COMMISSION STAFF WORKING DOCUMENT Assessment of the 2013 national reform programme and convergence programme for SWEDEN Accompanying the document Recommendation for a Council Recommendation on Sweden’s 2013 national reform programme and delivering a Council Opinion on Sweden’s 2013 convergence programme for 2012-2016
Date: 2013-05-29
Institutions: European Commission
Subjects: Sweden, economic situation, financial institution, fiscal policy, indebtedness, medium-term forecast, public administration, research and development, structural adjustment

EUROPEAN 
COMMISSION 

Brussels, 29.5.2013  
SWD(2013) 377 final 

COMMISSION STAFF WORKING DOCUMENT 

Assessment of the 2013 national reform programme and convergence programme for 
SWEDEN 

Accompanying the document 

Recommendation for a Council Recommendation  

on Sweden’s 2013 national reform programme and delivering a Council Opinion on 
Sweden’s 2013 convergence programme for 2012-2016 

{COM(2013) 377 final} 

EN 

   EN 

 
 
 
 
  
 
CONTENTS 

Executive summary .................................................................................................................... 3 

1. 

2. 

Introduction .................................................................................................................. 5 

Economic developments and challenges...................................................................... 6 

2.1. 

2.2. 

Recent economic developments and outlook................................................. 6 

Challenges...................................................................................................... 8 

3. 

Assessment of policy agenda ..................................................................................... 11 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

Fiscal policy and taxation ............................................................................ 11 

Financial sector ............................................................................................ 16 

Labour market, education and social policies.............................................. 18 

Structural measures promoting growth and competitiveness ...................... 24 

Modernisation of public administration....................................................... 27 

4. 

5. 

Overview table ........................................................................................................... 29 

Annex ......................................................................................................................... 32 

2 

 
 
 
 
EXECUTIVE SUMMARY 

Economic Outlook 

In  2012  and  early  2013,  growth  and  employment  in  Sweden  were  strongly  affected  by 
the euro area sovereign-debt crisis and the global slowdown. Overall, GDP grew by 0.8 % 
in 2012, and the Commission's spring forecast estimates growth of 1.5% in 2013 and 2.5% in 
2014,  with  private  consumption  being  the  main  driving  force.  The  labour  market  was  quite 
stable  in  2012,  with  the  unemployment  rate  hovering  around  8%.Following  the  redundancy 
notices announced in the autumn months of 2012, the unemployment rate is expected to rise 
to 8.3% in 2013, before falling back to 8.1% in 2014. Youth unemployment rose to 23.7% in 
2012,  above  the  EU  average.  Inflation  fluctuated  around  0.9%  in  2012  and  is  expected  to 
remain low in 2013, dampened by the strengthening currency, before rising to 1.4% in 2014. 

Sweden’s public finances have been affected by the economic slowdown and slowing tax 
revenues,  as  well  as  by  the  expansionary  measures  included  in  the  2013  Budget  Bill. 
Lacklustre  growth  pushed  the  general  government  balance  from  a  surplus  into  a  deficit  of 
0.5% in 2012. Expansionary policies and a continued rise in unemployment are expected to 
widen  the  deficit  to  1.1%  of  GDP  in  2013,  but  an  improvement  to  a  deficit  of  0.4%  is 
projected  for  2014  on  account  of  accelerating  economic  activity.  The  structural  budget 
balance  is  expected  to  swing  from  a  surplus  of  0.2%  of  GDP  in  2012  to  a  slight  deficit  of 
0.1% of GDP in 2013 and back to a surplus of 0.3% of GDP in 2014. Therefore, Sweden is 
likely to continue to meet its medium-term budgetary objective – fixed at a structural deficit 
of  1%  of  GDP.  Gross  government  debt  is  projected  to  remain  low,  around  40%  of  GDP  in 
2013 and 2014. 

Key Issues 

The  Swedish  economy  remains  one  of  the  most  competitive  in  the  EU,  and  has 
weathered the crisis relatively well in terms of growth, employment and public finances. 
In  April  2013,  the  Commission  concluded  that  the  country  is  experiencing  macroeconomic 
imbalances  when  it  comes  to  private  sector  debt  and  the  housing  market,  which  deserve 
continued attention.  

Sweden  has  made  some  progress  in  addressing  the  2012  CSRs,  particularly  the 
challenges in the labour market. Sweden has also made some efforts to address problems in 
the housing and mortgage markets and has adopted a well-defined innovation strategy, which 
should pool resources and make the country more competitive by addressing the future needs 
of the research sector.  

Nevertheless, Sweden faces major challenges with regard to private sector debt, housing 
market  uncertainties  and  the  integration  of  vulnerable  groups  in  the  labour  market. 
Over the medium term, research and development will remain a concern as private investment 
in research dwindles. 

•  Housing market: High private sector debt (235% of GDP in 2012) continues to be a 
matter of concern and incentives to borrow – such as the debt-bias in housing taxation 
–  have  not  been  phased  out.  Constraints  in  the  housing  supply  remain,  and  are 
exacerbated  by  rent  control,  cumbersome  planning  and  limited  competition  in  the 
construction sector. Together with debt-inducing housing taxation, these inefficiencies 
tend  to  create  upward-bias  in  house  prices.  Household  debt  of  around  80%  of  GDP 
(roughly 170% of disposable income) has only recently stabilised. High debt exposes 
households to risks related to possible drops in house prices or interest rate increases.  

3 

 
 
Corporate debt is also substantial, at around 149% of GDP, partly driven by the debt-
bias in taxation. 

•  Labour market: The government has taken a number of measures to further integrate 
young  people  and  people  with  a  migrant  background  into  the  labour  market,  but 
unemployment  in  these  groups  remain  high  (youth  unemployment  increased  from 
22.8%  to  23.7%  from  2011  to  2012,  above  the  EU  average,  while  at  30.6%,  the 
unemployment  rate  for  non-EU  nationals  exceeds  the  EU  average  of  21.3%). 
Moreover,  the  at-risk-of-poverty  rate  for  women  over  65  increased  from  13.1%  to 
24.7% between 2005 and 2011, far above the EU average.  

•  Research  and  innovation:  In  the  medium  term,  Sweden’s  competitiveness  is 
challenged  by  its  traditional  reliance  on  a  limited  number  of  multinational  firms. 
However, over the last two decades, some of these firms have relocated   their research 
and  innovation  facilities,  often  placing  them  close  to  growth  markets  or  in  new 
headquarters. Despite increased public spending on research, Swedish R&D intensity 
is falling, and to reach its R&D intensity target of 4% of GDP, Sweden would need to 
increase  R&D  spending,  particularly  by  the  private  sector.  The  2012  innovation 
strategy provides a good basis for future progress and its practical implementation will 
now need to be closely monitored.  

4 

 
 
 
1. 

INTRODUCTION 

In  May  2012,  the  Commission  proposed  a  set  of  country-specific  recommendations  (CSRs) 
these 
for  economic  and  structural  reform  policies  for  Sweden.  On 
recommendations,  the  Council  of  the  European  Union  adopted  four  CSRs  in  the  form  of  a 
Council Recommendation in July 2012. These CSRs concerned public finances, the housing 
and  mortgage  markets,  the  labour  market,  and  research  and  innovation.  This  Staff  Working 
Document (SWD) assesses the state of implementation of these recommendations in Sweden. 

the  basis  of 

The  SWD  assesses  policy  measures  in  light  of  the  findings  of  the  Commission’s Annual Growth 
Survey  2013  (AGS)1  and  the  second  annual  Alert  Mechanism  Report  (AMR)2,  which  were 
published in November 2012. The AGS sets out the Commission’s proposals for building the 
necessary common understanding of the priorities for action at national and EU level in 2013. 
It  identifies  five  priorities  in  guiding  Member  States  towards  renewed  growth:  pursuing 
differentiated, growth-friendly fiscal consolidation; restoring normal lending to the economy; 
promoting growth and competitiveness for today and tomorrow; tackling unemployment and 
the  social  consequences  of  the  crisis;  and  modernising  public  administration.  The  AMR 
serves as an initial screening device to determine whether macroeconomic imbalances exist or 
are likely to emerge in Member States. The AMR found positive signs that macroeconomic 
imbalances in Europe are being corrected. To ensure that complete and lasting rebalancing is 
achieved, Sweden and 13 other Member States were selected for a review of developments in 
the accumulation and unwinding of imbalances.3 

In the light of the 2012 Council Recommendation, the AGS and the AMR, Sweden presented 
updates of its national reform programme (NRP) and its convergence programme on 19 April 
2013. The NRP follows the guidance provided by the Commission, but as last year Sweden is 
invited to set in its next NRP a numerical target for reducing social exclusion to supplement 
the EU target of reducing the number of persons at risk of poverty and social exclusion by 20 
million.  

The  programmes  submitted  provide  detailed  information  on  progress  made  since  July  2012 
and on the future plans of the government. The information contained  in these programmes 
provides  the  basis  for  the  assessment  made  in  this  SWD.  The  reform  priorities  and  policy 
measures  described  in  the  NRP rely  largely  on  measures  already  announced  by  the 
government in the 2013 Budget Bill and the 2013 Spring Fiscal Policy Bill.  

The national reform  programme  went through an extensive consultation process, also at the 
local  and  regional  level.  Responding  to  requests  from  social  partners,  regular  consultations 
were carried out with social partners through a reference group organised by the government. 
The  reference  group  represents  involved  ministries  of  the  Swedish  government  offices,  as 
well  as  social  partners  and  regular  meetings  on  the  implementation  of  the  Europe  2020 
strategy  in  Sweden  are  being  organised.  Since  the  presentation  of  the  2012  NRP,  three 
consultations at the civil service level have also been organised. Civil society has also been 

1 COM(2012) 750 final. 
2 COM(2012) 751 final. 
3  13  in-depth  reviews  were  published  on  10  April  2013.  Although  Cyprus  had  been  selected  for  an  in-depth 
review in the AMR, in the end it was not reviewed under the Macroeconomic Imbalance Procedure in view of 
the advanced preparations for a financial assistance programme. 

5 

 
 
 
                                                            
consulted  through  a  number  of  public  consultations  and  the  Sweden's  2013  NRP  was 
accompanied by examples of the implementation of the Europe 2020-strategy at the local and 
regional  level.  The  convergence  programme  was  presented  to  the  Riksdag’s  parliamentary 
Committee on Finance on 18 April 2013 and adopted by the government on 19 April 2013. 

Overall assessment 

The  analysis  in  this  SWD  leads  to  the  conclusion  that  Sweden  has  made  some  progress  on 
measures taken to address the CSRs of the Council Recommendation.  

It  appears  that  Sweden  is  likely  to  achieve  its  medium-term  objective  (MTO).  However,  it 
should be noted in this context that the government lowered the MTO from +1 % of GDP to -
1 %  of  GDP  in  2012,  which  was  also  confirmed  in  the  2013  convergence  programme.  As 
regards the housing and mortgage markets, some measures have been taken to foster prudent 
lending  (such  as  the  planned  increase  in  the  risk-weight  floor,  and  strengthened  capital 
requirements),  but  no  decisive  measures  to  reduce  the  debt-bias  in  housing  taxation  have 
emerged.  Although  the  housing  market  has  benefited  from  some  reforms,  notably  to  the 
system  for  private  lettings  and  emerging  proposals  addressing  the  construction  sector, 
constraints in the housing supply remain in place and rent control further limits the supply of 
rental units. As regards the labour market, the government has taken a number of measures to 
further foster labour market integration of disadvantaged people (in particular young people 
and people with a migrant background). However, so far unemployment rates of these groups 
remain high and further efforts could be made to increase demand for vulnerable groups and 
to further improve the functioning of the labour market. With the adoption of the Research & 
Innovation Bill, as well as the innovation strategy in the autumn of 2012, Sweden addressed 
the CSR pertaining to the challenges of the Swedish R&D sector.  

The policy plans submitted by Sweden address most of the challenges identified in last year’s 
SWD,  and  broad  coherence  between  the  two  documents  has  been  ensured.  The  national 
reform  programme  confirms  Sweden's  commitment  to  address  shortcomings  in  the  areas  of 
the  housing  and  labour  market.  The  convergence  programme  demonstrates  Sweden's 
commitment to preserve a sound budgetary position towards the medium-term objective and 
ensure  the  long-run  sustainability  of  public  finances  in  line  with  the  Stability  and  Growth 
Pact.  Nevertheless,  further  efforts  could  be  made  to  address  the  challenges  identified  in  a 
comprehensive  way,  notably  by  effective  measures  to  curb  the  increasing  private  sector 
indebtedness and to foster further flexibility of housing supply. Reforms of the tax system, for 
example  by  reviewing  the  tax  benefits  for  debt  accumulation  and  the  VAT  structure  would 
also  be  warranted.  Finally,  according  to  the  NRP,  the  government  limits  its  strategy  of 
ensuring the participation of disadvantaged people to active labour market policy, whereas a 
more determined policy response to further improve the functioning of the labour market in 
other areas would also be welcome.   

2. 

ECONOMIC DEVELOPMENTS AND CHALLENGES 

2.1.  Recent economic developments and outlook 

Recent economic developments  

In  2012  and  early  2013,  growth  and  employment  in  Sweden  were  strongly  affected  by 
the euro-area sovereign-debt crisis and the global slowdown. Overall GDP grew by 0.8 % 
in  2012.  A  number  of  challenges  arose  in  the  autumn  of  2012:  confidence  indicators 
plummeted across all categories, investment stagnated and exports faltered, reflecting falling 

6 

 
 
global  demand  and  the  effect  of  strong  krona  appreciation  over  the  summer  of  2012.  The 
number  of  lay-off  notices  also  increased.  Nevertheless,  Swedish  households  remained 
relatively optimistic, encouraged by stable house prices and decreasing mortgage rates. Real 
income  growth  was  sustained  by  real  wages,  which  continued  to  grow  supported  by  low 
inflation. In early 2013, also industry reported more optimism, as new orders  and industrial 
production started to grow in year-on-year terms.    

So far Swedish exports have been rather resilient, benefiting from a large and diversified 
export market. Nevertheless, exports fell by 4 % in 2012 due to weak external demand and the 
strengthening  of  the  Swedish  krona.  The  labour  market  was  quite  stable  in  2012,  with  the 
unemployment rate hovering around 8 %, having deteriorated somewhat in recent months with 
youth unemployment of above 20 %. Harmonised Index of Consumer Prices (HICP) inflation 
fluctuated  around  0.9 %  in  2012,  being  dampened  by  the  strengthening  currency  and  low 
capacity utilisation. 

Public  finances  were  affected  by  the  economic  slowdown  and  slowing  tax  revenues,  as 
well  as  by  the  expansionary  measures  included  in  the  2013  Budget  Bill.  The  general 
government  balance  swung  from  a  surplus  of  0.2 %  of  GDP  in  2011  to  -0.5 %  in  2012. 
However, over the last few years there has been a declining trend in gross government debt, 
which stood at 38.2 % of GDP in 2012 and although it is expected to increase temporarily to 
40.7 % in 2013, it is forecast to return to a level below 40 % next year. 

Economic outlook 

According to the Commission 2013 spring forecast, GDP is expected to grow by 1.5 % in 
2013  and  become  more  dynamic  in  2014,  when  it  is  estimated  to  increase  by  2.5 %,  with 
private  consumption  being  the  main  driving  force,  unlike  previous  recoveries,  which  were 
typically export-driven. Recent data on exports point to a further deceleration at the beginning 
of  2013,  reflecting  continuously  suppressed  demand  from  EU  Member  States  as  well  as  a 
stronger  krona,  which  may  continue  to  have  an  adverse  effect  on  Swedish  exports  in  2013. 
Firms’ employment plans remain cautious and growth is expected to remain subdued for the 
rest  of  2013,  as  confidence  among  households  and  companies  rises  only  gradually  and 
external  demand  slowly  resumes.  Nevertheless,  household  consumption  accelerated  in  the 
fourth  quarter  of  2012  and  domestic  demand  is  expected  to  drive  growth  in  2013.  Several 
factors may contribute to this development: real disposable income keeps growing at a solid 
pace, backed by wage increases, low inflation (which is likely to stay below the 2 % target for 
the  foreseeable  future),  and  higher  pensions.  Household  savings  are  also  reaching 
unprecedented  levels,  suggesting  a  potential  for  higher  consumption  once  the  uncertainty 
subsides. 

