Sweden's centre-right government aims to safeguard welfare and economic stability with strong labour laws and high taxes.

• Only Danes pay more taxes than Swedes
• Nordic countries leading Europe out of crisis

During a speech Monday at the yearly political week on the island of Gotland, Sweden’s Finance Minister Anders Borg said that countries with strong labour law and collective agreements, like Sweden, Germany, Holland and Finland, are those that have emerged strongest after the financial crisis, compared to countries like the United States or Denmark.

“Sweden's economy is strong and appears as an obvious spot of light in Europe where many countries are facing large problems”, the finance minister said as he raised the outlook for the countries economy, partly on the back of better attitudes on the labour market. "The trend in employment is a sign of strength for the Swedish model and a development that should be safeguarded".

The government now forecast GDP to increase by 3.3 percent this year, up from 2.5 percent in its previous prognosis. Unemployment is expected to be 8.9 percent this year and then to reach 6 percent in 2014.

Anders Borg said the pickup in the labor market and increased consumption will help Sweden's public finances reach a surplus by 2012.

The message came the day after Prime Minister Fredrik Reinfeldt, who leads the government's largest party, said he doesn’t plan any additional tax cuts next year in order to protect public finances. Since coming to power in 2006 Reinfeldt's government has cut income tax by about 70 billion kronor ($9.2 billion), or 2.3 percent of gross domestic product, in four steps.

"We won't promise any more tax cuts for 2011", Fredrik Reinfeldt said. "The room for reform that exists should be used for spending on the core of welfare, on education and health care."

Swedes pay the second-highest taxes in the OECD, after Denmark. Sweden still has the highest top tax rate on personal income with 56.4 percent in 2010.

Sweden raised its key interest rate from a historic low last week, reporting a strong economic recovery in the country which along with several Nordic neighbours appears to be leading Europe out of crisis.