|2019||2020||2021 (e)||2022 (f)|
|GDP growth (%)||2.0||-2.8||4.9||3.7|
|Inflation (yearly average, %)||1.8||0.5||2.1||3.9|
|Budget balance (% GDP)||0.6||-2.8||-0.9||-0.3|
|Current account balance (% GDP)||5.5||5.7||5.5||5.0|
|Public debt (% GDP)||34.9||39.7||37.9||35.7|
(e): Estimate (f): Forecast
- Very favourable business climate
- Very diversified economy, specialized in high-tech products (automotive, aviation, telecommunications, nuclear power)
- High standard of living
- Sound public finances
- Positive demographical development due to immigration
- Highly dependent on global demand (exports = 45% of GDP in 2020)
- Tensions on the real estate market
- Substantial household debt (198% of personal disposable income 2020)
- Highly concentrated banking sector
Recovery continues in 2022, but at a slower pace
Sweden showed a strong rebound in 2021 after a moderate recession in 2020. The country had a different approach to the pandemic. Without any strict lockdowns, growth was already back to pre-COVID levels in Q2 2021 and remained on a dynamic path during the summer. Even in the autumn, GDP had developed relatively well compared to other European countries due to relatively low COVID-19 numbers until December 2021. Nevertheless, GDP development is expected to flatten somewhat over the winter/spring 2022 due to persistent supply-chain issues, with a strong lack of input goods and transportation issues. From summer onwards, these obstacles should slowly dissipate and growth should accelerate again. Regardless of the problems in the industry, the main growth drivers should be private consumption and investments. A temporary tax reduction for middle-income groups should support consumption, as well as a positive development of employment. However, this has only a limited impact on the wage dynamic, which was already negotiated in 2020 and resulted in a wage increase of 5.4% by March 2023 (less than the previous 3-year deal that included a rise of 2.2% per year). A noticeable part of the increasing purchasing power will be balanced out by the high inflation, partly resulting from higher energy prices and higher input prices. The price pressure should peak in late summer 2022 and then slowly decrease. The Riksbank already reacted to the higher inflation (2% inflation target) and ended its assets purchase programme with a total envelope of SEK 700 billion at the end of 2021. That said, assets worth SEK 145 billion, which will mature this year, will be reinvested. In the meantime, the key interest rate will be held at 0%. Additionally, foreign trade will be a little less supportive. Goods exports should increase at a slower pace due to supply-chain issues, while imports will be stronger because of further domestic recovery. Nevertheless, tourists should come back stronger this summer. Some support will still come from the public sector as well. While most COVID-19 related support measures ended in the autumn of 2021, the government decided to implement a “reform package” of SEK 74 billion (0.9% of GDP) this year that includes investments into climate transition, digitalization, strengthening of the welfare system. Some of these measures are combined with the EU Recovery and Resilience Facility that includes disbursements for Sweden worth 0.2% of GDP.
Almost back to a twin surplus
The country’s current account surplus should shrink a bit this year as the decrease in the trade in goods surplus cannot be balanced out by a higher trade in services surplus combined with higher investment revenues from abroad. The general government budget balance will improve somewhat due to higher revenues and lower expenditures. Nevertheless, there should be small deficit at the end of the year. Still, the public debt should decrease further and remain very low.
New Prime Minister without major support in the parliament
Magdalena Andersson is the first female Swedish Prime Minister and was elected in a politically turbulent summer/autumn 2021. Previous Prime Minister Stefan Löfven’s Social Democratic Party (100 seats out of 349 in the parliament) won the last general election in 2018. Due to the strong result for the right-wing Sweden Democrats (62 seats), none of the classical political blocks (left vs. conservative) reached a majority in the parliament. Therefore, Löfven led a centre-left minority government (quite usual in Sweden) with the Green party (16 seats), supported by the social-liberal Centre Party (31 seats) and the Left Party (27 seats). In June 2021, the Left Party left the support-block after a fight in the government about rent controls. Against this background, Löfven lost a vote of no confidence in the parliament and resigned. Because no other party could found a new government coalition, Löfven was again appointed as a Primer Minister in July. He then announced that he would pass on the office to another social democratic candidate in the next months. In late November 2021, the parliament narrowly elected previous Finance Minister Magdalena Andersson as the new Prime Minister. However, hours after this election, the Green party left the government because of disputes over the budget plan. Andersson had to resign again, but was elected by the parliament once more a few days later with a government consisting only of the Social Democratic Party, again with a very narrow margin. She should be leading the government until the next regular election in September 2022. However, reforms are not on the horizon, as she has to find majorities every single time for the different topics in parliament.
Last updated: February 2022
Bills of exchange and promissory notes are neither widely used nor recommended as they must meet a number of formal requirements in order to be considered as legally valid.