Investment  is  expected  to  remain  weak  in  2013,  as  companies  have  become  more 
cautious. However, companies that have been postponing their investment plans are likely to 
push on with them once they see a credible revival in global growth. Low investment levels in 
previous years also argue in favour of a strong pick-up in capital formation once uncertainty 
subsides.  Financing  conditions  remain  favourable,  supported  by  three  cuts  in  repo  rates  in 
2012 and wide access to foreign funding for Swedish banks. 

The  labour  market  is  likely  to  deteriorate  further  in  2013.  Most  employers  expect  no 
change, or a slight reduction, in employment in the coming months and this, together with the 
fact that the labour force continues to rise, is expected to result in unemployment at around 
8.3 % this year, before it falls back to 8.1 % in 2014. 

7 

 
 
The  macroeconomic  scenario  underpinning  the  budgetary  projections  in  the  Swedish 
programmes appears to be plausible (the economic outlook contained in the NRP is in line 
with  the  main  CP  scenario).  The  government  projects  growth  1.2 %  and  2.2 %  in  2013  and 
2014, respectively, whereas the Commission forecasts 1.5 and 2.5 %.  

2.2.  Challenges 

Sweden faces serious challenges as regards private-sector debt and related uncertainties 
in the housing market as well as the integration of disadvantaged people into the labour 
market.  From  the  mid-term  perspective,  R&D  is  still  a  matter  of  concern,  with  a  negative 
trend in terms of private investments. There is a clear link between these challenges and the 
priorities of the 2013 Annual Growth Survey, in particular with respect to promoting growth 
and  competitiveness,  tackling  unemployment  and  the  social  consequences  of  the  crisis,  as 
well as modernising public administration. 

The high indebtedness of the private sector (at 235 % of GDP in 2012) continues to be a 
matter of concern. As analysed in the in-depth review (see Box 1), corporate debt remains 
substantial,  at  around  149 %  of  GDP  (although  this  number  includes  tax-motivated  cross-
border  lending  within  multinational  companies  amounting  to  almost  50 %  of  GDP). 
Household debt, hovering around 80 % of GDP or roughly 170 % of disposable income, has 
only recently stabilised and is not likely to decline in the near future given continued credit 
growth and a slow pace of mortgage amortisation. On the other hand, credit conditions do not 
indicate that any deleveraging pressures are imminent. Nevertheless, the challenge remains, as 
high  debt  makes  households’  net  wealth  more  exposed  to  possible  drops  in  house  prices. 
Moreover,  interest  rate  increases  could  set  off  a  downward  movement  which  would  be 
detrimental to households. 

The Swedish housing market remains a potential source of instability, although lately it 
has  developed  in  a  balanced  way.  As  pointed  out  in  the  in-depth  review  (see  Box  1), 
inefficiencies  still  weigh  on  the  housing  supply,  particularly  as  a  result  of  cumbersome 
planning  processes,  limited  competition  within  the  construction  sector  and  the  remaining 
regulation  of  the  rental  market.  Together  with  debt-inducing  housing  taxation,  these 
inefficiencies tend to create upward-bias in house prices. 

The  Swedish  tax  system  is  generally  efficient.  However,  in  addition  to  the  debt-bias  in 
housing and company taxation, the efficiency and transparency of the tax system is sub-
optimal as a result of a number of deviations from the principles of tax uniformity and 
neutrality that were the basis of the 1991 tax reform. For example, these principles aimed to 
limit exceptions to the application of a standard VAT rate, a goal which is currently not being 
attained.  

The  main  policy  challenges  for  the  labour  market  are  still  broadly  the  same  as  in  the 
2011 and 2012 assessments. The labour market participation of young people and people 
with  a  migrant  background  remains  weak  as  compared  with  that  of  the  rest  of 
population.  The  unemployment  rate  for  young  people  increased  from  22.8  to  23.7 %4 
between  2011  and  2012,  which  is  still  above  the  EU  average.  Although  this  figure  is 
somewhat overstated by a high share of students and temporarily high inflows into the labour 
force, the ‘non-student’ unemployment rate is still high compared to other EU Member States 
with  a  similarly  good  labour  market  performance  for  the  25-64  age  group.  This  points  to  a 

4 Youth is understood as the 15-24 age group. The overall population covers the 15-74 age group. 

8 

 
 
                                                            
particular  challenge  for  low-skilled  young  people,  typically  those  who  have  not  completed 
upper-secondary education. 

At  30.6 %,  the  unemployment  rate  of  non-EU  nationals  exceeds  the  EU  average  of 
21.3 %,  although  it  decreased  marginally  between  2011  and  2012,  despite  a  general 
deterioration  in  the  labour  market.  Moreover,  the  employment  rate  of  non-EU  immigrants 
(44.2 %)  remains  far  below  the  EU  average  (53.7 %),  and  even  further  below  the  Swedish 
national average. This shows that a large part of the population with migrant background, and 
especially  women,  are  excluded  from  the  labour  market.  In  addition  to  these  points,  the  at-
risk-of-poverty rate for older women (aged 65+) measured as the share of the group with an 
income below 60 % of the national median income, is above the EU average and increased by 
more  than  10  percentage  points  between  2005  and  2011,  from  13.1 %  to  24.7 %.  This 
contrasts  with  the  corresponding  rate  for  older  men  (9.8 %)  and  the  EU  average  (13.7 %). 
Although indicators of absolute poverty do not show any deterioration or a gender gap,5 the 
at-risk-of-poverty indicator suggests that older women are getting poorer in comparison with 
men of the same age group. 

In the medium term, Sweden’s competitiveness and innovation capacity is challenged by 
its  traditional  reliance  on  a  limited  number  of  multinational  firms  for  its  knowledge-
based innovation. These large firms dominated employment creation in Sweden in the 1980s 
and  1990s.  However,  over  the  last  two  decades,  they  have  decreased  their  employment  in 
Sweden while increasing it globally (outside Sweden, as well as outside the EU). Moreover, 
over  the  last  decade  these  firms  have  also  increasingly  outsourced  their  research  and 
innovation facilities, often placing them close to growth markets or in new headquarters, as a 
result  of  gradually  adopting  advanced  global  strategies  as  well  as  foreign  ownership. 
Therefore, Swedish R&D intensity is falling, in spite of significant financial increases in the 
public R&D bills of 2004, 2008 and 2012. To reach its R&D intensity target of 4 %, Sweden 
would  need  to  increase  R&D  spending,  particularly  by  the  private  sector.  Thus,  as  a  small 
country heavily dependent on its exports, the challenge for Sweden is to remain competitive 
and attractive for domestic and foreign business investment in research and innovation. 

5 Severe material deprivation for women over 65 remains, similarly to men, below 1 % of the population. 

9 

 
 
                                                            
Box 1. Summary of the 2013 in-depth review (IDR) under the Macroeconomic 
Imbalance Procedure (MIP)6 

In  the  Alert  Mechanism  Report  (AMR)  published  on  28  November  2012,  the  Commission 
found  it  useful,  in  view  of  the  imbalance  identified  in  May  2012,  to  examine  further  the 
persistence  of  imbalances  or  their  unwinding  in  Sweden.  To  this  end,  the  second  2013  in-
depth review (IDR) published on 10 April 2013 takes a broad view of the Swedish economy 
in  line  with  the  scope  of  the  surveillance  under  the  Macroeconomic  Imbalance  Procedure.  
The  review  concluded  that  the  country  is  experiencing  macroeconomic  imbalances,  which 
deserve monitoring and policy action. In particular, macroeconomic developments regarding 
private  sector  debt  and  deleveraging,  coupled  with  remaining  inefficiencies  in  the  housing 
market, deserve continued attention.  

The main findings from this analysis are as follows: 

• 

• 

• 

• 

The  Swedish  current  account  surplus  is  large,  but  it  does  not  seem  to  point  to  an 
underlying imbalance in the economy, having already corrected markedly since 2007 
and being expected to decline further in the medium term. Although the large current 
account surplus does not raise risks in the way that large deficits do, the Commission 
will continue monitoring the developments of the current account in Sweden.  

Despite  a  continued  reduction  in  the  export  market  shares,  the  Swedish  economy 
remains one of the most competitive in the EU. Disregarding the crisis years 2008-09, 
the  losses  in  market  shares  have  been  marginal  over  the  last  10  years.  Market  share 
losses in goods have been largely compensated by gains in services. The losses reflect 
structural  changes  linked  to  the  traditional  Swedish  product  mix  rather  than 
unfavourable domestic cost developments or eroding quality competitiveness, and are 
hence not considered as symptoms of declining competitiveness. 

Macroeconomic risks related to high indebtedness of the private sector continue to be 
important,  despite  a  number  of  mitigating  factors  and  recently  introduced  policy 
measures on housing and corporate taxation. Corporate debt has declined substantially 
since  2009  but  remains  high  even  if  the  large  bulk  of  inter-company  loans  is 
disregarded. Although household debt has stabilised, the main contributing factors — 
the debt-bias in housing taxation and the slow mortgage amortisation pace —are still 
in  place,  thus  limiting  prospects  for  further  deleveraging.  Low  interest  rates  on 
mortgages  also  contribute  to  debt  build-up.  On  the  other  hand,  various  indicators  of 
financial health of corporations and stress tests for households, as well as the low rate 
of  defaults  during  the  2008-2009  crisis,  alleviate  to  some  extent  concerns  about  the 
private actors' capacity to service their debts. Credit supply and demand conditions do 
not indicate any imminent deleveraging pressures. 

The housing market  has been balanced  over  the latest period yet remains a potential 
source  of  instability  for  the  future.  Despite  some  recent  measures,  housing  supply 
remains  constrained  by  cumbersome  planning  processes  connected  to  the  local 
planning  monopoly  of  the  Swedish  municipalities,  limited  competition  within  the 
construction  sector  and  remaining  elements  of  rent  control.  Together  with  debt-

6 http://ec.europa.eu/economy_finance/publications/occasional_paper/2013/pdf/ocp141_en.pdf. 

10 

 
 
 
                                                            
inducing housing taxation, these inefficiencies tend to create an upward-bias in house 
prices and in household indebtedness. 

3. 

ASSESSMENT OF POLICY AGENDA 

3.1. 

Fiscal policy and taxation 

Budgetary developments and debt dynamics  

The main goal of the government’s budgetary strategy, as expressed in the 2013 Convergence 
Programme (henceforth ‛programme’), is to ensure long-term sustainability by respecting the 
rules  of  the  Swedish  fiscal  framework,  in  particular  the  target  of  a  surplus  in  general 
government  net  lending  of  1 %  of  GDP  over  the  cycle.  The  strategy  also  aims  to  meet  the 
requirements of the Stability and Growth Pact, notably by keeping to the 3 % deficit limit and 
establishing a medium-term budgetary objective (MTO). The MTO, fixed as a deficit of 1 % 
of  GDP,  reflects  the  conditions  of  the  Stability  and  Growth  Pact.  According  to  the 
programme, this less ambitious MTO (before 2012 it was fixed at a surplus of 1 % of GDP) 
should  be  seen  as  a  minimum  requirement  for  the  structural  balance  to  which  Sweden  is 
subject  as  an  EU  Member  State.  Nevertheless,  the  guiding  principle  for  the  government’s 
fiscal policy strategy will continue to be the more demanding target of 1 % surplus over the 
cycle. 

The general government balance slipped from a small surplus of 0.2 % of GDP in 2011 to a 
deficit of 0.5 % in 2012. This can be compared to an expected deficit of 0.1 % of GDP in last 
year’s  programme,  the  difference  being  explained  by  higher  expenditure  growth  than 
expected.  The  deterioration  in  relation  to  the  targeted  deficit  was  not  related  to  cyclical 
development,  since  the  economy  grew  faster  in  2012  than  was  expected  in  last  year’s 
programme and unemployment increased in line with expectations. The expenditure ratio in 
2012  increased  due  to  higher  income  pensions  (to  compensate  for  a  decline  in  2010-2011), 
other social payments and compensation of employees.  

Based on an assumption of no policy change, the programme provides for a deficit of 1.4 % of 
GDP  in  2013,  shrinking  to  0.9 %  of  GDP  in  2014,  as  the  economy  is  expected  to  recover 
gradually. In the Commission’s spring forecast, the general government balance is expected to 
show  deficits  of  1.1 %  of  GDP  in  2013  and  0.4 %  of  GDP  in  2014,  based  on  a  more 
pronounced recovery. Compared with last year’s programme, both the 2013 programme and 
the  Commission’s  spring  forecast  anticipate  a  much  lower  government  balance  in  2013  and 
2014  due  to  an  expansionary  budget  for  2013  and  higher  projected  unemployment  in  both 
years.  Fiscal  expansion  in  2013  includes  both  a  decreasing  revenue  ratio  in  view  of  lower 
corporate tax and an increasing expenditure ratio resulting from a further increase in pensions 
and other transfers to households. The projected fall in expenditure in 2014 is based on the 
assumption  that  no  additional  discretionary  measures  will  be  adopted,  although  this  is 
associated with risks in view of the upcoming elections. 

For  2015  and  2016,  surpluses  of  0.2 %  and  1.2 %  of  GDP  are  expected  in  the  programme, 
based  on  a  favourable  macroeconomic  scenario,  with  strong  household  consumption  and 
labour  productivity  growth.  In  2016,  the  programme  also  expects  buoyant  employment 
growth, as a result of government labour-market and tax reforms. Should the effects of these 
reforms  be  less  than  expected,  revenue  growth  may  be  slower,  which  would  jeopardise  the 

11 

 
 
 
2016  target  for  general  government  balance.  In  addition  to  strong  economic  growth, 
expenditure  restraint  is  expected  to  be  the  main  means  of  improving  the  fiscal  balance 
between 2014 and 2016. Assuming that policies do not change, the programme forecasts that 
the  expenditure  ratio  will  fall  by  3.4  percentage  points  over  the  programme  period.  The 
programme  expects  the  fiscal  balance  to  be  strengthened  primarily  at  central  government 
level. However, the old-age pension system should shift to a deficit along with slight deficits 
in local government net lending.    

The  programme  foresees  a  structural  general  government  balance,  as  recalculated  by  the 
Commission,7  of  -0.6  and    0%  of  GDP  in  2013  and    2014,  respectively,  the  Commission 
forecasts a swing in the structural balance from 0.2 % of GDP in 2012 to -0.1 % and back to 
0.3 % of GDP in 2013 and 2014 respectively. Since the MTO is fixed at -1 % of GDP as from 
2012,  it  is  likely  to  be  met  over  the  period  covered  by  the  programme,  even  taking  into 
account the possibility of further expansionary discretionary measures in  2014. These could 
stem from a political will to restore the real value of expenditure items that are not indexed to 
inflation  or  income  growth,  particularly  in  view  of  the  elections  scheduled  for  2014. 
Moreover, the government may decide to proceed with the fifth step in the in-work tax credit 
as set out in its election programme.  

According  to  the  information  provided  in  the  programme,  the  growth  rate  of  government 
expenditure, net of discretionary revenue measures, exceeded the reference medium-term rate 
of potential GDP growth (1.84 %) in 2012 and will exceed it in 2013, with a negative impact 
on  the  structural  balance  of  0.1 %  and  0.4 %  of  GDP,  respectively.  According  to  the 
Commission Spring forecast, the negative impact on the structural balance would amounts to 
0.5 % and 0.6 % of GDP, respectively. The difference for 2012 between the assessment based 
on  the  programme  and  the  Commission  spring  forecast  lies  in  the  estimated  cyclical 
unemployment benefit expenditure, where the programme data contain a break in the series. 
The slippage from the expenditure benchmark in 2012 and 2013 should be seen in the context 
of  the  likelihood  that  the  MTO  will  be  met  over  the  programme  period.  In  2014  and  later 
years,  according  to  both  the  information  provided  in  the  programme  and  the  Commission 
spring  forecast,  the  growth  rate  of  government  expenditure,  net  of  discretionary  revenue 
measures, will not exceed the reference medium-term rate of potential GDP growth (1.84 %).  

