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On 16 March, the Swedish government and its January Agreement partners (the Centre Party and the Liberals) held a press conference on new budgetary measures to mitigate the financial impact of the corona virus.
The Minister for Finance, Magdalena Andersson (S), said that the corona virus will have major economic consequences for Swedish businesses and that a heavy and stressful time lies ahead for Sweden. Therefore, public finances will be used to mitigate the negative effects of the corona virus. Dagens Industri reports the measures can encompass up to SEK 300 bn depending on how the situation develops.
Among the proposed measures are:
Short term lay-offs Employers’ wage costs can be halved as the central government will cover a larger share of the costs. The employee will receive more than 90% of the wage. The proposal on short-term layoffs is proposed to enter into force on 7 April and be in effect throughout 2020, but be applied as of today (press release)
Central government assumes sick pay responsibility for 2 months
Liquidity reinforcement via tax accounts Companies can defer payment of employers’ social security contributions, preliminary tax on salaries and value added tax that are reported monthly or quarterly (press release)
The new regulations are proposed to take effect on 7 April, but can be retroactively applied from 1 January. The Minister for Finance, Magdalena Andersson (S), the Minister for Financial Markets, Per Bolund (MP), and the spokespersons on economic policy from the Centre Party and the Liberals, Emil Källström (C), and Mats Persson (L) participated in the press conference.
The government intends to present the proposals to the Riksdag in the additional amending budget that the government will adopt on 19 March, according to a press release. The proposals on respite and short-term layoffs will now proceed to the Council on Legislation (Lagrådet) for fast-track consideration.
In addition to the government’s measures, the Riksbank announced last week that it is lending up to SEK 500 billion to companies via the banks to safeguard credit supply during the corona virus. Finansinspektionen has announced that it is lowering the countercyclical capital buffer to zero to safeguard a well-functioning credit supply.