COMMISSION STAFF WORKING DOCUMENT 2022 Country Report - Sweden Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Sweden and delivering a Council opinion on the 2022 Convergence Programme of Sweden
Date: 2022-05-23
Institutions: European Commission, Secretariat-General
Subjects: Sweden, economic policy, economic recovery, economic reform, energy policy, integration into employment, integration of migrants, public finance, stability pact, stability programme

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.5.2022  SWD(2022) 625 final  COMMISSION STAFF WORKING DOCUMENT 2022 Country Report - Sweden Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Sweden and delivering a Council opinion on the 2022 Convergence Programme of Sweden {COM(2022) 625 final} - {SWD(2022) 640 final}  
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

The Swedish economy back on its 
feet, while geopolitical effects are 
starting to kick in 

Sweden’s  economy  was  on  a  strong 
footing before the onset of the COVID-19 
pandemic. In 2019, Sweden’s per capita GDP 
was  around  150%  of  the  EU  average,  the 
fourth highest in the EU, while the labour force 
participation rate was the highest in the EU. In 
the  5  years  prior  to  the  pandemic,  Swedish 
GDP  expanded  by  2.6%  per  year  on  average. 
The  general  government  balance  was 
in 
surplus  throughout  this  period,  while  the 
banking  sector  remained  profitable  and  well 
macroeconomic 
capitalised. 
  poorly 
imbalances  stemming 
functioning 
high 
household debt continued to build up. 

housing  market 

However, 

from  a 

and 

recovered  strongly. 

The  pandemic  has  had  a  significant 
impact  on  the  Swedish  economy,  but  the 
The 
latter  has 
economy  contracted  by  2.8%  in  2020.  It 
started  to  bounce  back  from  the  middle  of 
2020, underpinned by strong policy support, as 
international supply bottlenecks eased. Private 
consumption  and  exports  picked  up  again,  as 
did  private  investment  with  many  companies 
investing  in  digital  equipment  and  software. 
Real  GDP  growth  reached  4.8%  in  2021  and 
by  mid-2021  Sweden’s  real  GDP  had  already 
surpassed  its  pre-pandemic  level.  Economic 
growth is expected to fall to 2.3% in 2022 due 
to  the  combined  impact  of  higher  inflation 
(lowering  purchasing  power),  the  war 
in 
Ukraine and supply bottlenecks, before slowing 
further  to  1.4%  in  2023  (see  Annex  19).  The 
unemployment  rate  is  set  to  drop  to  7%  in 
2023, roughly equal to its pre-pandemic level.  

The harmonised index of consumer prices 
(HICP) inflation has picked up sharply. The 
marked rise in inflation in 2021 was chiefly on 

2 

the  back  of  higher  energy  prices,  but  also 
including 
reflects  broader  price  pressures, 
from  supply  chain  disruptions. 
In  2022, 
inflation is expected  to remain relatively high, 
at  close  to  6%.  So  far,  wage  pressures  have 
remained contained. However, the risk of price 
and  cost  pressures  has  increased  and  poses 
downside risks to growth and employment. 

impact  of  Russia’s 

invasion  of 
The 
Ukraine  on  the  economy  will  be  mostly 
indirect.  Direct  trade  and  financial  relations 
with  both  Russia  and  Ukraine  are  limited. 
Swedish  energy  is  mostly  produced  from 
renewable  resources  and  nuclear  energy. 
Fossil  fuel 
imports  are  mostly  used  for 
transport and for re-exports.  

The  impact  has,  so  far,  been  mostly 
visible in economic growth, inflation, and 
the  exchange  rate.  The  economic  growth 
outlook  has  weakened  as  for  Sweden’s  main 
trading  partners.  The  Swedish  krona  initially 
depreciated  against  the  euro.  Although  the 
its  value 
krona 
against  the  euro  has  been  relatively  volatile. 
Overall,  increases  in  energy  and  food  prices 
are the main upward risk for inflation. To stem 
inflationary  pressures,  the  Riksbank  increased 
the repo rate by 25 bps on 28 April 2022 and 
indicated two or three more interest increases 
in 2022. 

recovered  subsequently, 

Sweden is well placed to further advance 
the  green  and  digital  transition.  The 
country’s  carbon  neutrality  ambitions  surpass 
those  of  the  EU,  and  according  to  the  EU 
innovation  scoreboard  2021,  Sweden  has 
remained  the  best  performing  EU  Member 
State,  a  position  it  has  held  since  2017  (see 
Annex  5).  The  country  remains  a  leader  in 
digital  innovation  according  to  the  European 
Commission’s  Digital  Economy  and  Society 
Index (DESI) (see Annex 8). The high degree of 
internet  penetration  and  digital  skills  have 
helped protect value chains and enable remote 

 
 
working during the COVID-19 crisis, supporting 
the recovery. While more remote areas of the 
country  lag  behind  metropolitan  areas,  the 
northern  part  of  the  country  is  becoming  a 
centre  for  green  and  digital  transformation 
and  innovation  including  through  large-scale 
investment in fossil-free steel and car battery 
production. Sweden invests in green innovation 
and  strengthening  sustainable  transport  while 
retaining  a  significant  price  on  carbon  (see 
Annex  5).  Sweden’s  energy-intensive  industry 
provides  jobs  for  3%  of  the  total  employed 
workforce,  for  which  up-  and  reskilling  could 
be particularly important (see Annex 6). 

