Front-Runner for Swedish PM Job Rejects Party Plea to Spend More
Front-Runner for Swedish PM Job Rejects Party Plea to Spend More
(Bloomberg) -- Sweden’s finance minister Magdalena Andersson, the favorite to replace outgoing premier Stefan Lofven, has rebuffed a plan to increase spending from the left wing of her party.
The faction within the Social Democrats earlier this week called for a new fiscal policy framework, saying the current rules are “a straitjacket” that hurts the economy by blocking investments.
But in an interview with Bloomberg, Andersson dismissed the idea of separate investment budget to allow for a more expansive fiscal policy.
“There is this idea that you’d create more money by changing accounting methods,” she said. “Accounting methods don’t create additional resources.”
Should Andersson become Sweden’s first female prime minister this fall, she would still need to strike a balance between a decades-old tradition of tight fiscal policy and the left of the party who want to shore up a welfare system creaking under the weight of migration and the Covid crisis.
Andersson, who has called herself “the most frugal finance minister” in the European Union, did say she is open to lowering the current target of a 0.33% surplus over a business cycle.
“We have argued for a balanced-budget target and that remains our view,” Andersson said. “I don’t see a need to reduce the government debt, as even with the investments we have made during this crisis, government debt won’t exceed 40% of GDP.”
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