Sweden Economists Call for Green Fiscal Policy to Stop Recession

(Bloomberg) -- Sweden and the European Union should ease regulation and allow for a more expansive and greener fiscal policy to counter the threat of a global recession, Swedbank economists Anna Breman and Andreas Wallstrom said in op-ed published on Saturday in the Dagens Nyheter newspaper.

The two economists argue that the Swedish government has enough fiscal leeway to support greener investments without increasing the general tax level, starting with the 2020 budget. The bank estimates that the government could run yearly budget deficits of 50-70 billion kronor ($5-7 billion) without increasing the country’s public debt-to-GDP ratio.

Other suggestions include:

• Taking advantage of negative rates to carry out climate-smart investments in infra-structure and technology
• Allowing exemptions to the EU’s strict fiscal rules for countries that borrow to fund green investments
• Expanding and speeding up plans by the Swedish Debt Office to issue green bonds
• Encouraging the Riksbank to consider buying green corporate and government bonds

To contact the reporter on this story: Rafaela Lindeberg in Stockholm at rlindeberg@bloomberg.net

To contact the editor responsible for this story: Nick Rigillo at nrigillo@bloomberg.net

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