Sweden  is  a  top  performer  on  many  of 
the  UN’s  Sustainable  Development  Goals 
(SDGs),  but  more  could  be  done  to 
progress  on 
reducing  poverty  and 
inequality  (see  Annex  1).  Sweden’s  green 
transition  is  relatively  well  advanced.  It  is 
already  among  the  Member  States  with  the 
lowest  greenhouse  gas  emissions  per  capita 
and  a  high  proportion  of  energy  from 
renewable  sources  (SDG  7,  Affordable  and 
clean  energy,  and  13,  Climate  action). 
However, the country’s progress on SDGs 1 (no 
is 
poverty)  and  10  (reduced 
slowing.  Sweden  also  shows 
favourable 
rankings  on  indicators  assessing  the  digital 
transition  (SDG  9,  Industry,  innovation  and 
infrastructure).  The  country  scores  well  on 
decent work and economic growth (SDG 8). On 
the  stability  axis,  Sweden  scores  very  well  on 
indicators  related  to  SDG  16,  (Peace,  justice, 
and strong institutions). Overall, Sweden ranks 
second in the global SDG rankings and scores 
highly in terms of competitive sustainability, in 
particular for environmental sustainability and 
productivity. 

inequalities) 

Conditions are in place to allow progress 
towards  improved  social  fairness.  The 
Social  Scoreboard  supporting  the  European 
Pillar  of  Social  Rights 
indicates  a  well-
performing  labour  market  and  overall  good 
social  outcomes  in  Sweden  (see  Annex  12). 
Educational  outcomes  are  overall  good,  but 
inequalities 
inequalities 
negatively  affect  pupils  from  disadvantaged 
backgrounds  in  particular,  and  contribute  to 
persistent labour participation gaps. 

persist. 

These 

Graph 1.1: Activity, unemployment and job 
vacancy rate 

Source: European Commission 

ongoing 

towards 
The 

Bottlenecks  in  several  areas  may  slow 
competitive 
progress 
sustainability. 
economic 
recovery  has  gone  hand-in-hand  with 
increasing  labour  shortages,  especially  for 
high-skilled professions. However, at the same 
time,  vulnerable  groups  on  the  labour  market 
find it difficult to reduce the skills gap. Overall, 
labour  shortages  may  become  a  constraining 
factor 
investment  to 
support 
to  a  greener, 
increasingly  digitalised  economy  and  further 
boost Sweden’s productivity.  

in  realising  planned 

transition 

the 

pre-existing 

increasing  further 

The 
macroeconomic 
imbalances  in  the  housing  market  have 
been  exacerbated,  with  house  prices  and 
private  debt 
(see 
Annex  17).  Groups  who  are  new  to  the 
housing  market  find  it  especially  difficult  to 
meet their housing needs, despite an increase 
in  the  number  of  newly  built  homes in  recent 
years.  There  is  a  particular  lack  of  affordable 
housing, including in the rental sector. 

3 

83.0%83.5%84.0%84.5%85.0%85.5%86.0%86.5%87.0%87.5%88.0%0%2%4%6%8%10%Activity rate 20-64 (rhs)Unemployment rate 15-74 (lhs)Job vacancy rate (lhs) 
   
Solid government finances served 
as a bulwark against the pandemic 
fall-out 

Sweden entered the pandemic with strong   
finances.  The  outlook  at  the  beginning  of 
2020 for Sweden's public finances was one of 
continued  resilience  and  few  challenges  to 
fiscal  sustainability.  The  general  government 
balance  was  expected  to  remain  in  surplus  in 
2020  and  2021,  while  general  government 
debt was expected to continue falling to 32% 
of  GDP  by  2021.  Public  finances  deteriorated 
markedly in 2020 as a result of the COVID-19 
crisis. The general government balance moved 
into  a  deficit  of  2.8%  of  GDP,  while  the  debt 
ratio increased by some 5 percentage points to 
just below 40% of GDP. 

As  of  mid-March  2020,  the  government 
introduced  several  extraordinary  budget 
amendments  to  mitigate  the  impact  of 
the  pandemic.  The  2021  budget  already 
included  measures  that  were  to  be  funded 
through  the  Recovery  and  Resilience  Facility 
(RRF).  The  support  measures  had  broad 
coverage,  focusing  on  households,  businesses 
and  the  health  care  sector.  They  included,  for 
example, the short-time work scheme to avoid 
wide-spread  redundancies  and  support  to 
compensate  businesses  and  the  sports  and 
cultural sectors for incurred turnover losses as 
a 
restrictions. 
Substantial  support  was  also  provided  to 
regions  and  municipalities  that  had  increased 
healthcare and social protection costs.  

the  pandemic 

result  of 

Beyond  fiscal  measures,  the  Swedish 
central  bank  acted  decisively  to  ensure 
financing  for  to  commercial  banks  and 
the  bond  purchase 
businesses.  Notably, 
program was expanded, banks benefited from 
a  lower  overnight  interest  rate,  expanded 
opportunities to borrow from the central bank 
and  expanded  use  of  collateral  to  finance 
businesses. 
supervisor  
temporarily  eased  amortisation  requirements 
for  housing  loans,  supporting  households  and 
the  housing  market  during  a  period  of 
considerable  uncertainty  and  falling  GDP 
growth. 

financial 

The 

Graph 1.2: Key fiscal indicators 

Source: European Commission 

in 

The 

Public  finances  are  expected  to  remain 
addressing 
2022,  while 
solid 
geopolitical 
general 
effects. 
government  deficit  is  set  to  increase  from 
0.2% of GDP in 2021 to 0.5% of GDP in 2022, 
turning into a surplus of 0.5% of GDP in 2023. 
The  2022  budget  includes  stimulus  measures 
of around 1½% of GDP. Taken together with a 
number  of  other  initiatives  to  address  the 
impact  of  rising  energy  prices  on  purchasing 
power  and  the  arrival  of  people  fleeing 
Ukraine, fiscal policy is expected to continue to 
support the recovery. 