Just as the rules for issuing cheques have become more flexible, the sanctions for issuers of uncovered cheques have been relaxed over the years. The use of cheques has subsequently become almost non-existent.
Conversely, use of the SWIFT electronic network by Swedish banks provides a secure, efficient, and cost-effective domestic and international fund-transfer service. Payments are dependent on the buyer’s good faith. Sellers are advised to ensure that their bank account details are correct if they wish to receive timely payment.
Direct debits represent about 10% of non-cash payments in Sweden and are quickly growing in popularity. There are two types of direct debit in Sweden: Autogiro Foretag (AGF) for B2B transactions and AutogiroPrivat (AGP) for B2C payments. They can both be used for single or recurring payments.
Amicable settlement aims to recover the debt without transferring the case into a trial procedure. The debtor is informed (either orally or via writing, with written correspondence being preferred) about the debt, the payment deadline, and the consequences of not paying the debt. If debtor agrees to pay the debt, both parties may settle on instalment payments through an official document that sets out the contractual terms of the agreement.
When there is no specific interest clause in the contract, the rate of interest applicable since 2002 is the six-monthly benchmark rate (referensräntan) of the Central Bank of Sweden (Sveriges Riksbank), plus eight percentage points.
Under the Swedish Interest Act (räntelag, 1975, last amended in 2013), interest on damages is awarded from the 30th day following the day on which the creditor addressed a written claim for damages to the defendant, if the plaintiff so requests. In any event, interest may be awarded from the date of service of the summons application.
Where claims meet some basic requirements (e.g. payment is overdue, mediation was attempted), creditors can obtain an injunction to pay (Betalningsföreläggande) via summary proceedings through the Enforcement Service. The application has to be made in writing and clearly express the grounds of the claim. No further proof needs to be submitted.
This Enforcement Authority (Kronofog–demyndigheten) orders the debtor to respond within a period of ten days to two weeks. If the debtor fails to reply in time or acknowledge the debt, a verdict will be rendered on the merits of the original application.
While formal, this system offers a relatively straightforward and quick remedy in respect of undisputed claims, which has greatly freed up the courts. Creditors are not required to hire a lawyer but, in some circumstances, would be well advised to do so. On average, the process takes two months from application to decision. The decision is immediately enforceable.
If the debtor contests the debt, the creditor has the decision of either turning to the District Court (the first instance, Tingsrätten) or to terminate the process.
Proceedings involve a preliminary hearing in which the judge attempts to help the parties reach a settlement after examining their case documents, evidence and arguments. It is up to the parties themselves to decide what evidence they wish to submit.
If the dispute remains unresolved, the proceedings continue with written submissions and oral arguments until the main hearing, where the emphasis is on counsels’ pleadings (defence and prosecution) and examination of witnesses’ testimonies.
In accordance with the principle of immediateness, the court bases its decision exclusively on the evidence presented at the trial. Barring exceptional circumstances, the judgement is customarily issued within two weeks thereafter.
As a general rule, the Code of Civil Procedure requires the losing party to bear all legal costs considered reasonable, as well as the attorney fees incurred by the winning party beyond a given threshold claim amount (about SEK 23,800, approximately EUR 2,390).
It takes up to twelve months (in exceptional cases more) to obtain a writ of execution in first instance, bearing in mind that there is a widespread tendency in Sweden to appeal against judgements.
ENFORCEMENT OF A LEGAL DECISION
As soon as a domestic judgment becomes final, it is enforceable. If the debtor does not comply, the creditor can request the court’s enforcement authority to seize and sell the debtor’s assets.
For awards rendered in an EU member-state, special enforcement conditions are provided. When the claim is undisputed, the creditor may apply to the European Enforcement Order, or when the claim does not exceed €2,000, the creditor may start a European Small Claim Procedure. For awards issued in non-EU countries, the Svea Hovrät Court of Appeal must recognize an award in order to enforce it, provided that a recognition and enforcement agreement has been signed between the non-EU country and Sweden.
Out-of court proceedings
Swedish law does not formally regulate out-of court arrangements. Nevertheless, creditors and debtors can enter into voluntary negotiations in order to negotiate the debt and reach an agreement.
The aim of restructuring is to find a financial solution for an insolvent company that is deemed to have sustainable long-term business prospects. It can apply for a restructuring with the local court. If approved, the court will appoint a rekonstruktör to manage the restructuring. The latter will investigate the financial situation of the company, before establishing and implementing a restructuring plan under which up to 75% of the debt may be written off.
Bankruptcy proceedings are initiated as a consequence of a company becoming permanently insolvent. They aim to wind down an insolvent company by selling its assets and distributing any income to creditors. Either the debtor or the creditor can file a petition before the local court. After the court has declared a company bankrupt, it appoints an administrator that independently takes control over the company’s assets with the main task of realising such assets and repaying the debts of the bankruptcy estate in accordance with the creditors’ statutory ranking.