• Sweden hikes economic growth forecast
• Forecast for the Swedish economy: full statement

The Government's policy focuses on supporting the recovery of the Swedish economy, promoting full employment by continuing to strengthen the work-first principle and reducing exclusion, and safeguarding publicly financed welfare. These objectives are all dependent on continuing to keep the public finances in good order.

"The Government's primary goal is to take Sweden back to full employment. We are therefore continuing our efforts to strengthen the work-first principle and reduce exclusion," says Minister for Finance Anders Borg.

Broad recovery, though not without risks

The Swedish economy is developing well, with recovery on a broad front.

"But Sweden is still in a period of low economic activity and high unemployment. And there are still risks that developments will be less favourable than expected. It is therefore important that we make sure that the public finances are once again in surplus and that we prevent a high level of unemployment becoming persistent. The years of high growth that lie ahead must be used to ensure that more people, including people who have had difficulty becoming established in the labour market, begin to work," says Mr Borg.

Measures for jobs, knowledge, welfare and the environment

In this bill, the Government proposes measures costing a total of SEK 13 billion. The reforms receiving priority are:

• increasing employment and reducing exclusion
• increasing knowledge
• safeguarding core welfare services and reducing the effects of the crisis
• reducing emissions and climate impact.

Full employment and reduced exclusion

The Government is continuing its efforts to increase the labour supply and stimulate the demand for labour, so that jobs will come early in the upturn. An important factor in this is to prevent new bottlenecks that would hinder employment growth. Another element of the Government's strategy is to improve conditions for a dynamic business sector.

The Government therefore proposes:

• an adaptation of labour market policy to economic developments
• measures to promote integration so as to reduce exclusion
• measures to promote better conditions for entrepreneurs and a more vigorous innovation climate to improve conditions for growth
• a higher standard deduction for sub-letting to stimulate housing supply.

Increasing knowledge

A well-functioning education system offers long-term prospects of increased permanent employment and reduced exclusion. Research, development and innovation are similarly core components of growth policy. The emphasis in investments in the education area will lie on compulsory (primary and lower secondary) school. Education will be improved both in quantitative and qualitative terms.

Preserving welfare and reducing the effects of the crisis

The Government continues to give priority to measures that will reduce the effects of the crisis and protect core welfare services. Welfare services must be of the highest standard and available to all.

The Government therefore proposes:

• a new temporarily higher government grant to local governments to enable them to provide essential welfare services such as education, healthcare and social services
• lower taxes for pensioners by raising the basic income tax allowance so as to counteract lower income-related and supplementary pensions
• measures to promote gender equality
• measures in health and medical services to increase availability and quality
• reforms in elderly policy to provide increased freedom of choice and quality care for the elderly
• measures for culture and sport.

In addition, reforms are announced in family policy, primarily for lone parents, so as to improve their economic standard.

Reduced emissions to achieve climate objectives

Climate change is one of the greatest challenges of our time. The Government recognises the importance of meeting this challenge and has therefore set a national climate target that is more ambitious than the EU target. The Government's assessment is that the target will largely be attained by means of measures that have already been decided or announced. However, this presupposes continued investments in climate action in other countries. The Government therefore announces the commitment of additional resources for this purpose from 2013 onwards.

The Government's reform ambitions

The Government has the ambition of implementing a range of reforms during this electoral period. However, this will only happen when the public finances surplus target has been met and there is permanent scope for reforms.

In that case, the Government's priorities will include:

• lower taxes for low and medium earners by taking another step in the in-work tax credit and raising the threshold for state income tax
• halving VAT on restaurant and catering services
• compulsory unemployment insurance

For more information on the budget, see www.sweden.gov.se/statebudget