The expected improvement in the general 
government  balance  will  further  improve 
fiscal  sustainability.    Despite  a  generalised 
income  tax  cut  in  2022,  tax  receipts  are 
expected  to  be  relatively  strong,  in  line  with 
economic  growth.  The  general  government 
debt-to-GDP  ratio 
its 
downward path and fall to just above 30% of 
GDP in 2023. 

to  resume 

is  set 

Further bolstering competitive 
sustainability post-COVID 

forward,  Sweden  aims 

Looking 
to 
strengthen  competitive  sustainability  in 
several  policy  areas.  This  will  entail 
initiatives to strengthen its health system, and  
towards  digitalising  and 
a  further  shift 

4 

-4.0-3.0-2.0-1.00.01.02.0-4.0-3.0-2.0-1.00.01.02.0201820192020202120222023% of potential GDP% of GDPNew fiscal measuresHeadline balanceCyclical component (rhs)forecast 
   
greening  the  economy,  while  enhancing  social 
fairness. The 2022 budget, as amended by the 
parliamentary  opposition,  aims  to  strengthen 
active  labour  market  policies,  i.e.  policies  to 
encourage  people  into  work,  with  a  focus  on 
young  people  and  the  long-term  unemployed, 
as  well  as  measures 
law 
enforcement. Higher  retirement  age limits  are 
to  be  introduced  in  2023  and  2026,  in  line 
with  ambitious  national  targets  for  fiscal 
sustainability.  

to  support 

Sweden’s  objective  of  achieving  carbon 
neutrality  by  2045  guides  its  strategic 
direction on climate policy. This is reflected 
in the significant spending on green measures 
that  will  be  financed  by  grants  from  the  RRF. 
Linked  to  this,  Sweden  recently  adopted  a 
national 
sustainable 
for 
electrification  of  society,  which  calls  for  large 
investments e.g. in transmission infrastructure. 

strategy 

the 

its  work  on 
Sweden  will  continue 
includes 
improving  digitalisation.  This 
ensuring  broadband  access  throughout  the 
entire  country,  supported  inter  alia  by  RRF 
funding.  

5 

 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 

reforms 

supporting 

The Swedish recovery and resilience plan 
(RRP)  includes  a  comprehensive  set  of 
mutually 
and 
investments  that  will  support  economic 
recovery and growth, and improve social, 
economic  and  institutional  resilience.  The 
plan has a total allocation of EUR 3.3 billion in 
grants  (representing  0.7%  of  GDP  in  2019) 
in 
and  focuses  on  addressing  challenges 
relation to the green and digital transition and 
human  capital  (see  Annex  2).  The  plan  also 
includes  reforms  and  investments  to  increase 
the  Swedish  economy, 
the 
through 
tackling  demographic  challenges, 
bolstering the integrity of the financial system 
and  improving  the  functioning  of  the  housing 
market.  The  plan  is  part  of  a  larger  national 
restart  package  to  support  socio-economic 
recovery and long-term development after the 
COVID-19 pandemic.  

resilience  of 

The  RRP  supports  a  swift  recovery  by 
frontloading  the  implementation  of  key 
investments and reforms. Over 80% of the 
plan’s  56  milestones  and  targets  are  due  by 
the  end  of  2023.  The  expected  first  payment 
request will contain around 40% of the plan’s 
milestones  and  targets.  The  frontloading  of 
measures  will  not  only  result  in  rapid  impact 
but  will  also  lead  to  a  greater  overall  impact, 
given that the plan’s direct positive effects on 
growth  are  expected  to  be  strongest  during 
2021-2023. 

Measures  in  the  RRP  will  help  accelerate 
the  green  and  digital  transition,  with 
lasting impacts on the Swedish economy. 
Wide-ranging  investment  schemes  supporting 
the  decarbonisation  of  emission-intensive 
industries  and  promote  local  and  regional 
initiatives to reduce greenhouse gas emissions 
are expected to boost the green transition. The 
green  transition  will  be  further  supported  by 
measures to protect  valuable natural  habitats 
and  to  preserve  biodiversity,  as  well  as 
ambitious tax reforms that discourage the use 

6 

in 

substantial 

of  fossil  fuels.  Progress  on 
the  digital 
transition  will  be  made  with  significant 
investments to expand high-speed and reliable 
broadband  connectivity,  especially 
less 
populated  areas,  which  will  also  help  support 
territorial  cohesion.  The  plan  will  accelerate 
the  deployment  of  e-government  solutions  by 
allocating 
the 
development  of  a  joint  digital  infrastructure 
improving 
for 
interoperability  and  data  exchange.  The 
development 
new 
technologies  in  the  digital  and  green  domains 
is expected to help the Swedish economy grow 
in  a  smart  and  sustainable  way,  reduce  its 
energy  dependence  and  improve  resilience 
instance 
against  external  disruptions,  for 
related to cybersecurity.  

