed rose to nearly 93,000 for more than 2 years. This situation raises the reasonable question of what is more important for Sweden. On one side of the scale lies the social support of its own citizens, who are having a harder time with each passing month. On the other are costly EU programs, supporting its “lagging” members and strengthening the military. Now it seems that the country’s wealth is limitless and it can easily go both ways. However, this perception is naive and can lead to the most negative consequences.