Swedish Sentiment Shifts With Election
Consumer Confidence in Sweden has taken a jump this morning but Business Confidence is not faring so well according to the latest sentiment surveys published this morning. The Consumer Confidence number, which has been falling consistently in recent months has managed to post a gain in the as presented in the September release. The indicator is now showing at 102.4 in comparison to the August reading of just 96.9, forecasts pointed towards a more moderate increase to around 97. The Business Confidence number however is continuing to deteriorate, this now stands at 101.8, down from the August figure of 104.6 and clearly missing the predicted rise to 104.8.
There is an interesting shift in today’s figures in light of the recent change of government in Sweden, it may be coincidental but there could well be more to it. The Social Democrats, credited with building Sweden’s infamous welfare state during the most of the last century, have regained control of Government after an extended stint in opposition. The previous incarnation of this leftist party were at the helm of the economy when Sweden experienced it’s notorious financial collapse in the early nineties, their policies of high taxation and generous social welfare and health spending left the economy open to the shock that ultimately brought it to it’s demise.
The outgoing Moderate government on the other hand has been notable for having reduced taxation to a more acceptable level while at the same time reforming the unsustainable social benefits system. The Swedish economy has undeniably thrived under the Moderate administration of Fredrik Reinfeldt however this has been at the expense of social equality.
Swedish voters, aka consumers, will no doubt sense that the safety net of the social focused system is returning and therefore feel more confidence to spend, while business facing into likely tax hikes is understandably nervous.
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