administration, 

application 

public 

funds 

and 

for 

of 

The  RRP  includes  measures  to  tackle 
education  and  skills  gaps,  but  specific 
challenges  remain.  Additional  study  places 
in vocational education across the country will 
particularly  serve  those  with  a  disadvantaged 
labour  market  position,  a  group  to  which  a 
relatively  large  proportion  of  the  non-EU  born 
population  belongs. 
In  addition,  higher 
education  and  vocational  education  measures 
place  a  strong  emphasis on  digital  skills,  with 
the aim of alleviating shortages and improving 
employment opportunities for the unemployed 
people.  Coupled  with  reforms  to  modernise 
these 
employment  protection 
investments  help  equip  the  labour  force  with 
the necessary skills for the future. This in turn 
will help improve the labour market transition 
and  contribute  towards  enabling  people  to 
make  best  use  of  the  opportunities  provided 
by  the  twin  transition,  contributing  to  the 
implementation  of  the  European  Pillar  of 
Social Rights. Despite this work, more needs to 
be done to close the education and skills gaps. 
In  particular,  the  plan  does  not  entirely 
address  the  lack  of  highly  skilled  talent  in 
science,  technology  and  engineering,  and 
inequalities 
general  education  (educational 

legislation, 

 
 
 
reforms  with 

macroeconomic imbalances in the housing 
market  and  private  debt.  The  plan  focuses 
mainly  on  the  supply  side  of  the  market 
through  investment  subsidies  for  rental  and 
the 
student  housing  and 
objective  of  shortening  planning  periods  for 
zoning,  making  it  easier  to  obtain  building 
permits  and 
increase  predictability  and 
efficiency in the construction process. Although 
the plan does also include reforms that affect 
the  demand-side,  such  as  lowering  taxes  on 
deferred  capital  gains,  these  reforms  are 
expected  to  have  a  limited  impact  on  the 
dynamics  of  the  housing  market  and  private 
debt levels. 

teacher  shortages).  A  strong  and 
and 
competitive  labour  force  and  a  sufficient 
supply of skilled personnel in these areas lays 
the 
technological 
advances  and  is  therefore  fundamental  to 
ensuring productivity growth in the long run. 

foundation 

future 

for 

The  RRP  also 
includes  measures  to 
increase  the  accessibility,  capacity  and 
resilience  of  the  health  and  long-term 
care system. The strengthening of healthcare 
resilience  is  embedded  in  a  broad  plan  to 
upgrade  the  Swedish  health  care  system 
through training care providers for the elderly,   
a greater number of study places in vocational 
education  and  training  focused  on  health  and 
social care, and the introduction of a protected 
title  for  assistant  nurses 
this 
profession  more  attractive  for  job  seekers. 
These  measures  are  expected  to  address 
structural  weaknesses 
that  have  been 
highlighted  by  the  COVID-19  pandemic,  such 
as  shortages  of  healthcare  workers  and 
geographical  imbalances  in  the  distribution  of 
health care. 

to  make 

The RRP is expected to reduce the risk of 
money laundering in the financial system. 
The  plan  includes  a  measure  to  create  a 
database  of  holders  of  accounts  and  safe 
deposit boxes of financial undertakings, which 
can  be  checked  directly  by  the  competent 
authorities.  The 
information  that  financial 
undertakings  are  obliged  to  make  in  the 
system  will  improve  the  effectiveness  of  the 
system  for  combatting money  laundering  and 
terrorist  financing,  which  will  help  safeguard 
the legitimacy of the Swedish welfare system.  

The RRP only partially addresses existing 

Box 1:  Key deliverables under the recovery and resilience plan for 2022-2023 

  Entry into force of a law abolishing the reduction of energy tax on fuel in certain sectors. 

  At least 7 900 new study places created in vocational training and adult education. 

  Entry into force of a law providing greater employee protection and transition possibilities. 

  At least 18 400 buildings newly connected to broadband access. 

 

Implementation of a new bank account and safe deposit box system. 

  Entry into force of a law setting better standards for housing construction.  

7 

 
 
FURTHER PRIORITIES AHEAD 
FURTHER PRIORITIES AHEAD 

gaps 

Beyond  the  challenges  addressed  by  the 
RRP  Sweden  faces  additional  challenges 
not sufficiently covered by the plan. These 
relate  in  particular  to  challenges  emanating 
from high level of household debt and a poorly 
functioning  housing  market,  as  well  as 
educational 
labour  market 
integration,  and  reducing  energy  dependence 
(covered in the next two sections). Addressing 
these challenges will also help to make further 
sustainable  progress  towards  SDG  8  (Decent 
work  and  economic  growth),  particularly  as 
regards  stability  and  productivity,  but  also 
regarding  SDG  4  (Quality  education)  and  SDG 
7 (Affordable and clean energy). 

and 

Tackling deeper imbalances on the 
housing market 

Sweden faces macroeconomic imbalances 
in  the  form  of  high  levels  of  household 
debt  associated  with  elevated  house 
prices (1). Lending to households grew by 7 % 
per year on average in nominal terms over the 
past  two  decades.  Household  debt  is  likely  to 
continue increasing both in nominal terms and 
as a proportion of disposable income and GDP. 
After  the  correction  and  stabilisation  over 
2017-2019,  house  prices  increased  in  2021, 
appearing  significantly  overvalued  (see  Graph 
3.1).  These  imbalances  expose  Sweden  to  a 
risk  of  diverting  investments  from  productive 
and  innovative  assets  and  potential  adverse 
shocks  and  a  possible  disorderly  correction 
harming the economy and the banking sector, 
and  possible  spillover  effects  to  countries 
where Swedish banks have a strong presence. 