Following  an  overall  assessment  of  the  Member  State’s  budgetary  developments  and  plans, 
with  the  structural  balance  as  a  reference,  including  an  analysis  of  expenditure  net  of 
discretionary  revenue  measures,  the  plans  have  been  found  to  be  consistent  with  continued 
fulfilment of the MTO. 

7 Cyclically adjusted balance net of one-off and temporary measures, recalculated by the Commission services 
on the basis of the information provided in the programme, using the commonly agreed methodology. 

12 

 
 
                                                            
Box 2. Main budgetary measures 

  Revenue 

Expenditure

2012 

•  Lower VAT rate for restaurant and catering 

•  Higher  spending  on  infrastructure  (+0.1% 

services (-0.2% of GDP) 

of GDP) 

2013 

•  Lower  corporate  income  tax  (-0.2%  of 

•  Labour market package (+0.1% of GDP) 

GDP) 

  Note:  The  budgetary  impact  in  the  table  is  the  impact  reported  in  the  programme  by  the  national 

authorities. A positive sign implies that revenue / expenditure increases as a result of this measure.  

The debt ratio has shown a declining trend since the mid-1990s, which was only temporarily 
interrupted by the recession of 2008/09. Gross debt stood at 38.2% of GDP in 2012. Since the 
debt-to-GDP ratio is below the reference rate, the debt reduction benchmark is not applicable. 
The programme expects a temporary increase in the debt ratio to 42% in 2013 due to central 
government  lending  of  SEK  100  billion  (roughly  EUR  11  billion)  to  the  Riksbank  for 
strengthening the foreign exchange reserve. In 2014-16, the programme anticipates a renewed 
decline  in  the  debt-to-GDP  ratio  to  36.2 %  in  2015,  the  main  drivers  being  the  contribution 
from  real  GDP  growth  and  primary  surpluses  in  2015-16.  This  decline  is  based  on  a  rather 
favourable  macroeconomic  scenario  and  includes  the  effects  of  some  limited  further 
privatisation  receipts.  Medium-term  debt  projections  (see  Graph  below  Table  V  in  annex) 
indicate that full implementation of the programme would lead to a further decline in the debt-
to-GDP ratio by 2020. 

Long-term sustainability 

It would appear that Sweden is not facing any short-term or medium-term sustainability 
challenges. Government debt (38.2 % of GDP in 2012 and expected to rise to 39 % in 2014) 
is  below  the  60 %  of  GDP  Treaty  threshold,  providing  the  country  with  some  fiscal  space 
over  the  medium  term.  The  country  is  at  medium  risk  in  the  long  term  due  to  the  cost  of 
ageing,  but  it  has  some  time  to  adjust  policies  that  affect  age-related  spending.  The  risks 
would be lower if the structural primary balance reverted to the higher values observed in the 
past,  such  as  the  average  for  the  period  1998-2012.  If  age-related  expenditure  growth  were 
contained further, it would contribute to the sustainability of public finances in the long term. 
According  to  the  2012  Ageing  Report,  the  long-term  care  component  of  the  medium-  and 
long-term sustainability indicators is much higher than on average in the EU. 

Fiscal framework 

The Swedish fiscal framework, which is characterised by a cautious approach, has been 
stable  over  the  latest  period.  It  has  its  origin  in  the  period  following  the  recession  of  the 
early 1990s, linked to which public finances suffered. The framework combines elements that 
are  laid  down  in  law  with  softer  regulation  through  a  series  of  practices  and  particular 
approaches  to  the  budgetary  process  ensuring  a  tight  process  controlled  by  the  Swedish 
Ministry of Finance. This process comprises three key components. First, the surplus target, 
encompassing 
local  governments  (counties  and 
municipalities)  and  the  pension  system,  stipulates  that  an  overall  surplus  of  1  %  of  GDP 

the  finances  of  both  central  and 

13 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
should be  achieved  over the business cycle (since 2010 the surplus target must be defined). 
The achievement of the target is assessed against seven different indicators, largely forward-
looking. The multitude of indicators impairs the clarity of the assessment and could lead to an 
opportunistic  interpretation.  Second,  the  three-year  nominal  expenditure  ceiling  for  central 
government (excluding interest expenditure) and the pension system controls budget overruns 
and  forces  government  departments  to  prioritise.  Third,  the  balanced-budget  rule  for  local 
governments  forbids  municipalities  and  counties  to  approve  ex-ante  deficit  budgets  and 
requires them to compensate for any ex-post deficits within three years. The 2013 Budget Bill 
included  new  rules  allowing  municipalities  and  countries  to  balance  revenues  over  time 
through  so  called  results-balancing  reserves,  as  a  means  of  reserving  a  proportion  of  the 
surplus in good times, which can then be used to cover deficits in a recession. The new rules 
entered into force on 1 January 2013, with the possibility to include surpluses as from 2010, 
and  are  expected  to  give  local  governments  bigger  possibilities  to  avoid  pro-cyclical 
budgeting.  In  addition  to  the  budgetary  rules,  the  Fiscal  Policy  Council  was  established  in 
2007  as  a  government  agency  with  the  task  of  providing  an  independent  evaluation  of  the 
government’s fiscal policy as outlined above and compliance with the fiscal rules.  

The  well-established  fiscal  framework  has  successfully  contributed  to  putting  Swedish 
public  finances  on  a  much  stronger  footing  at  both  the  central  and  the  local  level.  It  has 
played a specific role in preventing strong tax receipts in good times from translating into pro-
cyclical spending increases. This has provided the necessary margin for automatic stabilisers 
to play their role in recessions, even making room for discretionary fiscal stimulus.  

At the end of 2012, the Swedish government called a parliamentary committee with the 
purpose of reviewing the budget process. Initial results have recently been published (SOU 
2013:32)  and  a  full  report  is  due  by  1  October  2013.  The  present  public  inquiry  evaluates 
whether the Swedish budgetary framework is in line with Council Directive 2011/85/EU of 8 
November  2011  on  requirements  for  budgetary  frameworks  of  the  Member  States.  The 
inquiry  concludes  that  the  overall  compliance  is  good  but  that  Sweden  lacks  a  regular 
evaluation of the government’s macroeconomic forecasts and budget forecasts, as required by 
the  Directive.  The  inquiry  therefore  proposes  to  keep  the  process  generally  intact,  with  the 
addition  that  the  government  should  be  required  to  regularly  publish  evaluations  of  the 
forecasts  presented  in  the  Budget  Bills  and  the  spring  budget.  The  government  should  also 
address  significant  discrepancies  against  the  Commission’s  forecasts.  The  Directive  is  to  be 
transposed by 31 December 2013.   

Tax system 

Swedish  taxation  levels  are  the  second  highest  in  the  EU  with  a  tax-to-GDP  ratio 
(including  social  security  contributions)  of  44.3 %  in  2011  (latest  available  year  for 
detailed data on taxation). In 2011, revenues from indirect taxes rose by 0.6 percentage point 
year-on-year  (42.0 %  of  total  tax  revenue),  while  revenues  from  direct  taxes  dropped  back 
slightly  (42.2 %  of  total  tax  revenue).  The  implicit  tax  rate  on  labour  has  declined  steadily 
from its peak level of 49.3% in 1998, to reach a new low of 39.4 % in 2011 which can mostly 
be explained by all the measures taken in recent years to decrease the tax burden on labour. 

The  in-work  tax  credit  which  the  Swedish  government  introduced  in  stages  in  recent 
years seems to have generated the desired effect: a reduction of the effective marginal tax 
rate on labour (and the tax wedge), in particular for low-earners. However, the marginal tax 
rates for above-average wage earners and the average tax wedge remain high. Similarly, the 

14 

 
 
implicit  tax  rate  on  labour  remains  above  the  EU  average  (weighted  35.8 %),  despite  a 
significant decline over the last decade. 

A  further  reduction  in  labour  taxation  could  be  achieved  via  the  planned  but  not  yet 
realised  fifth  step  of  the  in-work  tax  credit.  In  this  context,  the  government’s  ambition,  as 
announced linked to the presentation of the spring budget in April 2013, and repeated in the 
NRP,  to  strengthen  the  in-work  tax  credit  further,  and  to  raise  the  lower  threshold  for  state 
income tax when the state finances so allow, are welcome steps. 

Since the tax reform in the early nineties, which aimed to make the system less complex, 
and also easier for citizens to comply with, various exemptions have been (re)introduced, 
not least in the area of VAT, where there are currently numerous deviations from the standard 
rate.  Making  sure  that  the  tax  system  is  understood  and  accepted  by  tax  payers  is  also 
important. 

Corporate  taxation  is  under  review  and  a  linked  public  inquiry  will  deliver  its  final 
report by 31 March 2014. In this context, there is a relatively big gap between the effective 
marginal tax rate on debt and on equity for new investment, suggesting a bias towards debt-
financing for corporations. The 2013 Budget Bill includes measures designed to address this 
issue. The corporate tax rate was reduced from 26.3 % to 22 % as of 1 January 2013, coupled 
with  a  reform  limiting  the  scope  of  deductibility  of  interest  expenses  on  all  types  of  intra-
group loans. For other types of corporate loans, deductibility rules remain unchanged. 

It  is  still  too  early  to  assess  the  effect  of  the  recently  introduced  reduction  in  the  real 
estate  charge  for  rental  and  tenant-owned  apartments  and  the  increase  in  the  standard 
deduction on income from the lease of a private dwelling, which is meant to tackle constraints 
in the housing supply responding to the 2012 CSR in this area.8 

With a view to improving low employment rates in the case of low-skilled workers, the 
Swedish  2012  Finance  Bill  included  reduced  VAT  on  restaurant  and  catering  services. 
Economic evidence  shows  that  reductions in VAT  rates  are  not  the  most  efficient  means  of 
boosting employment and growth, whereas broadening of tax bases is generally considered to 
be more growth-friendly.9 For Sweden, the third 2012 country-specific recommendation (CSR 
3) identified the need to review the effectiveness of the reduced rate on restaurant and catering 
services in support of job creation. The government has commissioned an in-depth analysis of 
the effects of the reform which will be presented on 1 January 2016 (initial conclusions due 
on 1 January 2014). 

Tax rates on energy products remain comparatively high in relation to the EU average. 
The  Swedish  energy  tax  system  is,  however,  highly  differentiated  and  tends  to  tax  sectors 
exposed  to  foreign  competition  less  than  private  households  or  service  sectors.10  Reforms 
were  initiated  in  2011  to  start  reducing  these  differences.  Overall,  the  energy  tax  system 
remains  complex  and  there  is  scope  for  a  more  uniform  and  consistent  pricing  of  energy 
products  through  the  tax  system.  An  assessment  and  follow-up  of  the  2011  reform  is 
scheduled for 2015. 

8 However, the reduction of the property fee will in fact increase the favourable tax treatment of these types of 
dwellings in relation to other assets, and further increase the debt bias in taxation. 
9 European Commission, ‘Communication on the future of VAT’, COM(2011) 851 final. 
10  See  for  example  OECD,  2013  Inventory  of  Estimated  Budgetary  Support  and  Tax  Expenditures  for  Fossil 
Fuels. 

15 

 
 
                                                            
To  conclude,  despite  the  high  tax  level  the  Swedish  tax  system  is  generally  efficient, 
although there is room for further strengthening the growth-friendliness of the system. 
The tax burden on capital is now rather low, while the tax burden on consumption in relation 
to  GDP  is  higher  than  the  EU  average.  The  reduction  of  the  tax  burden  has  mainly  been 
concentrated  on  labour  taxes  and  in  particular  taxes  on  low-  and  middle-income  earners  in 
order to enhance the labour supply. The overall progressivity of the tax rates on labour has not 
changed. The main difficulty facing the Swedish tax system is that it creates a bias towards 
debt. More neutral tax treatment of different investment options, in line with the Swedish tax 
neutrality  objectives,  could  be  achieved  through  higher  recurrent  property  tax  and/or  a 
reduction/gradual  phasing  out  of  interest  deductibility.  In  addition,  if  the  application  of  the 
standard  VAT  rate  were  extended,  the  Swedish  tax  system  would  gain  in  efficiency.  Taken 
together, such measures might create scope within Swedish fiscal policy for further reduction 
of the tax burden on labour. 

3.2. 

Financial sector 

Amid  the  Nordic  ‘safe  haven’  phenomenon,  the  financial  sector  in  Sweden  enjoyed 
relative stability and profitability throughout 2012. The Swedish banking sector, which is 
equivalent to more than 400 % of Swedish GDP, recorded one of the highest growth rates in 
the EU in 2012, driven mainly by lending to the domestic private sector. In fact, the level of 
household debt is high and the lion’s share of household debt is made up of mortgages, rising 
hand  in  hand  with  rising  house  prices  over  the  last  15  years.  At  present,  credit  growth  for 
mortgage loans is less expansive  but  still amounts to  approximately 4.5 % per year and still 
outpaces the growth of disposable income. 

In  2012,  the  Council  Recommendations  for  Sweden  contained  a  CSR  concerning  the 
need to strengthen the stability of the mortgage market in the medium term, including 
by  fostering  prudent  lending  and  reducing  the  debt  bias  in  the  financing  of  housing 
investments.  The  structure  of  housing  taxation  and  weak  amortisation  are  two  of  the  main 
factors  which  have  contributed  to  the  build-up  of  household  debt.  A  low  property  taxation 
together  with  a  generous  tax  relief  on  interest  payments  tilt  the  incentive  structure  towards 
debt-financed investment in property. The Swedish authorities have taken a set of measures to 
address these issues. In 2012, the Swedish Financial Supervisory Authority (FSA) proposed 
increasing  the  amount  of  capital  to  be  held  by  Swedish  banks  for  their  mortgage  exposures 
through  a  risk  weight  floor  of  15 %  for  mortgage  loans.  Further  steps,  such  as  measures  to 
increase  amortisation,  are  being  taken.  The  government  has  asked  the  FSA  to  prepare  an 
action  plan  by  15  October  2013  containing  measures  to  be  taken  to  promote  active 
amortisation among borrowers. 

Rigidities on the housing market may be  linked to foregone employment opportunities 
and hampered growth by putting limits to the mobility of workers, students, immigrants etc. 
Swedish  urban  areas  also  need  to  be  able  to  attract  innovative  companies  and  talented 
employees,  often  in  competition  with  cities  located  within  the  same  region,  or  even  part  of 
Europe. 

In spite of these potentially grave consequences, hardly any taxation measures have been 
proposed to reduce the debt bias in the financing of housing investments. On the supply 
side, the Swedish housing market is also characterised by some inefficiencies which may 
contribute  to  drive  house  prices  upwards  and  create  undesirable  lock-in  effects.  For 
example, Swedish construction investments are only half of those of other Nordic countries, 
both in relation to GDP as well as population. Recent data on housing starts point towards a 

16 

 
 
continued  decline  for  residential  buildings  and  in  total,  housing  investments  dropped  by 
almost  13 %  (from  already  low  levels)  during  the  third  quarter  2012  compared  to  the  same 
period in 2011, and the construction industry does not expect investments to pick up this year.  

In  terms  of  barriers  to  construction,  a  number  of  recent  public  inquiries  have  looked 
into  how  zoning  and  planning  processes  could  be  simplified.  At  present,  it  often  takes 
several years to launch a new project, as each one needs to go through lengthy processes at 
the  municipal  level.  Before  building  permits  are  granted,  a  detailed  development  plan 
designating residential, commercial and industrial areas first has to be put in place and appeals 
may be launched at both stages. The rules  governing the zoning and planning processes are 
also  perceived  as  opaque  and  there  are  unwanted  variations  in  their  applicability  across 
municipalities. While some reforms hence may be under way, actual legislative proposals are, 
however, still pending.  

The  residential  rental  market  is  afflicted  by  structural  problems  linked  to  several 
decades of stringent rent control, which is only recently showing signs of some softening. 
In  2013,  previous  measures  were  followed  up  by  market-oriented  reforms  in  the  private 
lettings  system.  A  public  inquiry  proposing  further  measures  was  submitted  to  the 
government in December 2012, and further efforts to achieve a well-functioning rental market 
will be welcomed. According to the NRP, the government has appointed a committee with the 
aim of increasing the supply of rental units. The committee is to propose improvements by 15 
October 2013, among other things linked to the tax situation for the rental market. 

