Swedish PM pledges billions to offset soaring energy bills as election nears

STOCKHOLM (Reuters) – Sweden’s government said on Wednesday it would hand around 60 billion crowns ($5.8 billion) to companies and households to ease the pain of soaring electricity prices, as it looks to woo voters ahead of September’s general election.

Electricity prices have hit record levels after Russia’s invasion of Ukraine even though Sweden is a net exporter of electricity and that its production is dominated by hydro-power, nuclear and wind.

“When it comes to the energy sector, we are in a situation which resembles a wartime economy,” Prime Minister Magdalena Andersson told reporters.

“We have electricity and gas prices that we have never seen before,” she said.

The Social Democrat government paid out billions of crowns to cushion households from the effect of higher electricity prices from December 2021 through March this year.

But with the war in Ukraine dragging on, consumers and businesses face another winter of record-high energy bills.

The new proposal comes as campaigning moves into high gear for a general election to be held on Sept. 11 with the cost-of-living crisis threatening Andersson’s chance of getting a second term in office.

Food prices have soared more than 10% so far this year – the price of butter is up by around 25%, meat 24% and cheese around 22%, according to price comparison site Matpriskollen.

Petrol prices are up around 18% over the last year and diesel has risen nearly 40%. Both are among the highest in the world.

Households also face rising interest rates and falling real wages and growth is set to slow to just 0.5% next year.

Andersson said the government would not let Russian President Vladimir Putin hold Swedish households and companies “hostage” to high energy prices, but that it was impossible to compensate for all the effects of the war.

“That would just drive prices up further and risk causing even higher interest rates on people’s mortgages,” she said.

With the election less than a month away, the Social Democrats and parties that back them are running neck-and-neck with a right-wing opposition bloc that includes the anti-immigration Sweden Democrats, the latest poll showed.

The opposition blames high energy prices in Sweden on the Social Democrat’s decision to phase out nuclear power and plans on subsidizing new atomic plants if it wins the election.

It also wants to cut fuel duties and other taxes.

($1 = 10.4004 Swedish crowns)

(Reporting by Simon Johnson; writing by Simon Johnson and Niklas Pollard, editing by Stine Jacobsen and Toby Chopra)