On Radio Sweden, Annika Alexius says that Sweden should leave the surplus target behind. Photo: Lars Johansson/Mostphotos

Should Sweden abandon the surplus target?

Annika Alexius is a professor of economics at Stockholm University. She meets Lars Jonung, professor emeritus at Lund University, in a conversation on Radio Sweden about the fiscal policy framework.

She believes that Sweden should leave the surplus target behind.

”We have a low national debt in Sweden today, and real interest rates are much lower than GDP growth. This means that the national debt as a percentage of GDP falls if you have zero budget deficit.”

Is the timing right?

”Given that we are reviewing the framework, the conditions have changed. There are incredibly large gaps in almost every part of public services. For example, the Swedish Transport Administration needs an additional 150 billion for maintenance, and Sweden can afford to maintain its roads,” says Annika Alexius.

Lars Jonung disagrees. According to him, it is ”historically ignorant” and the wrong direction to move from today’s surplus target to a deficit target.

He argues that the fiscal policy framework has worked very well in the past twenty years, and Sweden has increased its public investments more than any other EU country.

”There is room already in the current framework,” Lars Jonung says in the radio conversation.

Text by: Anneli Eriksson