As  regards  the  funding  structure  of  banks,  the  other  vulnerable  area  of  the  Swedish 
financial sector, it remains exposed to risks linked to foreign investors. Only 22 % of the 
balance  sheet  is  funded  by  private-sector  deposits,  while  33 %  is  covered  by  wholesale 
funding. A large proportion of wholesale funds are raised in foreign currencies. For the four 
largest banking groups, foreign currency debt exceeds 55 % of their total market funding.11 In 
the  past,  the  volatility  of  foreign  wholesale  funding  has  been  relatively  high.  Any  adverse 
developments  in  the  Swedish  economy  could  have  a  negative  impact  on  the  confidence  of 
foreign  investors,  which  in  turn  could  lead  to  capital  outflows  and  an  abrupt  increase  in 
funding  costs.  A  risk  factor  in  this  context  could  be,  for  example,  instability  in  the  housing 
market. 

Nevertheless, in the last few years the capital adequacy of the large Swedish banks has 
continued  to  increase  and  in  principle  the  banks  already  meet  the  impending  minimum  of 
10 %  Core  Equity  Tier  1  ratio.12  High  solvency  was  confirmed  by  the  European  Banking 
Authority  2012  EU  Capital  Exercise.  Lending  to  the  economy  is  still  adequate,  in  line  with 
the  Annual  Growth  Survey  objectives.  Asset  quality  raised  no  concerns  as  non-performing 
loans  accounted  for  only  1.4 %  of  total  loans  (Q3 2012).  Despite  the  downturn  in  economic 
growth, profitability remained high compared to other European banks. 

In  general,  Swedish  businesses  benefit  from  adequate  access  to  private  and  public 
capital.  The  latest  survey  on  access  to  finance13  showed  that  only  8 %  of  companies  in 
Sweden report access to finance as being the most pressing problem. Also SMEs enjoy better 

11 http://www.riksbank.se/Documents/Tal/Jochnick/2013/tal_af_jochnick_bilder_130125_eng.pdf. 
12  There  is  general  agreement  in  Sweden  on  setting  stricter  requirements  for  domestic  banks  than  the  minima 
adopted  at  the  EU  level,  among  other  reasons  because  of  the  substantial  size  of  the  financial  sector  in  the 
Swedish  economy.  In  this  context,  the  Council  for  Cooperation  on  Macro-prudential  Policy  was  set  up  in 
February 2012. 
13 European Central Bank and European Commission, SMEs’ Access to Finance Survey 2011, December 2011. 

17 

 
 
                                                            
financing  conditions  than  the  average  SME  in  the  EU.14  They  are  also  satisfied  with  their 
access to public financial support. 

All in all, the Commission comes to the conclusion that Sweden has made some progress 
with respect to the measures taken to address CSR2. The measures appear to be relevant 
and credible but further efforts along the lines outlined above seem warranted. 

3.3.  Labour market, education and social policies 

The  performance  of  the  Swedish  labour  market  is  generally  very  good:  the  overall 
employment rate is very high (79.4 %, in 2012 for those aged 20-64); labour productivity is 
above the EU average; the wage-setting system is quite flexible and accommodates cyclical 
developments well; dialogue between the social partners is consensus-oriented and efficient in 
preventing  strikes;  the  unemployment  benefits  system  as  well  as  the  sickness  and  disability 
benefit  schemes  have  become  more  supportive  of  labour  integration  and  employment;  and 
substantial progress has been made in reducing labour taxes. 

However,  the  Swedish  labour  market  does  not  function  well  for  young  people  without 
upper-secondary education, people with non-EU migrant background or the low-skilled 
in general. Their unemployment rates are far higher than those of the rest of the working-age 
population and above the EU average. Admittedly, the youth unemployment rate, at 23.7 % in 
2012, is somewhat overstated (in absolute terms but not relative to other countries) in that half 
of  unemployed  young  people  are  students  looking  for  jobs,  who  typically  report  short 
unemployment periods. Moreover, it may have been temporarily pushed up by a generational 
effect and government policies which have resulted in a particularly strong expansion of the 
labour force in recent years, making it more difficult for new entrants to get established in the 
labour market. Nonetheless, despite these mitigating factors, it is clear that the labour market 
underperforms  for  low-skilled  young  people,  who  have  seen  the  highest  increases  in 
unemployment  since  2001  as  well  as  declining  activity  rates.  When  students  are  excluded, 
youth  unemployment  appears  high  (11.9 %  in  2012)  if  compared  to  countries15  with  a 
similarly good labour market performance, where the figure stands between 2.5 % and 8.1 %). 
As for immigrants from non-EU countries (non-EU nationals), their unemployment rate stood 
at 30.6 % in 2012, far above the EU average of 21.3 %. Sweden shows a larger difference in 
employment/unemployment  rates  between  natives  and  immigrants  than  other  EU  Member 
States, including those with a similarly large migrant population (AT, UK and NL). 

In  2012,  the  Council  Recommendations  for  Sweden  contained  a  CSR  concerning  the 
need  to  improve  the  labour  market  participation  of  young  people  and  people  with  a 
migrant background as well as to review the effectiveness of the VAT cut on restaurants 
and catering services in supporting job creation. 

Some  of  the  policies  currently  in  place  contribute  to  underperformance  of  the  labour 
market for these groups.16 A lack of work-based vocational education hinders the transition 
from school to work and, together with the design of upper-secondary education, leads to an 
expanding pool of people with insufficient or inappropriate skills, prone to being trapped in 

14 European Commission, Sweden SBA Fact Sheet 2012. 
15 Netherlands, Denmark, Finland, Germany and Austria. 
16 A more detailed discussion of the impact of the various policies is presented in Pavlina Zakova, "Sun Spots on 
the  Swedish  Labour  Market",  Country  Focus  10/1,  European  Commission,  May  2013,  available  from 
http://ec.europa.eu/economy_finance/publications/country_focus/index_en.htm 

18 

 
 
                                                            
temporary  jobs  or  long-term  unemployment.17  Entry  wages  in  some  sectors,  such  as  retail, 
appear to be above the market-clearing level and lead to a sub-optimal level of employment.18 
Wage  agreements  between  the  social  partners  over  the  last  decade  have  resulted  in  a  rather 
narrow wage structure, with little wage progression at the lower end. The government’s role 
in  the  so  called  tri-partite  negotiations  described  below  is  welcomed  in  this  context.  The 
strong duality in employment protection legislation is detrimental to low-skilled people, who 
face  difficulties  in  obtaining  a  permanent  contract.  The  2001  reform  of  student  support  has 
pushed more university students into work alongside their studies and they may be crowding 
out low-skilled people from temporary or part-time low-paid jobs. The matching process has 
deteriorated  with  skill  mismatches  increasing  after  the  2008/2009  crisis  and  an  inflexible 
housing supply increasingly hindering matching between job-seekers and job-providers from 
various regions. 

Following the 2012 CSR, the Swedish government has taken a number of new measures, 
most  of  which  were  presented  in  the  Budget  Bill  for  2013  and  the  National  Reform 
Programme.  To  speed  up  the  integration  of  people  with  a  migrant  background,  especially 
women,  into  the  labour  market,  the  Introduction  Act  of  2010  has  been  reinforced  as  an 
incentive  for  municipalities  to  receive  newcomers  more  promptly.  The  Public  Employment 
Services are now involved early in the integration process. Moreover, the system of parental 
benefits  has  been  modified  to  counter  delays  in  the  labour  market  entrance  of  foreign-born 
women due to long parental leave periods. 

A smoother transition from school to work was already the main objective of the reform 
of  upper  secondary  education  in  2011.  The  reform  involved  further  differentiation  of  the 
general  education  and  vocational  tracks  and  the  introduction  of  apprenticeships  as  an 
alternative  route  to  obtaining  a  vocational  diploma.    However,  both  the  vocational  path  and 
apprenticeships struggle with a lack of interest both from the part of students and employers 
due to little recognition and difficulties in organising the apprenticeships.19 Within the 2013 
budget,  the  use  of  apprenticeships  has  been  further  promoted  by  extending  allowances  to 
employers  of  apprentices  in  both  upper-secondary  and  adult  education.  Furthermore,  tri-
partite  negotiations  are  taking  place  on  ‘work  introduction  agreements’,20  which  combine 
employment at 75 % of working time and vocational training at 25 %, at a wage that is at least 
75 % of the current entry wage. The government intends to support these agreements between 

17 Indeed, the lack of work-based education appears to be the main institutional feature distinguishing Sweden 
from other countries with high employment rates, such as Germany, Austria, Denmark or the Netherlands. . 
18  Substantial  rigidity  in  the  lower  part  of  the  wage  structure  prevents  wages  from  reflecting  the  productivity 
differentials between individual workers or sectors. By way of an example, whereas differences in pay between 
people  with  and  without  upper-secondary  education  are  very  small,  the  former  enjoy  markedly  higher 
employment rates (with the gap increasing markedly over the last decade). This suggests that a possible lowering 
of wages for inexperienced or low-productivity workers could improve their employment rate. See also OECD, 
Economic  Surveys  –  Sweden,  2011  and  2013;  Per  Skedinger,  Minimum  Wages  and  Employment  in  Swedish 
Hotels  and  Restaurants,  Labour  Economics,  13,  2006;  Minimilöners  effekter  på  löner  och  sysselsättning  -  en 
översikt, Arbetsmarknad & Arbetsliv 13(2), 2007; Effects of Increasing Minimum Wages on Employment and 
Hours:  Evidence  from  Sweden's  Retail  Sector,,IFN  Working  Paper  No.869,  2011;  Malin  Sahlen, 
Ungdomsarbetslöshet – när ska muren rivas, Ekerlids Förlag, 2012. 
19  In  fact,  the  number  of  apprenticeships  has  declined  since  2008.  It  is  also  explained  by  the  fact  that  ‘an 
education contract’ was introduced in 2011, putting more responsibility on the organisers of the apprenticeship 
training. 
20 These contracts were introduced in some sectors after the 2008-09 crisis following an agreement by the social 
partners. Negotiations between the social partners at national level stalled in January 2013, but are continuing at 
sector level.  

19 

 
 
                                                            
the  social  partners  by  providing  wage  subsidies  and  sector-adapted  vocational  courses  for 
young  people  employed  under  the  agreement.21  The  government  is  also  investigating  a 
possible  new  employment  format  with  educational  content  for  young  people  (‘apprentice 
probation  employment’).  Furthermore,  an  extra  18 000  temporary  student  places  in  adult 
vocational education, higher vocational education and universities should be funded under the 
‘youth  package’  presented  in  connection  with  the  2013  Budget  Bill.  Additional  funds  for 
vocational training and work experience programmes were allocated in the 2013 Spring Fiscal 
Policy Bill.   

Besides supporting the agreements on vocational introduction, the government strives to 
foster  demand  for  disadvantaged  people  by  funding  more  placements  and  training 
places for people at a high risk of long-term unemployment.22 In addition, to increase the 
employment  prospects  of  people  with  disabilities,  there  will  be  greater  opportunities  to 
receive individual assistance at a new workplace and the NRP foresees providing people with 
reduced  work  capacity  with  practical  work  experience  within  the  central  government  and 
agencies.  

With a view to improving the functioning of the labour market, the government intends to 
clarify  the  requirements  that  apply  to  all  recipients  of  labour-market-related  benefits  or 
income  support  from  the  public  authorities.  The  government  has  also  taken  initial  steps  to 
review some aspects of employment protection legislation. In particular, an inquiry has been 
held  to  review  the  priority  rules  for  dismissals  and  to  propose  ways  of  limiting  employers’ 
costs linked to disputes concerning dismissals. In September 2012, the inquiry proposed three 
amendments  to  the  Employment  Protection  Act  and  these  are  now  being  considered  by  the 
government. Alternatively, the government would promote changes to the rules for dismissals 
via transition agreements between the social partners. In parallel with the submission of the 
NRP, the Swedish government also shared its intention to create so called new start zones in 
order to promote socioeconomic development in challenged areas by giving small companies 
the  possibility  to  make  social  fee  deductions  subject  to  certain  conditions.  The  measure  is 
proposed to be applicable as from 1 January 2014; however it falls under State aid rules and 
shall therefore be notified to the European Commission. Whether the measure will eventually 
be  included  in  the  2014  Budget  Bill  to  be  presented  in  the  autumn,  will  also  depend  of  the 
budgetary space and the economic outlook at that time.  

As regards the 2012 labour market measure to reduce the VAT rate for restaurants and 
catering  services,  the  government  has  commissioned  a  review  of  its  effects  on  prices, 
wages and the employment of young people. The preliminary results of the review will be 
available in January 2014 and a final assessment will be delivered in 2016. At this stage, the 
data point to a 4.5 % increase in overall business volume in 2012 compared with 2011, which 
is  the  largest  volume  increase  in  this  sector  for  10  years,  and  recorded  at  a  time  of  weak 
private  consumption.  Moreover,  in  the  first  nine  months  of  2012  wages  in  the  restaurant 
sector rose by 8.5 % compared with the same period in 2011, which is twice as much as in the 
whole private business sector. This might suggest that the VAT cut has had positive effects on 

21 These courses correspond to up to 16 weeks of tax-financed full-time studies and are free of charge for the 
beneficiaries. A pilot assignment has been given to the Public Employment Services (PES) for the manufacturing 
industry sector, for the period Feb 2013-Dec 2014, to provide such training for up to 800 young people between 
16 and 25. 
22 The proposal could support approximately 9 500 places in 2013 and 4 750 places in 2014. 

20 

 
 
                                                            
job creation in the restaurant sector.23 Nevertheless, the effects on the overall employment are 
very  uncertain  (e.g.  due  to  possible  reduction  in  other  sectors)  whereas  the  cost  of  this 
measure  in  terms  of  foregone  VAT  revenue  is  high  (estimated  at  0.1-0.2 %  of  GDP  or 
between  EUR  400  and  EUR  800  millions24).  Moreover,  the  measure  contributes  to  further 
differentiation in VAT structure, therefore decreasing the efficiency of the tax. 

The Commission comes to the conclusion that Sweden has made some progress with the 
measures taken to address the CSR. The Swedish government has taken a large number of 
new,  relevant  and  robust  measures  within  the  different  areas  listed  in  the  CSR.  The 
recommendation to review the effects of the VAT cut for restaurant and catering services is 
considered to have been partially implemented, as the actual review is still not available and a 
cost-efficiency analysis of the measure shall still be made. Measures targeting the integration 
of people with a migrant background into the labour market have already produced hints of 
initial  results  in  lowering  the  unemployment  rate  of  the  group,  but  continued  efforts  are 
needed to reduce the distance from the rest of the population. There are no noticeable effects 
yet for young people. However, a number of promising measures have been put in place or 
are  in  the  pipeline.  For  instance,  the  support  for  agreements  on  vocational  introduction  is  a 
promising move to foster demand for young labour and to overcome the barrier of high-entry 
wages  in  some  sectors,  within  the  context  of  the  Swedish  model  for  wage  setting  by  fully 
independent  social  partners.  The  efforts  to  strengthen  apprenticeships  and  other  types  of 
work-based  vocational  education  are  totally  appropriate  for  facilitating  a  smooth  transition 
from school to work and reducing unemployment among young people who have completed 
post-secondary education. Nevertheless, more ambition will be required to reach the desired 
impact. There is a case for continued progress in reviewing employment protection legislation 
and  implementing  a  Youth  Guarantee25,  building  upon    the  current  job  guarantee  for  young 
people. Previous measures often covered the entire labour market segment showing weakness 
(e.g.  all  young  people,  all  immigrants).  However,  preference  should  be  given  to  more 
narrowly-defined measures targeting the most disadvantaged individuals from these segments 
in relation to general subsidies which typically involve high fiscal costs and a high risk of a 
deadweight loss. 

