Saturday, 18 September 2010

Keeping an eye on the Swedes

Sweden is one of those countries it pays to keep an eye on. Run (until relatively recently) by social democrats, with high levels of taxation, a competitive economy and high social mobility, it appeared to defy gravity - and the debate between economic liberals (like myself) and socialists or social democrats. In short, it was the poster child for the Left. That may be changing.

The Swedish model has long looked unsustainable over the longer term in a globally competitive economy - either unaffordable, or a threat to growth. Recession gave a different, center right, government the opportunity to address those structural imbalances. But could the government pull it off? And would the voters buy it?

We will find out next week, when Swedes go to the polls. As The Economist observes, this week, the center-right government led by Fredrik Reinfeldt has 'made welfare payments less generous, cut taxes for the lower-paid and trimmed the numbers on sickness benefit. Voters seem to approve.' Reforms have made 'work pay more and unemployment pay less', resulting in a business-driven recovery - creating jobs in the private sector, whilst enabling the private provision of education, health care and welfare.

A lesson for Britain? Absolutely. The re-election of a center-right government, that has competently addressed voters' lurking suspicion that the country is living beyond it means, is a positive model for the Con-Lib coalition, as it faces the challenges of deficit reduction in the months ahead.


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