• Paul Krugman's warning to Sweden: 'You have a significant housing bubble'
• Sweden’s economy doesn’t need more government help as 'optimism is spreading'
• 'The general market is skeptical towards Norway'
• Denmark's 321% debt burden 'no serious threat’

Nobel Laureate and Princeton University professor Paul Krugman questioned efforts to rein in welfare in Scandinavia after Denmark abandoned its universal benefits model and Sweden started prioritizing tax cuts over spending, Bloomberg said.

“It’s not clear that the crisis required these actions,” Krugman said in an interview in Oslo after speaking at an annual conference held by Skagen Funds. “It’s not clear that anything that’s happened says that tax cuts should be a priority for the Swedes.”

Sweden's centre-right coalition government plans to cut income taxes in the largest Nordic country for the fifth time since coming to power in 2006, aiming to boost a sluggish economy and overtake the opposition ahead of an election in 2014. At its peak, taxes accounted for 50 percent of Sweden's gross domestic product. Now they have fallen to below 45 percent, a reduction of more than 100 billion kronor ($15 billion). If the trend continues at the same pace, Sweden will be down to EU average of 40 percent within six, seven years, the TT news agency said.

“The lesson is actually that you can do fine with a generous welfare state as long as it has a sound fiscal base,” Krugman told Bloomberg. Even after being reined in, “all of the Scandinavian welfare systems are still beyond the wildest dreams of liberals in the United States,” he said.