As  regards  education,  according  to  Eurostat,  since  2006  early  school  leaving  has  been 
below  the  national  2020  target  of  10 %  (7.1 %  in  2012,  preliminary  figures).  However, 
based on the national definition,26 early school leaving has remained constant at 27 % over the 
past five years and at a higher level than in the 1990s. The 2011 reform of upper secondary 
education,  described  above,  has  not  yet  generated  positive  results  in  reducing  the  share  of 
school-leavers. 

23  The  restaurant  trade  organisation  Visita  calculated  that  the  increase  in  wages  paid  could  amount  to  an 
employment increase of 5 843 full time equivalents, or 5.3 %. . 
24 Estimates by the government and the Fiscal Policy Council.  
25 Council Recommendation of 22 April 2013 on establishing a Youth Guarantee (2013/C 120/01) to ensure that 
all young people under the age of 25 years receive a good-quality offer of employment, continued education, an 
apprenticeship or a traineeship within four months of becoming unemployed or leaving formal education. 
26 According to the national definition, early school leavers are young people who at the age of 20 have not yet 
completed  upper  secondary  education  successfully.  Eurostat  defines  early  school  leaving  as  a  share  of  the 
population  aged  18-24  with  at  most  lower  secondary  education  and  not  in  further  education  or  training.  This 
explains  the  difference  in  relation  to  the  national  definition,  since  young  people  in  Sweden  often  take  an 
alternative route to obtain their diploma with full grades, and are therefore considered to be in training. 

21 

 
 
                                                            
The teaching profession’s continuing lack of attractiveness remains a significant reason 
for  the  declining  quality  of  education  in  Sweden,  as  demonstrated  by  the  deteriorating 
results in international tests (OECD PISA 2009). Low pay with little salary progression over 
their career27 clearly discourages young qualified teachers and contributes to the ageing of the 
teaching  workforce  (41 %  of  upper-secondary  school  teachers  are  aged  50  or  older).  The 
government  has  adopted  a  range  of  measures  to  support  the  teaching  profession,  including 
continuing  professional  development  of  teachers.  However,  an  important  measure,  the 
accreditation  of  teachers,  has  undergone  numerous  postponements  of  the  implementation 
deadline. 

As regards tertiary education attainment, Sweden had already exceeded its 2020 target 
(40-45 %) in  2010,  with 47.9 % of graduates in the 30-34 age group in 2012. However, the 
high average age of university entrants, significant drop-out rates from higher education (46 % 
in  2008)28  and  lengthy  study  periods  raise  doubts  about  the  system’s  efficiency.  Recent 
measures, such as linking the level of study support to study results, are likely to speed up the 
throughput of students. The government’s intention to increase the number of study places in 
the fields of engineering, medicine, dental studies and nursing is welcome and should help to 
align education with the demand in the labour market. 

The  Swedish  social  model  draws  its  strength  from  the  synergies  between  the  universal 
social protection system and a well-developed active labour market policy. Sweden is one 
of  the  Member  States  with  the  lowest  income  inequalities.  The  combined  at-risk-of-poverty 
and social exclusion rate has been stable over the last decade (2004: 16.9 %, 2011: 16.1 %). 
However, the differences across groups are quite large. There is a continued deterioration in 
the relative social situation of older women, who record at-risk-of-poverty rates above the EU 
average  and  almost  three  times  higher  than  those  of  men  in  the  same  age  group,  the  figure 
having increased from 13.1 % in 2005 to 24.7 % in 2011 (Graph 1). 

27 Salary after 15 years of teaching experience was 13 % below the OECD average in 2010, which contrasts with 
an above-average overall wage level. The ratio of salary at the top of the scale to starting salary was around 1.35 
in  2010,  below  the  OECD  average  of  1.62.  While  in  the  OECD  countries  teachers’  salaries  rose  by  22 %  on 
average between 2000 and 2010, they rose by a mere 8 % in Sweden (OECD, Education at a Glance, 2012). 
28  OECD,  Education  at  a  Glance,  2010.  This  includes  students  entering  single  courses  who  may  never  have 
intended to study all the courses required for a degree (an estimated 40 % in Sweden). Preliminary data for 2011 
indicate that the completion rate for Sweden is at the same level as for 2008 for bachelor and master level type of 
education (ISCED 5A). The completion rate has slightly increased overall for tertiary education. 

22 

 
 
                                                            
Graph 1: At-risk-of-poverty rates for persons above 65 (based on 60 % of the median income) 

25

20

15

10

5

0

Men +65 EU
Women +65 EU

Men +65 Sweden
Women +65 Sweden

2004

2005

2006

2007

2008

2009

2010

2011

 Source: Eurostat 

The  increase  of  the  at-risk-of-poverty  rate  of  older  people  can  to  some  extent  be 
explained  by  higher  median  incomes  as  a  result  of  the  increasing  disposable  income  of 
workers due to wage growth and the in-work tax credits introduced between 2006 and 2010.29 
Since the income of a large proportion of Swedish women above 65 was just above the 60 % 
threshold before the introduction of the in-work tax credit, the statistical effect of the reform 
was  particularly  noticeable  for  the  relative  income  position  of  this  group.  Recently  the 
government  has  sought  to  improve  the  relative  income  position  of  retired  people  by 
introducing tax cuts for pensioners in several  stages  between  2009  and  2013.  Yet  as  the  at-
risk-of-poverty-rate  for  older  women  keeps  rising  other  factors  may  be  contributing.  The 
present relatively large gender gap in pension entitlements (estimated at 30 %)30 results from 
the  gender  differences  in  pay,  hours  worked  and  the  duration  of  working  life  in  the  past.31 
Since  gender  differences  are  much  smaller  in  the  present  working  age  population,  gender 
pension gaps are set to become narrower in the future. 

The Swedish government’s social policy is sharply focused on reducing social exclusion 
through  labour  market  integration.  For  the  approximately  two  million  retired  people  for 
whom  this  is  not  always  an  effective  or  realistic  method  of  reducing  the  risk  of  poverty,  in 
addition to the abovementioned tax cuts, a system of housing allowances is in place, which is 
however not fully exploited because of a lack of awareness among the target groups. It should 
also be noted that Swedish pensioners have access to subsidised social services, which may to 
some  extent  compensate  for  this  group’s  lower  income.  Moreover,  although  the  group  has 
relatively  low  income  levels,  wealth  aspects  must  also  be  considered  when  assessing  the 
global situation of individual households. However, it is clear that the relative poverty rate for 
older women has been increasing and that there is a widening gap in relation to men of the 
same age group.  Further analysis to fully understand all underlying mechanisms, for instance 

29  The  relative  resilience  of  Swedish  workers’  income  during  the  crisis  years  can  also  explain  the  contrast 
between a worsening of the situation of older people in Sweden and an improvement in many other EU Member 
States where poverty rates decreased as the income of the working population declined. In Sweden, the income 
of non-working people has not declined in real terms. 
30 Francesca Bettio, Platon Tinios, Gianni Betti, The Gender Gap in Pension in the EU, ENEGE, 2013. 
31In addition, the higher poverty rates for older women as compared to men are due to the fact that the indicator 
is household based. Since women tend to earn less and live longer, their income drops significantly when their 
husbands decease, therefore often falling into the at-risk-of-poverty range. 

23 

 
 
 
                                                            
in  relation  to  the  way  women  are  treated  in  the  transition  from  the  old  to  the  new  pension 
system, is warranted and the issue remains a point to watch in the future. 

3.4. 

Structural measures promoting growth and competitiveness 

Sweden  is  one  of  the  most  competitive  countries  in  the  European  Union.  The  Swedish 
economy  is  characterised  by  high  technological  advancement,  solid  R&D  and  innovation 
performance  (although  it  suffers  from  declining  private  investments)  and  reliable  and 
transparent  institutions,  as  well  as  a  higher  education  sector  which  delivers  satisfactory 
results.  Disregarding  the  crisis  years  2008-09,  losses  in  export  market  shares  have  been 
minimal  over  the  last  10  years  and  reflect  structural  changes  rather  than  unfavourable 
domestic  cost  developments  or  quality  concerns.  Market  share  losses  in  goods  have  been 
largely compensated by gains in services. 

In  2012,  the  Council  Recommendations  for  Sweden  contained  a  CSR  concerning  the 
Research and Innovation Bill (still impending at the time), to make sure that it tackled the 
challenges of declining R&D intensity and the low level of commercialisation in Sweden. 

Research and innovation 

Sweden adopted its Research and Innovation Bill, in parallel with its innovation strategy 
in  October  2012.32  The  declared  purpose  of  the  strategy  is  to  contribute  to  a  climate  in 
Sweden  offering  the  best  possible  conditions  for  innovation  by  2020.  The  combined  policy 
response,  which  is  also  well  aligned  with  the  AGS  priority  of  promoting  growth  and 
competitiveness, has a threefold dimension. 

First,  given  that  the  traditional  stronghold  of  employment  is  no  longer  sustained  by 
larger  multinational  firms,  Sweden’s  innovation  policy  now  focuses  on  enhancing  the 
growth of existing and new Swedish SMEs, preferably knowledge-intensive ones. Policies 
include a wide spectrum of measures which form an integral part of both the new R&I bill and 
the  new  national  innovation  strategy.  Second,  the  national  innovation  strategy  aims  to 
create world-class innovative regions and environments by 2020, which is to be supported 
by  a  further  mobilisation  of  innovative  public  procurement33  and  appropriate  regulation  to 
boost innovation. Third, there is a strong strategic focus, mainly on innovation areas, in 
both  the  R&I  bill  and  the  innovation  strategy.  The  rationale  is  to  focus  part  of  the 
resources  in  areas  where  Swedish  industry  has  relative  strengths  and  core  competences  and 
where  there  are  growing  markets,  both  in  Sweden  and  globally.  Sectors  receiving  increased 
investments  in  research  and  infrastructure  include  life  sciences,  advanced  materials,  energy 
storage  systems,  as  well  as  clean-tech  and  energy.  Further  down  the  innovation  chain, 
challenge-driven  strategic  innovation  areas  include  sustainable  and  clean  cities,  health  and 
information society, as well as established large ‘traditional’ industry sectors in Sweden. 

The  strategy  acknowledges  the  education  system’s  crucial  role  in  developing  the 
knowledge,  skills  and  approaches  of  young  people  which  are  necessary  for  translating 
ideas into innovation. However, although the strategy identifies the right policy areas, among 
them education, it should be recognised that the education landscape is diverse and there are 
big  differences  in  universities  when  it  comes  to  innovation  and  entrepreneurship.  Building 
entrepreneurship  education 
teaching 
entrepreneurship skills to trainee teachers are steps in the right direction. 

school  education  curriculum  and 

into 

the 

32 http://www.government.se/sb/d/2025/a/202558. 
33 A public inquiry into how public procurement could be made more efficient was published on 5 March 2013. 

24 

 
 
                                                            
The  strategy  broadly  addresses  the  concerns  expressed  in  CSR4,  and  the  proposed 
measures put a stronger emphasis on ensuring a higher return on R&D investment than 
there has been in the past. The challenge of getting ideas to the market for innovative and 
high-growth enterprises is also well recognised. The main challenge for Sweden now is swift 
implementation. One risk is the fact that there is no specific funding attached to the strategy, 
as  it  is  intended  to  come  from  bills  in  related  policy  areas,  such  as  the  new  Research  & 
Innovation Bill of October 2012 or the forthcoming Energy Bill, scheduled for spring 2013. 
Overall, implementation implies a challenge for governance in working across ministries with 
the focused objective of boosting innovation and synchronising supply-side and demand-side 
measures.  In  terms  of  total  R&D  investments,  it  is  also  clear  that  Sweden  is  one  of  the 
countries that need to crank up their R&D intensity in order to reach their target (4 % of GDP 
by 2020). R&D intensity fell from a peak of 4.13 % of GDP in 2001 to 3.42 % in 2010 (1.07 % 
public  and  2.35 %  private).  The  main  weaknesses  in  the  Swedish  innovation  system  are  the 
falling business R&D investments linked to outsourcing in multinational enterprises and the 
commercialisation  of  innovations  in  sustainable  high-growth  firms.  EU  structural  funds  can 
play an important role here, as they provide 40-50 % of public regional support for research 
and  innovation  with  a  particular  focus  on  SMEs.  In  this  context,  it  should  be  possible  to 
continue  to  develop  relevant  R&I  infrastructure,  incubators  and  knowledge-based  clusters. 
This requires increased coordination between national and regional initiatives. 

The  increased  focus  on  research  and  innovation  should  encourage  the  build-up  of 
research and innovation-based systems to stimulate fast growing innovative enterprises. 
Furthermore, the reduction in the corporate tax rate from 26.3 % to 22 % in January 2013, the 
proposed  tax  credits  for  investors  to  stimulate  access  to  capital  for  new  and  fast-growing 
companies, and the introduction of significantly higher expenditure ceilings for infrastructure 
investments  (mainly  road  and  rail)  are  all  measures  that  are  likely  to  create  jobs  and  boost 
economic  growth.  The  NRP  also  reports  on  government  initiatives  to  strengthen  the  public 
organisation,  Almi  Företagspartner,  providing  financing  and  advisory  services  to  companies 
at early stages of innovation and growth. The measures hence appear to be both relevant 
and  credible,  and  the  recent  strategy  and  R&I  Bill  should  be  a  good  basis  for  future 
progress.  The  Commission  therefore  comes  to  the  conclusion  that  Sweden  has  fully 
addressed  the  CSR.  However,  it  will  be  necessary  to  monitor  closely  the  actual 
implementation and its practical effects. 

Environment, energy and transport 

Traditionally, Sweden has had a good mix of different types of energy-saving measures, 
including  fiscal,  financial,  legislative,  information  and  voluntary  instruments,  supported  at 
various governance levels (national, regional, county and municipal) and tackling all sectors 
of the economy. Moreover, governance structures and institutions are well developed. While 
these  measures  continue  to  contribute  to  energy  efficiency,  today  new  policy  initiatives  are 
limited and the economic potential of energy efficiency has not been fully harnessed. 

The  Swedish  government  should  make  sure  that  the  country  benefits  fully  from  good 
energy-efficiency  knowledge,  established  programmes  and  collaboration  schemes, 
governance and institutional structures. The rate of energy-efficiency improvements should be 
maintained. Moreover, the complete and timely transposition and effective implementation of 
the Energy Efficiency Directive (to be transposed by June 2014) would also create additional 
tools to promote energy efficiency. 

As  regards  energy  infrastructure,  Sweden  has  a  very  extensive  electricity  transmission 
network.  Large  volumes  of  production  from  hydroelectric  power  plants  located  in  the 

25 

 
 
northern part of Sweden need to be transported to demand centres, which are concentrated in 
the  central  and  southern  parts  of  Sweden.  However,  there  is  significant  congestion  between 
the north and south of the country. This led the authorities last year to divide Sweden into four 
distinct  pricing  areas.  Sweden  covers  much  of  its  electricity  demand  by  hydropower,  which 
makes it vulnerable to the hydrological situation. The second largest source of generation is 
nuclear  power.  Sweden  is  increasingly  exposed  to  price  volatility,  especially  when  a  low 
reservoir  level  coincides  with  an  unplanned  outage  of  a  nuclear  power  plant.  Sweden  has  a 
relatively small gas market, which is only interconnected with one Member State (Denmark), 
covering 100 % of the Swedish supply, exposing the country to supply disruption. 

As  regards  renewable  energy,  Sweden  has  committed  to  reaching  a  target  of  49 %  of 
renewable  energy  sources  in  final  energy  consumption  (49.1 %  in  2010  and  hence  already 
achieved)  and  a  10 %  share  of  renewable  energy  in  the  transport  sector  by  2020.  The  NRP 
reports  that  the  government  has  commissioned  an  inquiry  to  map  out  possible  alternative 
approaches  and  to  identify  measures  to  reduce  the  transport  sector’s  emissions  and 
dependency on fossil fuels. The inquiry should present the results by 31 October 2013. 

