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Factbox-Swedish government unleashes spending spree in election-year budget
Published by Global Banking and Finance Review
Posted on September 22, 2025
2 min readLast updated: January 21, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on September 22, 2025
2 min readLast updated: January 21, 2026
Sweden's 2026 budget includes an $8.5 billion boost with tax cuts, increased defense spending, and VAT reductions to stimulate growth ahead of elections.
STOCKHOLM (Reuters) -Sweden's right-wing government will inject about 80 billion crowns ($8.5 billion) into the economy in the 2026 budget, the government said on Monday, hoping to speed up sluggish growth ahead of a general election next September.
Here are some of the most important budget measures.
INCOME TAX CUTS
The coalition government's biggest budget outlay is tax cuts of 30 billion crowns ($3.2 billion), with 21 billion crowns spent on income and pension tax reductions, and around 6 billion on lower electricity taxes.
SMALL BUSINESS INCENTIVES
Another 7 billion crown ($747 million) package will be used to boost companies, including lower taxes for 60,000small businesses, temporary incentives to employ young peopleand cuts to red tape.
BOOSTED DEFENCE SPENDING
The armed forces gets a boost of 26.6 billion crowns to be used on new materiel, such as air defence, rocket artillery, naval ships, and transport planes. It will also be used to hike salaries for officers and conscripts. The increase is projected to take Sweden's defence spending to 2.8% of GDP in 2026, from 2.4% this year.
VAT ON FOOD HALVED
Around 16 billion crowns will go towards temporarily cutting the value-added tax on food to 6% from 12%. The cut will take effect on April 1, six months before the September election, and will run until the end of 2027.
TIGHTER RULES FOR SOCIAL WELFARE SUBSIDIES
Another billion will be used on rent subsidies for low-income families, but the government is also cutting social welfare benefits for families with many children. A family with five children would see their welfare benefits reduced by more than 8,000 crowns per month.
(Reporting by Johan Ahlander; editing by Niklas Pollard and Bernadette Baum)
Value Added Tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of production or distribution.
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