Graph 3.1: House price overvaluation gap 

Source: European Commission 

housing 

House  price  growth  accelerated  during 
construction 
2021,  while 
continued apace. House prices grew by 11% 
year-on-year  nominally  in  the  fourth  quarter 
of  2021.  Corrected  for  the  general  rise in  the 
price  level,  house  prices  stood  10%  higher  at 
the  end  of  2021  in  comparison  with  the 
previous  high  in  2017.  Investment  in  housing 
has  recovered  from  the  slump  during  and 
following  the  global  financial  and  economic 
crisis.  Construction  permits  were  handed  out 
between 2015 and 2021 at almost double the 
rate  of  2009–2014.  However,  even  at  this 
higher  rate,  the  supply  of  new  housing  is  still 
falling short of the current needs (2). 

property 

The treatment of housing taxation puts a 
dent  in  fiscal  revenues.  Relatively  low 
recurrent 
the 
deductibility  of  30%  of  interest  payments  on 
income  taxes  (up  to  a  value  of  SEK  100 000 
and  21% 
tax 
expenditures.  The  tax  expenditures  associated 
with  interest  deductibility  alone  amounts  to 

thereafter)  are  sizeable 

taxation 

and 

(1)  See European Commission (2022), In-Depth Review for 

(2)  See Boverket (2021), “Building projections for 2021 and 

Sweden 

2022”, December 2021 

8 

-40-200204060800103050709111315171921% deviation of current priceModel-based valuations gapPrice to income vs. hist. avg.Price to rent vs. hist. avg.Overall valuation gap 
 
                                                 
   
                                                 
 
around  ½%  of  GDP,  subsidising  home 
ownership.  Alongside  low  amortisation  rates 
and  the 
low  rate  of  recurrent  property 
taxation,  mortgage  interest  deductibility  has 
been  an  important  factor  driving  up  house 
price growth and household debt. Higher debt, 
in  particular  for  first-time  buyers,  increases 
risks  of  negative  net  wealth.  It  could  also 
make  reforms  more  difficult  if  interest  rates 
increase substantially. 

rents.  Those  depending  more  on  public  
housing,  i.e.  those  with  lower  incomes,  face 
ever-tighter  gridlock  in  the  rental  market.  The 
proportion of social housing for rent out of the 
total  housing stock has declined  from 23% in 
2001 to 18% in 2018. 

Graph 3.2: Sweden national average: actual vs 
'attainable' house price change 

(MID)  and,  with 

The  tax  advantage  of  mortgage  interest 
it,  the 
deductibility 
foregone  revenues  of  the  government 
varies  with  the  interest  rate.  For  existing 
homeowners,  declining  mortgage 
interest 
rates  lower  their  mortgage  interest  payments 
and  the  amount  that  can  be  deducted  from 
taxes (3).  The  opposite  is  true  when  interest 
rates  rise.  However,  MID  always  relaxes  the 
budget  constraint  of  first-time  buyers,  which 
can  take  on  larger  loans  and  compete  for 
limited  housing  supply,  bidding-up  prices  and 
ultimately debt. This is also visible in the data: 
house prices have increased by more over the 
past  eight  years  than  the  net  positive  impact 
of ‘after-tax’ mortgage interest payments and 
other  factors  affecting  housing  affordability 
can  explain  (see  Graph  3.2).  Data  on  new 
mortgagors 
increased 
indebtedness of this group (4). With the recent 
interest  rate  increases  and  the  likelihood  of 
further,  the  impact  on  ‘after-tax’  interest 
payments  will  be  reduced  by  the  deductibility 
at  the  expense  of  higher  foregone  tax 
revenues and higher overall debt levels. 

suggest 

also 

The  poorly  functioning  rental  market 
hardly  is  an  alternative  to  purchasing 
property (5).  The  vacancy  rate  for  rental 
properties is  among  the  lowest  in the  EU  and 
when  compared  to  neighbouring  countries 
(0.6%  in  2019  vs  5.2%  in  Denmark  in  2018 
and  10.2%  in  Finland  in  2015).  The  rental 
market  is  characterised  by  long  queues  for 
tenants  seeking  properties  and  below-market 

(3)  Sweden’s mortgages are mostly with variable interest 

rates or interest rates fixed for a short period. 

(4)  Finansinspektionen (2022), The Swedish Mortgage 

Market 2022 

(5)  European Commission (2022), In-Depth Review of 

Sweden 2022 

9 

(1) The attainable price level indicates the development 
in maximum price households can pay as the indicated 
factors change. 
Source: European Commission 

Policy measures have still not sufficiently 
addressed  housing  debt  and  house  price 
imbalances.  Some  policy  action  has  been 
taken, like reducing capital gains tax, and other 
policy  actions  are  planned, 
in  particular 
measures to ease building restrictions, but the 
overall policy framework still incentivises debt 
into  house  price 
accumulation 
increases while the rental market has not been 
deregulated.  

feeding 

Labour market integration and 
education gaps 

In  Sweden,  demand  for  labour  is  tilted 
towards  skilled  labour.  Skilled  labour  is 
more  in  demand  than  in  some  other  Member 
States.  For  instance,  one  third  of  employees 
are categorised as professionals in Sweden (6), 

(6)  The category of professionals includes occupations 

whose main tasks require a high level of professional 
knowledge and experience in the fields of physical and 

-10-5051015202512131415161718192021pp contr. to annnual % changeTax&Ben contributionMortgage rate contributionIncome contribution"Attainable" price changeActual price change 
                                                 
  
                                                 
compared  to  one  fifth  of  employees  on 
average  in  the  EU.  In  the  information  and 
communication  technology  sector,  49%  of 
employers  report  a  shortage  of  staff  that 
affects their growth (7).  

(occupations  usually 

A  sizeable  group  of  workers  lacks  the 
skills  to  grasp  the  opportunities  the 
Swedish labour market offers. The flipside 
of the high demand for skilled labour is one of 
the  lowest  demand  for  low-skilled  workers 
among  EU  Member  States.  Only  5%  of 
employees  in  Sweden  work  in  ‘elementary 
occupations’ 
involving 
simple  and  routine  tasks,  often  requiring 
significant physical effort), which is about half 
the EU average (9%). In addition, a significant 
group  of  people,  such  as  people  with 
disabilities  and  women  born  outside  of 
Sweden, find it difficult to become and remain 
employed. The COVID-19 crisis has aggravated 
their  situation  and  the  number  of  long-term 
unemployed  has  risen (see  Annex  12).  Labour 
shortages linked to the transition to a climate-
neutral  economy  have  been  identified  in  the 
manufacturing  sector  in  particular  (see  Annex 
6). Tackling these challenges is key for Sweden 
to contribute to reaching the 2030 EU headline 
targets on employment and skills. 

