Sweden's Finance Minister Svantesson Signals Future Food VAT Increase Amid Economic Challenges

Finance Minister Elisabeth Svantesson has indicated that Sweden's current lower food VAT (Value Added Tax) rate is temporary and likely to rise again in the future. The VAT on food was reduced from 12% to 6% as a measure to stimulate the economy during the ongoing recession, and this reduction is set to remain until the end of 2027. However, Svantesson emphasized that it will probably increase back to the original rate afterward, with the responsibility to address this lying with the government in power at that time.

In an interview with Ekot and comments on Sveriges Radio, Svantesson also discussed broader economic conditions facing Sweden. The country's economy is currently well-positioned with low national debt and strong capital markets, which she described as making it 'Trump-secured'—a reference to recent global tensions driven by US President Donald Trump’s threats, including tariffs and territorial claims on Greenland. Despite this economic resilience, Sweden remains sensitive to disruptions in global trade given its export dependence.

Svantesson criticized Trump’s actions, calling the situation “absurd and saddening,” and advocated for a firm response. She noted the pause in ratification of a US-EU trade agreement due to these tariff threats but expressed hope it would ultimately be approved.

Regarding Sweden’s fiscal outlook, Svantesson acknowledged growing national debt and budget deficits but highlighted the government's commitment to maintain fiscal responsibility. She stated that borrowing is currently necessary to finance defense and support for Ukraine amid the war, which she hopes is temporary. She concluded on the importance of returning the budget to balance once these extraordinary circumstances resolve.

Overall, Svantesson painted a picture of cautious economic stewardship, balancing short-term stimulus measures like the food VAT reduction against the need for future fiscal consolidation. The eventual reversal of the VAT cut after 2027 reflects the challenges Sweden faces in managing public finances in a complex international context.