Sweden  is  also  making  good  progress  towards  achieving  its  climate-related  EU  target 
and  measures  are  in  place  in  virtually  all  sectors  to  mitigate  greenhouse  gas  emissions. 
However, taking the already relatively low level of emissions into account, further emphasis 
should  be  put  on  the  cost-effectiveness  of  Sweden’s  climate  change  policies.  Sweden  has 
undertaken to use the lever of the CO2-tax, together with other economic instruments in place, 
to  ensure  that  the  set  target  is  met.34  Climate  policy  efforts  are  currently  focusing  on  the 
modernisation  of  smart  grid  technologies  and  the  promotion  of  electric  cars  and  biofuels  in 
the transport sector. Emissions from road transportation are a specific policy challenge, as the 
Swedish  vehicle  stock  has  a  relatively  high  CO2  emission  intensity  compared  to  the  EU 
average.  As  an  incentive  to  reduce  emissions  further,  the  government  is  promoting  tax 
measures and pilot programmes for low-carbon vehicles and technologies, including biofuels. 
Although Sweden has a good track record for mainstreaming climate policy, it has been less 
prominent in integrating mitigation and adaptation objectives when applying EU cohesion and 
structural  funds.  However,  the  NRP  reports  that  Sweden  is  exploring  different  ways  to 
promote a greener economy. In 2010 the Government designated three counties as pilots for 
green development to disseminate experience guide other counties. In its recent research and 
innovation bill, the Government is introducing an initiative on research funding to stimulate 
biomass and bio-based products for a bio-based national economy. 

The overall situation of the transport infrastructure network is quite satisfactory, with 
rising  investment  levels.  There  were  new  infrastructure  projects  and  additional  funding  in 
2012. However, the level of investment in the maintenance and upgrading of the Swedish rail 
system  has  not  kept  pace  with  the  increase  in  traffic  in  recent  years.  In  addition,  some 
bottlenecks remain in the main cities. Responding to market needs in cross-border rail traffic 
with  continental  Europe  will  require  close  cooperation,  particularly  with  Denmark  and 
Germany and above all for future Swedish export traffic. While capacity is becoming scarce 
in other modes, there are indications that there is still spare capacity in shipping. 

The Swedish government is contemplating the introduction of water pricing pursuant to 
the  Water  Framework  Directive  to  achieve  a  sustainable  source  of  drinking  water  from  a 
good aquatic environment. Water quality is being threatened by nutrient overload, particularly 

34 Prop. 2009/10:41. 

26 

 
 
                                                            
in the Baltic Sea and the waters in the southern part of the country, and there is considerable 
pressure  on  hydromorphology  in  several  river  basins.  In  the  waste  sector,  Sweden  has 
succeeded  in  achieving  a  low  landfill  rate  (1 %),  and  a  49 %  share  of  recycling  and 
incineration respectively.35 The NRP reports that in a planned bill on waste, the government’s 
ambition  is  to  promote  resource-efficient  eco-cycles  without  hazardous  substances,  which 
might result in increased recycling, business opportunities and jobs in the recycling sector. 
A  guide  for  mapping  and  analysing  non-tax  environmentally  harmful  subsidies36  was 
recently presented as a result of a government assignment. The guide, which was highlighted 
in  both  last  year’s  and  this  year’s  NRP,  provides  guidance  for  identifying,  assessing  and 
phasing out these harmful subsidies. Concrete proposals with clear timelines based on these 
assessments would be welcome. 

All in all, the structural measures announced by the Swedish government for addressing 
bottle-necks in growth and competitiveness in the environmental, energy and transport 
fields appear to be appropriate and credible. 

3.5.  Modernisation of public administration 

Swedish  public  administration  is  highly  effective.  The  perceived  overall  quality  of  the 
services  provided  is  ranked  well  above  the  EU  average.37  As  in  other  Scandinavian 
countries,  the  implementation  of  tools  for  modernising  public  administration  (including  the 
use of ICT solutions) is highly advanced. E-government take-up by citizens and companies is 
also widespread, but public e-procurement could be extended further and procedures could be 
simplified  and  shortened  to  optimise  tendering  opportunities  for  SMEs  and  foreign 
companies. Overall, tax compliance is high and tax administration cost-effective.38 However, 
there  is  room  for  improvement  in  terms  of  reducing  the  administrative  burden  (including  a 
return to the principles of tax uniformity and neutrality) and simplifying procedures. 

In  2012,  Sweden  did  implement  measures  to  address  the  administrative  burden  on 
businesses,  acknowledging  the  need  to  step  up  its  efforts.  According  to  the  2013  World 
Bank Doing Business Report the time to start a business in Sweden is 16 calendar days, which 
is marginally longer than the EU average of 14 days and more than five times longer than the 
agreed  Small  Business  Act  target  of  3  days  by  2012.  Although  in  2006  the  Swedish 
government  undertook  to  reduce  the  administrative  burden  for  businesses  by  25 %  by  2010 
(subsequently pushed back to 2012), the reduction achieved by 2010 was just over 7 %. 

The  government  has  recently  taken  a  series  of  initiatives,  including  a  simplification 
programme for the period 2011-14. It has also commissioned a public inquiry, to be published 
in  November  2013,  on  the  scope  for  reducing  reporting  requirements  for  companies. 
Moreover,  government  agencies’  comprehensive  use  of  e-procurement  by  2013  is  on  the 
agenda, as is the possible outsourcing of some public administration support functions with a 
view to improving efficiency and reducing administrative costs. Although these measures are 
in  line  with  the  2013  Annual  Growth  Survey  priority  of  modernising  public  administration, 

35 http://www.naturvardsverket.se/Start/Statistik/Avfall-och-avloppsvatten/Avfallsstatistik. . 
36  http://www.naturvardsverket.se/Miljoarbete-i-samhallet/Miljoarbete-i-Sverige/Regeringsuppdrag/Redovisade-
2013/Handledning-for-att-kartlagga-icke-skatterelaterade-potentiellt-miljoskadliga-subventioner/. 
37 According to the government effectiveness index of the World Bank (2010, 2011). 
38  According  to  the  report  ’Excellence  in  public  administration  for  competitiveness  in  EU  Member  States’, 
European Commission (2012), the cost of tax administration is only 0.4 % of tax revenues compared to an EU 
average of 1.3 %. 

27 

 
 
                                                            
progress  has  been  slow  over  the  last  couple  of  years  and  it  is  not  clear  whether  substantial 
improvements  will  be  made  during  the  course  of  2013.  While  there  is  no  doubt  about  the 
relevance of the announced measures, their effectiveness is nonetheless uncertain, at least in 
the short run. 

28 

 
 
4. 

OVERVIEW TABLE 

2012 commitments 

Summary assessment 

Country-specific recommendations (CSRs) 

CSR1 has been fully addressed in the course of 
2012 and the 2013 Budget Bill is also in line with 
the recommendation. Nevertheless, it is still 
important to continue to achieve the MTO.. 

The general government budget is expected to have 
a small deficit in 2013. Taking into account the 
downward revision of the medium-term objective in 
the 2012 convergence programme (from a surplus of 
1 % of GDP to a deficit of 1 % of GDP), Sweden is 
likely to continue to meet its commitment under the 
Stability and Growth Pact and fulfil the CSR. The 
pro-growth composition of the fiscal stimulus in the 
2013 budget is commendable. 

Some progress on measures taken to address 
CSR2 has been made by Sweden. 

House prices and household debt have been stable 
over the last year. Several measures are in the 
pipeline to foster prudent lending: stricter capital 
and liquidity requirements; higher risk weights for 
mortgages; and discussions on introducing 
amortisation requirements). No measures have been 
taken to address the debt-bias in housing taxation. 
On the rental market, progress has been made 
through a partial reform of the rent-setting system in 
2011 and by simplifying private lettings in 2013. 
Initial steps have been taken to tackle the constraints 
in the construction sector and other measures are 
being considered.   

Some progress on measures taken to address 
CSR3 has been made by Sweden. 

A number of measures have been taken on various 
fronts, in particular to speed up the integration of 
people with a migrant background into the labour 
market, facilitate the transition from school to work, 
promote demand for vulnerable groups and improve 
the functioning of the labour market. The ‘youth 
package’ provides for a number of extra temporary 
student places in universities and adult vocational 
education establishments. The government has 
commissioned a review of the effectiveness of the 
VAT cut in restaurant and catering services in 
relation to prices and employment in the sector. 

to  have  been 
While  previous  measures  seem 
marginally 
the 
effective 
unemployment rate of immigrants, there has been no 

in  bringing  down 

CSR 1: Preserve a sound fiscal position in 2012 and 
beyond by implementing the budgetary strategy as 
envisaged and ensuring continued achievement of the 
MTO. 

CSR 2: Take further preventive measures to strengthen 
the stability of the housing and mortgage market in the 
medium term, including by fostering prudent lending, 
reducing the debt bias in the financing of housing 
investments, and tackling constraints in housing supply 
and rent regulations. 

CSR 3: Take further measures to improve labour market 
participation of youth and vulnerable groups, e.g. by 
improving the effectiveness of active labour market 
measures, facilitating the transition from school to work, 
promoting policies to increase demand for vulnerable 
groups and improving the functioning of the labour 
market. Review the effectiveness of the current reduced 
VAT rate for restaurants and catering services in support 
of job creation. 

29 

 
 
 
 
CSR 4 Take further measures in the upcoming research 
and innovation bill to continue improving the excellence 
in research and to focus on improving the 
commercialisation of innovative 
products and the development of new technologies. 

progress yet for young people. However, since most 
of the abovementioned reforms will come into effect 
in  2013,  it  is  too  early  to  say  whether  they  will 
actually  have  any  significant  effects  on  the  target 
groups. 

CSR4 has been fully addressed by Sweden. 

The Swedish Research and Innovation Bill has been 
adopted, as has the National Innovation Strategy. In 
line  with  the  Commission’s  recommendation  in 
2012,  the  emphasis  has  been  on  ensuring  a  higher 
return  on  R&D  investment  than  in  the  past.  The 
challenge  of  getting 
the  market  for 
ideas 
innovative  and  high-growth  enterprises  is  clearly 
recognised.  However,  the  actual  implementation  of 
the  strategy  will  have  to  be  followed  closely  over 
time. 

to 

Europe 2020 (national targets and progress) 

Employment rate target set in the 2011 NRP: well over 
80 %. 

Employment rate 2010: 78.1 %, 2011: 79.4 %, 2012: 
79.4 %   

The  EU-wide  target  has  already  been  met.  It  was 
also  attained  before 
in  2007-08. 
Achievement  of  the  more  ambitious  national  target 
was  hindered  by  the  2008-09  crisis.  Since  then, 
progress  has  again  been  made  towards  the  national 
target. 

the  crisis 

Gross domestic expenditure on R&D (in % of GDP) 
in 2010: 3.39 %, 2011: 3.37 %. 

Given the negative trend in private R&D, the 
achievement of this target is challenging and will 
require full and swift implementation of the new 
National Innovation Strategy.  

Greenhouse gas emissions, base year Index 2005 = 
100, 2010 and 2011. 

Sweden’s non-ETS greenhouse gas emissions fell by 
7 % between 2005 and 2010 and by 10 % between 
2005 and 2011. 

According to the latest national projections 
submitted to the Commission, and taking account of 
existing measures, it is expected that Sweden will 
just reach its emission reduction target by 2020. 
Sweden has also adopted a voluntary national target 
which goes beyond its EU obligations. This target 
aims to reduce non-ETS greenhouse gas emissions 
in 2020 by 33 % compared to 2005. 

R&D target: 4 % of GDP by 2020 

Greenhouse gas emissions target: 

-17 % (compared to 2005 emissions; emissions under the 
EU Emissions Trading Scheme (ETS) are not covered by 
this national target). 

30 

 
 
 
 
 
Renewable energy target:  49 % 

Share of renewable energy in the transport sector:  10 % 

In 2011, the share of total renewable energy in gross 
final energy consumption was 46.8 % and 8.8 % in 
the transport sector. (Source: Eurostat. April 2013. 
For 2011, only formally reported biofuels compliant 
with Art. 17 and 18 of Directive 2009/28/EC are 
included). Sweden is expected to meet the 2020 
target. 

The Swedish indicative national energy efficiency target 
for 2020 it that energy use shall be 20 per cent more 
efficient by 2020 compared with 2008. The target is 
expressed as an economy-wide target of a 20 per cent 
reduction in energy intensity between 2008 and 2020. 
Energy intensity is calculated as the quotient between 
power input and GDP at fixed prices (kWh/SEK). 

Sweden  has  set  an  indicative  national  energy 
efficiency  target  in  accordance  with  Articles  3  and 
24 of the Energy Efficiency Directive (2012/27/EU). 
However,  Sweden  has  not  complied  with  the 
requirement  of  this  Directive  to  express  this  target 
unambiguously in terms of absolute level of primary 
and final energy consumption in 2020. 

Early school leaving target: 

10 % 

Tertiary education target: 

40-45 % 

Risk of poverty or social exclusion target: 

Reducing to well under 14 % the number of people aged 20-64 
who  are  not  in  the  labour  force  (except  full-time  students), 
long-term unemployed or on long-term sick leave  

and 

from 

leavers 

education 

Early 
training 
(percentage  of  the  population  aged  18-24  with  at 
most  lower  secondary  education  and  not  in  further 
education or training): 
2010: 6.5 %, 2011: 6.6 %, 2012: 7.5 %39 

The target has been achieved well. 

Tertiary educational attainment (% of population 30-
34 having successfully completed tertiary 
education): 

2010: 45.3 %, 2011: 46.8 %, 2012: 47.9 % 

The target has been achieved.  

People  at-risk-of-poverty  or 
social  exclusion 
attainment  in  2010:  14.4%,  2011:  13.4%,  2012: 
13.1%. 

According  to  the  2013  national  reform  programme, 
the proportion of the population defined in the target 
is  estimated  to  be  about  13 %  of  the  age  group  in 
2012,  which  is  approximately  the  same  level  as 
compared to 2011. 

39 The values for 2009 and 2010 are considerably lower than the initial values set out in the 2012 staff working 
document  (SWD).  The  Swedish  figures  in  the  2012  SWD  were  provisional  because  Sweden  anticipated  a 
number of revisions for the variable that measures participation in education and training. This revision is now 
complete and the new values have been provided. 

31 

 
 
 
                                                            
5. 

ANNEX 

Table I. Macroeconomic indicators  

Core indicators
GDP growth rate
Output gap 1
HICP (annual % change)
Domestic demand (annual % change) 2
Unemployment rate (% of labour force) 3
Gross fixed capital formation (% of GDP)
Gross national saving (% of GDP)
General Government (%  of GDP)
Net lending (+) or net borrowing (-)
Gross debt
Net financial assets 
Total revenue 
Total expenditure
  of which: Interest
Corporations (%  of GDP)
Net lending (+) or net borrowing (-)

1995-
1999

2000-
2004

2005-
2009

2010

2011

2012

2013

2014

3.4
-1.7
1.4
2.6
8.6
16.4
21.3

-2.1
70.3
-22.2
59.0
61.1
4.9

3.0
0.3
1.9
2.0
6.3
17.4
23.3

0.7
52.6
-0.9
55.6
54.9
2.5

1.0
0.5
1.9
1.4
7.1
18.8
26.5

1.9
43.5
17.2
54.6
52.7
1.5

6.6
-1.6
1.9
6.5
8.6
18.0
25.6

0.3
39.4
23.7
52.3
52.0
0.8

3.7
-0.1
1.4
3.2
7.8
18.4
26.9

0.2
38.4
20.7
51.2
51.0
1.0

0.8
-1.3
0.9
0.5
8.0
18.8
25.6

-0.5
38.2
n.a
51.3
51.8
0.7

1.5
-1.6
0.9
1.5
8.3
18.8
25.6

-1.1
40.7
n.a
51.2
52.2
0.7

2.5
-1.1
1.4
2.4
8.1
19.1
26.1

-0.4
39.0
n.a
51.2
51.5
0.7

4.4

2.9

3.5

4.0

3.4

2.9

2.8

2.7

n.a
n.a
12.2
21.3

n.a
n.a
12.0
21.1

n.a
n.a
11.9
21.2

4.7
n.a
41.5
3.8
21.0
7.9

-109.3
12.9
12.0
23.1

-150.3
8.1
12.9
22.1

-165.2
13.2
12.0
22.2

-147.3
11.5
12.4
21.6

-114.6
1.4
12.3
20.6

1.4
84.9
39.9
3.2
25.5
3.3

1.8
91.8
40.8
2.5
23.8
4.4

3.8
110.0
40.6
3.7
20.7
7.2

2.8
119.4
40.3
3.5
21.7
6.2

2.1
103.9
40.2
3.0
22.3
5.4

Net financial assets; non-financial corporations
Net financial assets; financial corporations
Gross capital formation
Gross operating surplus
Households and NPISH (%  of GDP)
Net lending (+) or net borrowing (-)
Net financial assets
Gross wages and salaries
Net property income
Current transfers received
Gross saving
Rest of the world (%  of GDP)
Net lending (+) or net borrowing (-)
Net financial assets
Net exports of goods and services
Net primary income from the rest of the world
Net capital transactions 
Tradable sector
Non tradable sector
  of which: Building and construction sector
Real effective exchange rate (index, 2000=100)
Terms of trade goods and services (index, 2000=100)
Market performance of exports (index, 2000=100)
Notes:
1 The output gap constitutes the gap between the actual and potential gross domestic product at 2005 market prices.
2 The indicator on domestic demand includes stocks.
3  Unemployed persons are all persons who were not employed, had actively sought work and were ready to begin working immediately or within two weeks. 
The labour force is the total number of people employed and unemployed. The unemployment rate covers the age group 15-74.