Unemployment  is  highest  among  those 
with  low  levels  of education.  The disparity 
between  the  employment  rates  for 
low-, 
medium-,  and  high-skilled  workers  remains 
high.  Low-skilled  workers  face  far  greater 
uncertainty  in  the  labour  market  than  more 
skilled  workers.  And  within  the  low-skilled 
group,  those  born  outside  the  EU  face  far 
greater difficulties in finding employment than 
those born in the EU. At the same time, labour 
participation for the non-EU  born labour force 
is high in comparison with the EU average.  

Higher  educational  attainment  improves 
the  chances  of  finding  employment. 
People born in Sweden have, overall, increased 

life sciences, or social sciences and humanities. The 
main tasks consist of increasing the existing stock of 
knowledge, applying scientific and artistic concepts and 
theories to the solution of problems, and teaching about 
these in a systematic manner or any combination of 
these activities.  

(7)  See e.g. Arbetsförmedlingen, 2021. 

their  educational  attainment  level  between 
2011  and  2021  and,  thereby  improved  their 
chances  on  the  labour  market.  People  born  in 
the rest of the EU who work in Sweden tend to 
be highly educated as well but people working 
in  Sweden  who  were  born  outside  of  the  EU 
bring the average educational attainment level 
for workers born outside of Sweden below that 
of  Swedes  (see  Annex  13).  With  the  non-EU-
born  labour  force  growing  relatively  fast,  the 
proportion  of  people  with  lower  educational 
level has increased. By contrast, in the EU as a 
whole  the  proportion  of  people  with  lower 
educational  levels  decreased  between  2011 
and 2021 (Graph 3.3).  

Graph 3.3: Proportion of people born outside 
Sweden with low levels of education 

Source: European Commission 

A  high  number  of  pupils  from  diverse 
socio-economic  and  migrant  backgrounds 
do  not  manage  to  achieve  their  full 
learning  potential.  An  educational  gap 
between  students  born  in  Sweden  and  those 
who were not and a shortage of teachers are 
long  standing  challenges  (see  Annex  13). 
Despite  improved  results  in  the  latest  OECD 
Programme for International Skills Assessment 
(PISA),  the  performance  gap  between  pupils 
born in Sweden and those born elsewhere had 
increased  markedly  in  earlier  editions  and  is 
still  significant.  This  reflects  a  lack  of  equal 
opportunities  in  the  schooling  system  and  is 
especially challenging as the number of pupils 
with  a  migrant  background  nearly  doubled 
between  2009  (11.7%  of  total  number  of 

10 

051015202530354045EU-27SE20112021 
                                                                        
   
pupils)  and  2018  (20.5%  of  total).  These 
pupils’  chances  came  under  further  pressure 
with  distance  learning  and  limited  personal 
interactions during the pandemic. 

the 

tools  and 

Policy  actions  beyond  those  in  the  RRP 
could  further 
labour  market 
improve 
integration  and  reduce  educational  gaps. 
There  is  room  to  improve  the  set-up  and 
governance  of  the  education  system, 
its 
evaluation 
the  availability  of 
qualified  teachers  to  promote  the  quality  and 
equity  on  both  the  formal  and  non-formal 
sides  of  the  educational  system.  One  such 
action  could  be  to  offer  more  education  and 
training  for  specific  groups  with  low  levels  of 
education.  Reducing  inequalities  in  general 
education  and 
educational 
raising 
outcomes  for  pupils  born  outside  of  Sweden 
would  improve  their  chances  on  the  labour 
the  existing 
market  and  help 
employment  gap.  For  people  beyond  school 
age, incentives to increase skills can be put in 
place  by  adapting  resources  and  methods  to 
the  needs  of  disadvantaged  groups  and  are 
best supported by active labour market policy 
and financial incentives through social benefits 
and increased net wage levels (see Annex 18). 
These incentives could be specifically aimed at 
the  most  disadvantaged  groups  through,  for 
instance, earned income tax credits. Over time, 
a  range  of  such  policy  actions  could  help  the 
distribution 
among 
human 
newcomers  to  better  mirror  those  in  the 
broader  population, 
job 
chances and benefiting the wider economy. 

increasing 

reduce 

capital 

their 

of 

dependency on Russia is limited as well (20% 
of  refined  oil  imports  and  8%  of  crude  oil 
imports are from Russia) (8). Oil is mainly used 
in the transport sector and for re-export after 
refining.  Despite  Sweden’s  already  limited 
direct  exposure  to  Russian  fossil  fuels,  it  still 
stands to benefit from further decarbonisation 
efforts and reduced reliance on fossil fuels. In 
addition,  in  the  context  of  recent  geopolitical 
events,  Sweden  could  increase  its  security  of 
energy  supply  and  adaptability  to  regional 
variances 
interconnection 
advancing 
projects with neighbouring countries. 

by 

Graph 3.4: Energy mix (% of gross inland 
consumption in 2020) 

