When the red-green government on Wednesday presented its first budget that is likely to go through parliament is the most conventionally already known. There are a number of tax rises for the summer as “dollar for dollar” will fund its height unemployment insurance and more money for health care and railway maintenance. For 2016, the government announced further tax increases and increased investment on the expenditure side.
According to several analysts, the government would, however, have been able to loosen up more and stimulated the economy instead of adding a neutral budget.
“We think that there is no stimulus policies. There is too much dollar for dollar. We have a little troubling mix of economic policy. Monetary policy can not do so desperately much more. To ensure the increase in inflation would need more help from fiscal policy”, says Knut Hallberg, analyst at Swedbank, to Direkt.
He added that the continued uncertainty of the parliamentary situation additionally liable to maintain precautionary savings by households and dampen willingness to invest in business. Added to this there is also uncertainty about the future taxes and how it will be with interest deductions, which is debated despite persistent assurances from the government that they will not be touched.
“Net becomes the budget fairly neutral. The man gives with one hand takes away with the other. On the minus side there is uncertainty about the tax increases and on the positive side, the improvements in, for example, unemployment insurance, “says Knut Hallberg.
Also SEB is on the is room for a more expansionary policy, in a context of high unemployment and low inflation.
“As the Riksbank now forced to exceptional measures, including negative interest rates, it indicates that fiscal policy can play a major role in stabilization policy “writes SEB analysts Frisén and Daniel Bergvall in a market letter.
They argue that Sweden’s low national debt and government borrowing interest rates increase the fiscal room for maneuver and that it should be possible to find measures to support recovery and long term structural real. They mention unfunded infrastructure investment as the most obvious choice to stimulate the economy.
Nordea analyst Bengt Roström writes in a market letter, the main conclusion is that the new red-green government will bring a traditional social democratic politics with increased spending on welfare and tax hikes.
The big source of revenue this year is that the reduced employer contributions for young winding down for the summer, and then completely abolished next year. This provides an additional SEK 5.5 billion to the Treasury this year. Additionally made some additional minor tax hikes this year, which is expected to generate over 100 million.
Among the major expenditure growth is more money for school, health care and railway maintenance.
Another major initiative is the roof of the UIF will be raised in September, for the first time in 13 years. All who earn up to 25,000 dollars a month will now get 80 percent of their income during the first 100 days of benefit.
What is still lacking is informed of the Social Democrats heavy campaign promises of a job guarantee for young and trainee job.
In addition, the Government has announced a number of proposals which will come into effect until 2016, and then included in the autumn budget. On the revenue side, it’s in addition to abolish reduction in the payroll for young although reduced root and the RUT deduction, height gasoline and height standard tax on savings.
This provides much greater revenue to the state. The money will then be used to, among other things, stimulate housing and to continue investment in the railways, health care and school.
In his budget motion last fall, which was defeated in parliament, the government had additionally proposal to scale down the earned income tax at higher incomes. Tax cuts for pensioners is also a previously promised proposals that do not yet have notice of.
Several analysts are inside that you probably can expect continued rather conservative budgets, given the uncertain parliamentary situation, December agreement to although.
“Will December agreement to hold or not? It’s one thing that the government may, by the budget. The Alliance and SD can still provide all kinds digs all the time, which can give uncertainty, such as energy and defense. This also affects the perception of the government’s strength, “said Swedbank Knut Hallberg.
The SEB analysts Frisén and Daniel Bergvall also notes that it is approaching uncertain political times. The government is now forced into a delicate balancing act where they will simultaneously manage internal discord, secure support from the Left and administer the December agreement without challenging the alliance parties by putting too much into the budget. This together can be an impossible task that is paralyzing the government’s decisiveness.
“Swedish economic policy has rarely been as complicated as it is now. Spring budget will be the first test, but the real challenges lie ahead,” they write.
A side effect of tax increases is that CPI inflation increased in 2016, to the delight of the Riksbank grappling with too low increases. Analysts expect the budget proposals raise CPI inflation 0.3-0.4 percentage points.
Vårändringsbudgeten published on Wednesday, April 15, at 8. This is followed at 9 by a press conference with Finance Minister Magdalena Andersson and budget debate in parliament at 13th
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