6.9
n.a
6.2
2.3
-0.1
39.6
48.4
5.1
100.9
99.2
101.7

6.8
10.8
6.2
2.2
-0.1
40.7
46.6
4.6
95.7
100.6
99.7

7.2
13.4
6.2
2.6
-0.1
40.7
47.1
4.9
99.3
99.8
101.9

3.8
34.6
6.8
-1.8
-0.5
42.7
44.7
3.8
106.7
110.8
97.1

7.1
n.a
6.3
2.3
-0.1
n.a
n.a
n.a
107.1
99.5
101.4

6.9
n.a
6.1
2.3
-0.1
n.a
n.a
n.a
106.5
99.3
101.4

5.6
23.0
7.0
-0.1
0.0
42.0
45.7
4.0
101.5
103.7
98.8

7.7
15.9
7.3
1.9
-0.2
40.9
46.7
4.4
98.0
100.5
99.5

4.9
n.a
41.4
3.9
21.0
8.2

5.3
n.a
41.6
3.8
21.4
8.5

Source :
Commission services’ 2013 spring forecasts (COM); Convergence programme (CP).

32 

 
 
 
 
 
Table II. Comparison of macroeconomic developments and forecasts 

Real GDP (% change)

Private consumption (% change)

Gross fixed capital formation (% change)
Exports of goods and services (% change)
Imports of goods and services (% change)
Contributions to real GDP growth:

- Final domestic demand

- Change in inventories

- Net exports
Output gap1
Employment (% change)

Unemployment rate (%)

Labour productivity (% change)

HICP inflation (%)

GDP deflator (% change)

Comp. of employees (per head, % change)
Net lending/borrowing vis-à-vis the rest of the 
world (% of GDP)

2012

2013

2014

2015

2016

COM CP

COM CP

COM CP

0.8

1.5

3.4
0.7
-0.1

1.6

-1.1

0.4

-1.3
0.7

8.0

0.1

0.9

0.7

2.8
6.9

0.8

1.5

3.4
0.7
-0.1

1.6

-1.1

0.4

-0.7
0.7

8.0

0.2

0.9

0.7

2.9
3.7

1.5

1.8

1.4
1.3
1.3

1.4

0.0

0.1

-1.6
0.2

8.3

1.4

0.9

1.4

3.1
6.9

1.2

2.2

0.9
1.1
2.0

1.5

0.0

-0.3

-1.4
0.2

8.3

0.9

0.7

1.1

1.9
6.0

2.5

2.6

3.9
4.6
4.7

2.2

0.0

0.2

-1.1
0.7

8.1

1.7

1.4

2.1

3.5
7.1

2.2

2.8

4.0
4.5
5.4

2.2

0.0

-0.1

-1.6
-0.1

8.4

2.3

1.0

1.2

3.4
6.0

CP

3.6

3.7

6.6
7.3
7.3

3.2

0.0

0.4

-0.7
0.6

8.1

3.1

1.2

1.4

3.5
5.8

CP

3.9

3.6

6.7
7.8
7.5

3.3

0.0

0.6

0.3
1.5

7.1

2.5

1.5

1.7

3.4
5.6

Note:
1In percent of potential GDP, with potential GDP growth recalculated by Commission services on the basis of the programme 
scenario using the commonly agreed methodology.

Source :

Commission services’ 2013 spring forecasts (COM); Convergence programme (CP).

33 

 
 
 
 
Table III. Composition of the budgetary adjustment 

(% of GDP)

Revenue

of which:

- Taxes on production and imports

- Current taxes on income, wealth, etc.

- Social contributions

- Other (residual)

Expenditure

of which:

- Primary expenditure

of which:

Compensation of employees

Intermediate consumption

Social payments

Subsidies

Gross fixed capital formation

Other (residual)

- Interest expenditure

General government balance (GGB)

Primary balance

One-off and other temporary measures

GGB excl. one-offs
Output gap2
Cyclically-adjusted balance

2

3
Structural balance (SB)
Change in SB

Two year average change in SB 

Structural primary balance
Change in structural primary balance

3

Expenditure benchmark

Applicable reference rate

4

5

Deviation
Two-year average deviation (% GDP)

 (% GDP)

2012

2013

2014

2015

2016

COM COM

51.3

51.2

18.5

18.3

7.7

6.8

51.8

18.5

18.1

7.7

6.8

52.2

CP

51.1

18.3

19.0

7.5

6.3

52.5

1
COM

51.2

18.4

18.2

7.7

6.9

51.5

CP

50.9

18.4

18.9

7.5

6.1

51.8

CP

50.6

18.5

18.7

7.4

6.0

50.4

CP

50.3

18.6

18.5

7.3

5.9

49.1

51.1

51.5

51.7

50.8

51.0

49.6

48.2

14.2

9.1

18.2

1.6

3.5

4.6

0.7

-0.5

0.2

0.0

-0.5

-1.3

0.2

0.2

0.0

-0.5

1.0

1.84

0.6

0.3

14.1

9.2

18.6

1.6

3.5

4.6

0.7

-1.1

-0.3

0.0

-1.1

-1.6

-0.1

-0.1

-0.4

-0.2

0.6

-0.4

1.84

0.5

0.6

14.3

9.0

18.3

1.5

3.5

5.0

0.8

-1.4

-0.6

0.0

-1.4

-1.4

-0.6

-0.6

-0.8

-0.4

0.2

-0.7

1.84

0.4

0.3

13.9

9.2

18.2

1.6

3.5

4.6

0.7

-0.4

0.4

0.0

-0.4

-1.1

0.3

0.3

0.4

0.0

1.0

0.4

1.93

-0.4

0.1

14.3

8.9

17.9

1.5

3.4

5.0

0.8

-0.9

0.0

0.0

-0.9

-1.6

0.0

0.0

0.6

-0.1

0.8

0.6

1.93

-0.2

0.1

14.0

8.6

17.5

1.5

3.3

4.7

0.8

0.2

1.0

0.0

0.2

-0.7

0.6

0.6

0.6

0.6

1.4

0.6

1.93

-0.3

-0.3

13.7

8.3

17.1

1.4

3.3

4.4

0.9

1.2

2.0

0.0

1.2

0.3

1.0

1.0

0.4

0.5

1.9

0.5

1.93

-0.3

-0.3

Change: 
2012-2016
CP

-1.0

0.1

0.2

-0.4

-0.9

-2.7

-2.9

-0.5

-0.8

-1.1

-0.2

-0.2

-0.2

0.2

1.7

1.8

0.0

1.7

1.6

0.8

0.8

-

-

0.9

-

-

-

-

Notes:

1On a no-policy-change basis.
2Output gap (in % of potential GDP) and cyclically-adjusted balance according to the programme as recalculated by Commission services on 
the basis of the programme scenario using the commonly agreed methodology.
3Structural (primary) balance = cyclically-adjusted (primary) balance excluding one-off and other temporary measures.
4 Reference medium-term rate of potential GDP growth. The (standard) reference rate applies from year t+1, if the country has reached its 
M TO in year t. A lower  rate applies as long as the country is adjusting towards its M TO, including in year t.The reference rates applicable 
to 2014 onwards have been updated in 2013. 
5 Deviation of the growth rate of public expenditure net of discretionary revenue measures and revenue increases mandated by law from the 
applicable reference rate. The expenditure aggregate used for the expenditure benchmark is obtained following the commonly agreed 
methodology. A positive sign implies that expenditure growth exceeds the applicable reference rate. 

Source :

Convergence programme (CP); Commission services’ 2013 spring forecasts (COM); Commission services’ calculations.

34 

 
 
 
 
Table IV. Debt dynamics 

(% of GDP)

1
Gross debt ratio
Change in the ratio
Contributions 2 :

1. Primary balance

2. “Snow-ball” effect

Of which:

Interest expenditure

Growth effect

Inflation effect

3. Stock-flow adjustment

Of which:

Cash/accruals diff.

Acc. financial assets

Privatisation

Val. effect & residual

5,6

Gap to the debt benchmark
7
Structural adjustment
To be compared to:
Required adjustment8

Notes:

Average
2007-2011

39.9

-1.4

-2.3

-0.2

1.2

-0.6

-0.8

1.2

2012

38.2

-0.2

-0.2

0.1

0.7

-0.3

-0.3

-0.2

2013

2014

COM

40.7

2.5

0.3

-0.4

0.7

-0.6

-0.5

2.5

CP

42.0

3.8

0.6

-0.1

0.8

-0.4

-0.4

3.3

COM

39.0

-1.6

-0.4

-1.0

0.7

-1.0

-0.8

-0.2

CP

41.8

-0.2

0.0

-0.5

0.9

-0.9

-0.5

0.3

2015
CP

39.5

-2.3

-1.0

-1.2

0.8

-1.4

-0.5

-0.1

2016
CP

36.2

-3.3

-2.0

-1.3

0.8

-1.5

-0.6

0.0

2013

2014

2015

2016

2012

COM / 

3

CP
n.r.
n.r.

n.r.

n.r.
n.r.

n.r.

4

CP

n.r.
n.r.

COM / 

3

CP
n.r.
n.r.

4

CP

n.r.
n.r.

n.r.

n.r.

n.r.

CP

n.r.
n.r.

n.r.

CP

n.r.
n.r.

n.r.

1End of period.
2The snow-ball effect captures the impact of interest expenditure on accumulated debt, as well as the impact of real GDP growth 
and inflation on the debt ratio (through the denominator). The stock-flow adjustment includes differences in cash and accrual 
accounting, accumulation of financial assets and valuation and other residual effects. 

3 Assessment of the consolidation path set in CP assuming growth follows the COM  forecasts.
4Assessment of the consolidation path set in the CP assuming growth follows the CP projections.
5Not relevant for M ember Sates that were subject to an EDP procedure in November 2011 and for a period of three years 
following the correction of the excessive deficit.
6Shows the difference between the debt-to-GDP ratio and the debt benchmark. If positive, projected gross debt-to-GDP ratio 
does not comply with the debt reduction benchmark.
7Applicable only during the transition period of three years from the correction of the excessive deficit for EDP that were ongoing 
in November 2011.

8Defines the remaining annual structural adjustment over the transition period which ensures that - if followed – M ember State 
will comply with the debt reduction benchmark at the end of the transition period, assuming that COM  (SP) budgetary 
projections for the previous years are achieved.

Source :

Convergence programme (CP); Commission services’ spring 2013 forecasts (COM); Commission services’ calculations.

35 

 
 
 
 
Table V. Sustainability indicators 

S2

of which:

Initial budgetary position (IBP)

Long-term cost of ageing (CoA)

of which:

Pensions

Health care

Long-term care

Others

S1 (required adjustment)*

of which:

Initial budgetary position (IBP)

Debt requirement (DR)

Long-term cost of ageing (CoA)

S0 (risk for fiscal stress)**

Debt,  % of GDP (2012)

Age-related expenditure, % of GDP (2012)

SE

EU27

No-policy 
change 
scenario 

Programme 
(SCP) 
scenario

No-policy 
change 
scenario 

Programme 
(SCP) 
scenario

2.4

-0.3

2.7

0.0

0.5

2.0

0.2

-2.7

-2.0

-1.3

0.6

1.6

-1.1

2.7

0.1

0.5

1.9

0.2

-4.0

-2.9

-1.7

0.7

3.0

0.8

2.2

1.0

0.9

0.6

-0.4

2.2

0.0

1.9

0.3

0.24

38.2

27.6

:

87.0

25.8

1.3

-0.9

2.2

1.1

0.8

0.6

-0.3

0.5

-1.8

1.9

0.4

Note: 
The 'No-policy change' scenario depicts the sustainability gap under the assumption that the budgetary position evolves 
according to the Commissions' spring 2013 forecast until 2014. The 'Programme (SCP)' scenario depicts the sustainability gap 
under the assumption that the budgetary plans in the programme are fully implemented.
* The required adjustment of the primary balance until 2020 to reach a public debt of 60% of GDP by 2030.              
** The critical threshold for the S0 indicator is 0.44. 

Source : 
Commission services; 2013 stability programme.                                                                                                                               

(% of GDP)
80

Gross debt as % of GDP - SE - Medium term debt projections

70

60

50

40

30

20

10

0

0
9
9
1

2
9
9
1

4
9
9
1

6
9
9
1

8
9
9
1

0
0
0
2

2
0
0
2

4
0
0
2

6
0
0
2

8
0
0
2

0
1
0
2

2
1
0
2

4
1
0
2

6
1
0
2

8
1
0
2

0
2
0
2

2
2
0
2

4
2
0
2

6
2
0
2

8
2
0
2

0
3
0
2

COM no-policy change scenario
COM + Shock ( -1p.p. in the short-term/long-term interest rate on maturing and new debt from 2015)
COM + Shock (+1p.p. in the short-term/long-term interest rate on maturing and new debt from 2015)
COM consolidation scenario (0.5% per year on SB) in order to achieve MTO
COM consolidation scenario (1% per year on SB) in order to achieve MTO
SCP scenario

36 

 
 
 
 
Table VI. Taxation indicators 

Total tax revenues (incl. actual compulsory social contributions, % of GDP)

47.5

48.3

46.4

46.5

45.4

44.3

2002

2006

2008

2009

2010

2011

Breakdown by economic function (% of GDP)1
     Consumption

              of which:

              - VAT

              - excise duties on tobacco and alcohol

             - energy

             - other (residual)

     Labour employed

     Labour non-employed

     Capital and business income

     Stocks of capital/wealth
     p.m.  Environmental taxes 2
3
VAT efficiency
     Actual VAT revenues as % of theoretical revenues at standard rate

Note: 

12.6

12.4

12.7

13.3

13.2

12.8

8.8

0.8

2.4

0.6

8.9

0.7

2.3

0.5

9.3

0.7

2.2

0.6

9.6

0.7

2.3

0.6

9.7

0.7

2.2

0.6

9.4

0.7

2.0

0.6

25.7

24.1

24.0

23.4

22.3

22.6

4.0

3.4

1.8

2.9

4.3

5.8

1.7

2.7

3.7

4.7

1.3

2.7

3.9

4.6

1.4

2.8

3.4

5.1

1.4

2.7

3.2

4.5

1.3

2.5

52.7

55.7

58.3

57.4

59.4

58.4

1 Tax revenues are broken down by economic function, i.e. according to whether taxes are raised on consumption, labour or capital. See European Commission 
(2013) Taxation trends in the European Union, for a more detailed explanation.

2 This category comprises taxes on energy, transport and pollution and resources included in taxes on consumption and capital.

3 The VAT efficiency is measured via the VAT revenue ratio. The VAT revenue ratio is defined as the ratio between the actual VAT revenue collected and the 
revenue that would theoretically be raised if VAT was applied at the standard rate to all final consumption. A low ratio can indicate a reduction of the tax base due 
to large exemptions or the application of reduced rates to a wide range of goods and services ('policy gap') or a failure to collect all tax due to e.g. fraud ('collection 
gap'). See European Commission (2012), Tax reforms in EU M ember States, European Economy 6/2012 and Taxation Papers 34/2012 for a more detailed 
explanation.