Source: European Commission 

Reducing further the dependence 
on fossil fuels 

In  line  with  the  overall  EU  aim,  also 
Sweden  needs  to  even  further  reduce 
dependence on Russian fossil fuels. Recent 
geopolitical  developments  have  brought  even 
greater  urgency  for  the  EU  to  ensure  the 
security of its energy supplies, in particular by 
phasing  out  its  dependency  on  Russian  fossil 
fuels. For its limited share of gas in the energy 
consumption  (3%),  the  dependency  on  Russia 
is limited (13% of imports). The share of oil in 
energy  consumption  is  higher  (18%)  but  the 

(8)  Eurostat (2020), share of Russian imports over total 

imports of natural gas, not included refined oil products 

11 

0%10%20%30%40%50%60%SolidsOilGasNuclearRenewablesandbiofuelsEU-27SE 
   
 
                                                 
Graph 3.5: Dependence on Russian fossil fuels 
(% of total imports in 2020) 

Source: European Commission 

Additional  renewable  energy  resources 
and  energy  efficiency  can  further  lower 
Sweden’s  use  of  fossil  fuels.  Sweden  has 
the  highest  proportion  of 
its  energy 
consumption provided by renewable sources in 
the  EU,  but  is  also  amongst  the  Member 
States  with  the  highest  energy  consumption 
per  capita.  Increasing  energy  efficiency  is  the 
first  objective  to  reduce  energy  consumption. 
Extended  permitting  procedures,  in  particular 
for  the  development  of  wind  energy,  is  a 
bottleneck  for  the  deployment  of  renewables. 
Shortening  the  time  it  takes  to  get  a  permit 
would  accelerate  additional  investments  in 
renewable  energy.  Transport  is  the  prime 
target  for  reducing  dependence  on  oil.  The 
transport  sector,  in  particular  road  transport, 
accounts for three quarters of energy demand 
for  oil  and  petroleum  products.  Consequently, 
increasing  energy  efficiency  and  reducing 
fossil  fuel  usage in  transport  will both  reduce 
energy  dependence  as  well  as  the  climate 
footprint of the Swedish economy.  

Sweden  has  an  ambitious  national 
climate  strategy.  Sweden  aims  to  reach 
100%  renewable  energy  generation  by  2040 
and  net  zero  carbon  emissions  by  2045.  To 
reach this goal  efforts need  to be stepped up 
(see  Annex  5) 
to 
including 
decarbonise  industry  and  the  transport  sector 
as well as raising the effective price on carbon 
emissions.  Sweden's  high  carbon  price 
is 
applied to a limited share of carbon emissions. 

investments 

12 

As a consequence, its effective carbon price is 
comparatively low (9). While the currently high 
energy  prices  might  entice  some  energy 
consumers  to  change  their  behaviour  a  more 
structural  approach  would  be  to  broaden  the 
tax  base  of  the  carbon  tax,  increasing  energy 
taxes  and  reducing  fossil  fuel  subsidies.  In 
addition,  scaling  up  production  of  renewable 
energy  will  allow  other  sectors  to  follow  the 
example  of  the  paper  and  pulp  industry, 
representing  40%  of  Sweden’s  energy 
consumption in industry and 80% of industry’s 
consumption  of  bioenergy,  to  move  towards 
renewable energy usage. Recently, the Climate 
Policy  Council  of  Sweden  has  also  found  that 
further  strengthening  of  policies  is  needed  to 
achieve  Sweden’s  high  ambition  of  becoming 
carbon neutral by 2045 (10). 

Constraints on the capacity of the power 
Increased 
grid  hinder  electrification. 
electrification  will  necessitate  expanded  grid 
capacity. Sweden’s electricity consumption has 
been  relatively  constant  since  the  1980s  at 
140 TWh (maximum of 150 TWh in 2001). Its 
grid was expanded in 1980s to include nuclear 
power  but  now  has  to  adapt  to  both  new 
sources  of  energy,  in  different  locations,  and 
higher  demand  through  the  electrification  of 
industry  and  transport (11).  Current  capacity 
constraints  of  the  power  grid  spill  over  not 
only  into  increased  costs  for  households, 
business and industry, but there are signs that 
a lack of guaranteed capacity hinders even the 
establishment  of  energy-intensive  activities. 
Moreover,  shortage  of  supply  in  the  south 
cannot be alleviated by transmission from the 
north,  where  power  capacity  is  higher  thanks 
to  hydroelectric  power,  since  transmission 
capacity is insufficient.  

(9)  OECD (2021), “Effective Carbon Rates 2021 – Pricing 
Carbon Emissions through Taxes and Emissions 
Trading”. 

(10)  Swedish Climate Policy Council, “Report of the Swedish 

Policy Council 2022”, 16 March 2022. 

(11)  For instance, The Royal Swedish Academy of 

Engineering Sciences estimated in 2016 that power grid 
capacity would need to be between 140 and 180 TWh 
by 2030; In January 2020, Swedenergy estimated a 
capacity need of 190TWh in its “Roadmap Electricity for 
a fossil-free society”. 

0%5%10%15%20%25%30%35%40%45%50%GasCrude oilRefined oilCoalEU-27SE 
   
 
                                                 
KEY FINDINGS 
KEY FINDINGS 

Sweden’s  recovery  and  resilience  plan 
includes measures to address a series of 
its structural challenges through: 

  Increasing 

investment 
the 
and 
of 
decarbonisation 
promoting  local  and  regional  initiatives  to 
reduce GHG emissions. 

in 
industries 

  Improving  the  availability  of  broadband 
connectivity and the development of a joint 
digital 
public 
administration.  

infrastructure 

for 

  Alleviating  limitations  in  the  accessibility, 
capacity  and  resilience  of  the  health  and 
long-term care system. 

  Improving  the  effectiveness  of  system  for 
combatting  money  laundering  and terrorist 
financing. 