Source: Commission

37 

 
 
 
 
Table VII. Financial market indicators 

Total assets of the banking sector (% of GDP)

272.3

320.1

305.2

294.3

296.1

2008

2009

2010

2011

2012

Share of assets of the five largest banks (% of total assets)

Foreign ownership of banking system (% of total assets)
Financial soundness indicators:
              - non-performing loans (% of total loans)1), 2)
              - capital adequacy ratio (%) 1), 2)
              - return on equity (%) 1), 2)
Bank loans to the private sector (year-on-year % change)

Lending for house purchase (year-on-year % change)

Loan to deposit ratio

CB liquidity as % of liabilities
Banks' exposure to countries receiving official financial assistance  (% of GDP)3)
Private debt (% of GDP)
Gross external debt (% of GDP)4)
            - Public
            - Private

Long term interest rates spread versus Bund (basis points)*

Credit default swap spreads for sovereign securities (5-year)*
Notes: 

1) Latest data (September 2012).
2) Four large banking groups.
3) Covered countries are CY, EL, ES, LV, HU, IE, PT and RO.
4) Latest data 2012Q3.

* M easured in basis points.
Source :

61.9

10.6

0.5
10.3

16.9

7.5

10.5

223.4

4.9

8.0

60.7

6.8

0.8
12.7

8.0

3.3

11.8

221.9

4.0

8.0

57.8

…

0.8
12.0

14.1

7.3

7.9

57.8

…

0.7
11.5

14.9

5.5

5.6

…

…

0.7
11.8

12.3

3.6

4.7

221.9

215.4

207.8

0.0

5.6

0.0

4.4

124.0

154.8

153.2

148.7

12.3
65.7

-0.1

53.1

16.4
83.2

0.0

71.8

17.4
73.5

0.1

37.8

18.1
66.6

0.0

42.4

0.0

4.1

…

17.8
69.3

0.1

45.0

Bank for International Settlements and Eurostat (exposure to macro-financially vulnerable countries), IMF (financial soundness indicators), 
Commission (long-term interest rates), World Bank (gross external debt) and ECB (all other indicators).

38 

 
 
 
 
Table VIII.  Labour market and social indicators 

Labour market indicators
Employment rate
(% of population aged 20-64)
Employment growth 
(% change from previous year)
Employment rate of women
(% of female population aged 20-64)
Employment rate of men 
(% of male population aged 20-64)
Employment rate of older workers 
(% of population aged 55-64)
Part-time employment (% of total employment, 
15 years and more)
Part-time employment of women  (% of women employment, 15 
years and more)
Part-time employment of men  (% of men employment, 15 years 
and more)
Fixed term employment (% of employees with a fixed term 
contract, 15 years and more)
Transitions from temporary 
to permanent employment
Unemployment rate1 (% of labour force, 
age group 15-74)
Long-term unemployment rate2 (% of labour force)

Youth unemployment rate 
(% of youth labour force aged 15-24)
Youth NEET rate (% of population aged 15-24)

Early leavers from education and training (% of pop. 18-24 with at 
most lower sec. educ. and not in further education or training)

Tertiary educational attainment (% of population 30-34 having 
successfully completed tertiary education)
Formal childcare (from 1 to 29 hours; % over the population less 
than 3 years)
Formal childcare (30 hours or over; % over the population less 
than 3 year)
Labour productivity per person employed (annual % change)

Hours worked per person employed  (annual % change)
Labour productivity per hour worked (annual % change; constant 
prices)

Compensation per employee (annual % change; constant prices)

Nominal unit labour cost growth (annual % change)

Real unit labour cost growth (annual % change)

2007

2008

2009

2010

2011

2012

80.1

80.4

78.3

78.1

79.4

79.4

2.3

77.1

83.1

70.0

25.0

40.0

11.8

17.5

2.4

6.1

0.9

0.9

77.2

83.5

70.1

26.6

41.4

13.3

16.1

3.5

6.2

0.8

-2.4

75.7

80.9

70.0

27.0

41.2

14.2

15.3

2.6

8.3

1.1

1.0

75.0

81.1

70.4

27.0

41.0

14.5

16.4

3.0

8.6

1.6

2.3

76.5

82.1

72.0

26.5

40.1

14.2

17.0

:

7.8

1.5

0.7

76.8

81.9

73.0

26.5

39.6

14.6

16.4

:

8.0

1.5

19.2

20.2

25.0

24.8

22.8

23.7

7.5

8.0

41.0

20.0

27.0

1.0

0.8

0.2

2.4

4.2

1.4

7.8

7.9

42.0

18.0

31.0

-1.5

0.3

-1.8

-1.6

3.1

-0.1

9.6

7.0

43.9

26.0

37.0

-2.7

-0.5

-2.2

-0.4

4.4

2.3

7.7

6.5

45.3

18.0

33.0

5.5

1.6

3.9

2.3

-2.3

-3.1

7.5

6.6

46.8

19.0

32.0

1.4

0.0

1.3

-0.3

-0.6

-1.7

7.8

7.5

47.9

:

:

0.1

-0.9

1.0

2.0

2.6

1.9

Notes:
1 Unemployed persons are all persons who were not employed, had actively sought work and were ready to begin working immediately or within 
two weeks. The labour force is the total number of people employed and unemployed.

2 Long-term unemployed are unemployed persons for at least 12 months.

Sources: 
Commission (EU Labour Force Survey and European National Accounts) 

39 

 
 
 
 
 
Expenditure on social protection benefits (% of 
GDP)
Sickness/Health care

Invalidity

Old age and survivors

Family/Children

Unemployment

Housing and Social exclusion n.e.c.

Total

of which:  means tested benefits
Social inclusion indicators
At-risk-of-poverty or social exclusion1 
(% of total population)
At-risk-of-poverty or social exclusion of children 
(% of people aged 0-17)
At-risk-of-poverty or social exclusion of elderly 
(% of people aged 65+)
At-Risk-of-Poverty rate2 (% of total population)
Severe Material Deprivation3  (% of total population)
Share of people living in low work intensity households4 (% of 
people aged 0-59)
In-work at-risk-of poverty rate (% of persons employed)
Impact of social transfers (excluding pensions) on reducing 
poverty
Poverty thresholds, expressed in national currency at constant 
prices 5
Gross disposable income (households)
Relative median poverty risk gap (60% of median equivalised 
income, age: total)

2006

2007

2008

2009

2010

7.79

4.53

11.76

2.98

1.63

0.51

29.79

0.84

7.51

4.42

11.63

2.93

1.08

0.47

28.63

0.78

7.55

4.30

12.12

3.02

0.87

0.46

28.94

0.78

7.94

4.57

13.19

3.21

1.31

0.47

31.41

0.86

7.44

4.24

12.59

3.11

1.36

0.46

29.90

0.00

2007

2008

2009

2010

2011

13.9

14.9

10.4

10.5

2.2

5.9

6.5

14.9

14.6

15.5

12.2

1.4

5.4

6.8

15.9

15.1

18.0

13.3

1.6

6.2

6.9

15.0

14.5

15.9

12.9

1.3

5.9

6.5

16.1

15.9

18.6

14.0

1.2

6.8

6.9

61.8

57.2

50.0

51.7

49.8

104641

112302

116661

117236

117980

1513230

1595302

1661482

1714281

1796684

20.3

18.0

20.3

19.7

18.5

Notes:
1 People at-risk-of poverty or social exclusion (AROPE): individuals who are at-risk-of poverty (AROP) and/or suffering from severe 
material deprivation (SM D) and/or living in household with zero or very low work intensity (LWI).
2 At-risk-of poverty rate (AROP): share of people with an equivalised disposable income below 60% of the national equivalised median 
income. 
3 Share of people who experience at least 4 out of 9 deprivations: people cannot afford to i) pay their rent or utility bills, ii) keep their 
home adequately warm, iii) face unexpected expenses, iv) eat meat, fish, or a protein equivalent every second day, v) enjoy a week of 
holiday away from home once a year, vi) have a car, vii) have a washing machine, viii) have a colour tv, or ix) have a telephone.
4 People living in households with very low work intensity: share of people aged 0-59 living in households where the adults (excluding 
dependent children) work less than 20% of their total work-time potential during the previous 12 months.

5 For EE, CY, M T, SI, SK, thresholds in nominal values in Euros; HICP -  index 100 in 2006 (2007 survey refers to 2006 incomes)

Sources: 
For expenditure for social protection benefits ESSPROS; for social inclusion EU-SILC.

40 

 
 
 
Table IX. Product market performance and policy indicators 

Performance indicators

Labour productivity1 total economy (annual 
growth in %)
Labour productivity1 in manufacturing (annual 
growth in %)
Labour productivity1 in electricity, gas, steam and 
air conditioning supply (annual growth in %)
Labour productivity1 in the construction sector 
(annual growth in %)
Total number of patent2 applications per million of 
labour force

Policy indicators

Enforcing contracts 3 (days)
Time to start a business 3 (days)
R&D expenditure (% of GDP)
Tertiary educational attainment 
(% of 30-34 years old population)
Total public expenditure on education 
(% of GDP)

Product market regulation4, Overall
(Index; 0=not regulated; 6=most regulated)
Product market regulation4, Retail
(Index; 0=not regulated; 6=most regulated)
Product market regulation4, Network Industries 5
(Index; 0=not regulated; 6=most regulated)

2003-
2007

2.8

7.7

1.5

0.1

2008

2009

2010

2011

2012

-1.5

-2.7

5.5

-5.7

-12.6

29.5

1.4

5.0

0.1

-2.1

-7.0

-7.4

-12.1

-6.1

7.0

1.4

-2.9

n.a.

4.2

1.4

509.8

553.1

572.2

580.3

n.a.

n.a.

2003-
2007
508

16

3.6

2008

2009

2010

2011

2012

508

16

3.7

314

16

3.6

314

16

3.4

314

16

3.4

314

16

n.a.

36.6

42.0

43.9

45.8

47.4

48.2

6.91

6.76

7.26

6.98

n.a.

n.a.

2007

2008

2009

2010

2011

2012

n.a.

n.a.

1.3

0.5

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

1.7

n.a.

n.a.

n.a.

n.a.

n.a.

Notes:
1 Labour productivity is defined as gross value added (in constant prices) divided by the number of persons employed.
2 Total number of patent applications to the European Patent Office (EPO) per million of labour force
3 The methodologies, including the assumptions, for this indicator are presented in detail on the website 
http://www.doingbusiness.org/methodology. 
4 The methodologies of the product market regulation indicators are presented in detail on the website 
http://www.oecd.org/document/1/0,3746,en_2649_34323_2367297_1_1_1_1,00.html. The latest available product market 
regulation indicators refer to 2003 and 2008, except for Network Industries.
5 Aggregate Energy, Transport and Communications Regulation (ETCR).
*figure for 2007.

Source :
Commission, World Bank - Doing Business  (for enforcing contracts and time to start a business) and OECD (for the 
product market regulation indicators). 

41 

 
 
 
 
Table X. Green Growth 

Green Growth performance

Macroeconomic
Energy intensity 
Carbon intensity 
Resource intensity (reciprocal of resource productivity)
Waste intensity 
Energy balance of trade 
Energy weight in HICP
Difference between change energy price and inflation 
Environmental taxes over labour taxes
Environmental taxes over total taxes

Sectoral 

Industry energy intensity 
Share of energy-intensive industries in the economy
Electricity prices for medium-sized industrial users**
Gas prices for medium-sized industrial users***
Public R&D for energy 
Public R&D for the environment
Recycling rate of municipal waste
Share of GHG emissions covered by ETS*
Transport energy intensity
Transport carbon intensity
Security of energy supply
Energy import dependency
Diversification of oil import sources 
Diversification of energy mix
Share renewable energy in energy mix

kgoe / €
kg / €
kg / €
kg / €
% GDP
%
%
ratio
ratio

kgoe / € 
% GDP
€ / kWh
€ / kWh
% GDP
% GDP
ratio
%
kgoe / €
kg / €

%
HHI
HHI
%

2002-
2006

0.17
0.23
0.63
n.a.
-1.5%
n.a.
n.a.
9.7%
5.9%

0.23
11.6
n.a.
n.a.
n.a.
n.a.
90.2%
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

2007

2008

2009

2010

2011

0.15
0.20
0.64
n.a.
-1.7%
12
-2.2
9.6%
5.5%

0.19
11.4
0.06
0.04
0.03%
0.01%
94.9%
29.1%
0.42
1.00

36.3%
0.23
0.29
30.4%

0.15
0.19
0.65
0.26
-2.0%
11
6.5
9.7%
5.8%

0.19
11.6
0.07
0.05
0.03%
0.01%
96.1%
31.7%
0.40
0.96

37.9%
0.22
0.29
31.3%

0.15
0.19
0.59
n.a.
-1.3%
11
-0.4
10.2%
6.0%

0.21
10.7
0.07
0.04
0.04%
0.02%
97.6%
29.5%
0.42
0.99

37.1%
0.22
0.28
34.6%

0.16
0.20
n.a.
0.35
-1.7%
11
2
10.8%
6.1%

0.21
n.a.
0.08
0.05
0.04%
0.02%
97.9%
34.6%
n.a.
n.a.

36.7%
0.25
0.28
33.8%

0.14
n.a.
n.a.
n.a.
-1.9%
12
0.7
n.a.
n.a.

n.a.
n.a.
0.09
0.05
0.04%
0.02%
n.a.
32.3%
n.a.
n.a.

36.8%
n.a.
0.29
31.8%

Country-specific notes: 
The year 2012 is not included in the table due to lack of data.
General explanation of the table items:
Source: Eurostat unless indicated otherwise; ECFIN elaborations indicated below
All macro intensity indicators are expressed as a ratio of a physical quantity to GDP (in 2000 prices)
          Energy intensity: gross inland energy consumption (in kgoe) divided by GDP (in EUR)
          Carbon intensity: Greenhouse gas emissions (in kg CO2 equivalents) divided by GDP (in EUR)
          Resource intensity: Domestic M aterial Consumption (in kg) divided by GDP (in EUR)
          Waste intensity: waste (in kg) divided by GDP (in EUR)
Energy balance of trade: the balance of energy exports and imports, expressed as % of GDP  
Energy weight in HICP: the share of the "energy" items in the consumption basket used in the construction of the HICP
Difference between energy price change and inflation: energy component of HICP, and total HICP inflation (annual %-change)
Environmental taxes over labour or total taxes: from DG TAXUD's database "Taxation trends in the European Union"
Industry energy intensity: final energy consumption of industry (in kgoe) divided by gross value added of industry (in 2005 EUR) 
Share of energy-intensive industries in the economy: share of gross value added of the energy-intensive industries in GDP
Electricity and gas prices medium industrial users: consumption band 500  - 2000M Wh and 10000 - 100000 GJ;  figures excl. VAT.
Recycling rate of municipal waste: ratio of municipal waste recycled over total municipal waste
Public R&D for energy or for the environment: government spending on R&D (GBAORD) for these categories as % of GDP
Share of GHG emissions covered by ETS: based on greenhouse gas emissions as reported by M ember States to EEA (excl LULUCF)
Transport energy intensity: final energy consumption of transport activity (kgoe) divided by transp industry gross value added (2005 EUR)
Transport carbon intensity:  greenhouse gas emissions in transport activity divided by gross value added of the transport sector
Energy import dependency: net energy imports divided by gross inland energy consumption incl. energy consumption international bunkers

Diversification of oil import sources: Herfindahl index (HHI), calculated as the sum of the squared market shares of countries of origin 

Diversification of the energy mix: Herfindahl Index over natural gas, total petrol products, nuclear heat, renewable energies and solid fuels

Share renewable energy in energy mix: %-share in  gross inland energy consumption, expressed in tonne oil equivalents

*Provisional data (15 April 213). Commission Services and EEA.

** For 2007 average of S1 & S2 for DE, LU, NL, FI, SE & UK. Other countries only have S2.

*** For 2007 average of S1 & S2 for IT, NL, FI, SE & UK. Other countries only have S2.

42