Beyond  the  reforms  and  investments  in 
the plan, Sweden would benefit from: 

  Alleviating  macro-economic 

imbalances 
emanating  from  the  housing  market  and 
household  debt,  which  are  compounded  by 
bottlenecks in building and rental regulation 
and fiscal incentives. 

  Reducing the persistent education gaps for 
providing 
groups 
disadvantaged 
targeted  active  labour  market  policies  and 
re-  and  up-skilling  to  strengthen  the 
integration  of  these  groups  on  the  labour 
market. 

and 

  Further  reducing  the  overall  reliance  on 
fossil  fuels  by  increasing  investment  in 
renewables  and  electrification,  addressing 
infrastructure  bottlenecks,  within  Sweden 
and 
countries, 
simplifying permitting procedures, boosting 
energy  efficiency  and  lowering  fossil  fuel 
consumption in transport. 

neighbouring 

with 

13 

 
 
 
ANNEXES 

 
 
 
LIST OF ANNEXES 

Cross-cutting progress indicators 

Annex 1: Sustainable Development Goals 

Annex 2: Recovery and Resilience Plan – implementation 

Annex 3: Other EU instruments for recovery and growth 

Annex 4: Progress in the implementation of country-specific recommendations 

Environmental sustainability 

Annex 5: Green Deal 

Annex 6: Employment and social impact of the green transition 

Productivity 

Annex 7: Resource efficiency and productivity 

Annex 8: Digital transition 

Annex 9: Innovation 

Annex 10: Industry and single market 

Annex 11: Public administration 

Fairness 

Annex 12: Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

Annex 13: Education and skills 

Annex 14: Health and health systems 

Annex 15: Economic and social performance at regional level 

Macroeconomic stability 

Annex 16: Key financial sector developments 

Annex 17: Macroeconomic Imbalance Procedure assessment matrix 

Annex 18: Taxation 

Annex 19: Key economic and financial indicators 

Annex 20: Debt sustainability analysis 

LIST OF TABLES 

Table A2.1: 
Table A4.1: 
Table A5.1: 
Table A7.1: 
Table A8.1: 

Key elements of the Swedish RRP 
Summary table on 2019,2020 and 2021 CSRs 
Indicators underpinning progress on the European Green Deal from a macroeconomic perspective 
Selected resource efficiency indicators 
Key Digital Economy and Society Index indicators 

17 

21 

21 

23 

24 

26 

28 

28 

32 

34 

34 

36 

38 

40 

42 

44 

44 

46 

48 

50 

53 

53 

55 

58 

60 

61 

23 
27 
31 
35 
37 

 
 
 
Table A9.1: 
Table A10.1: 
Table A11.1: 
Table A13.1: 
Table A14.1: 
Table A15.1: 
Table A16.1: 
Table A17.1: 
Table A18.1: 
Table A19.1: 
Table A20.1: 
Table A20.2: 

Key research, development and innovation indicators 
Key Single Market and Industry indicators 
Public administration indicators – Sweden 
EU-level targets and other contextual indicators under the European Education Area strategic framework 
Key health indicators 
Selected indicators at regional level – Sweden 
Financial soundness indicators 
Assessment of Macroeconomic Imbalances matrix 
Taxation indicators 
Key economic and financial indicators 
Debt sustainability analysis for Sweden 
Heat map of fiscal sustainability risks for Sweden 

LIST OF GRAPHS 

Graph A1.1: 

Progress towards SDGs in Sweden in the last five years 

Graph A2.1: 

Share of RRF funds contributing to each policy pillar 

Graph A3.1: 

2014-2020 European Structural and Investment Funds – total budget by fund 

Graph A3.2: 

Cohesion policy contribution to the SDGs 

Graph A4.1: 

Sweden’s progress on the 2019-2020 CSRs (2022 European Semester cycle) 

Graph A5.1: 

Fiscal aspects of the green transition – taxation and government expenditure on environmental protection 

Graph A5.2: 

Thematic – Energy  Share in energy mix (solids, oil, gas, nuclear, renewables) 

Graph A5.3: 

Thematic – Biodiversity Terrestrial protected areas and organic farming 

Graph A5.4: 

Thematic – Mobility Share of zero emission vehicles 

Graph A6.1: 

Fair green transition challenges 

Graph A6.2: 

Energy poverty by income decile 

Graph A7.1: 

Economic importance and expansion of the circular economy – employment and value added in the circular economy 

sectors 

Graph A11.1: 

Performance on evidence-based policy making indicators 

Graph A13.1: 

Gap in reading performance between native students and students with migrant background 

Graph A14.1: 

Life expectancy at birth, years 

Graph A14.2: 

Projected increase in public expenditure on health care over 2019-2070 (reference scenario) 

Graph A15.1: 

Changes to labour productivity across Swedish regions 

Graph A15.2: 

CO2 emissions from fossil fuels per head, 2018 in Sweden 

Graph A15.3: 

Regional performance groups, 2021 in Sweden 

Graph A15.4: 

Territories most affected by the climate transition in Sweden 

Graph A18.1: 

Tax wedge indicators 2021 

39 
41 
43 
47 
49 
52 
54 
56 
59 
60 
61 
62 

22 

23 

24 

25 

26 

28 

29 

29 

30 

33 

33 

34 

42 

46 

48 

48 

50 

51 

51 

51 

58 

18 

 
 
 
 
CROSS-CUTTING PROGRESS INDICATORS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 

This  Annex  assesses  Sweden’s  progress  on 
the  Sustainable  Development  Goals  (SDGs) 
along  the  four  dimensions  of  competitive 
sustainability.  The  17  SDGs  and  their  related 
indicators  provide  a  policy  framework  under  the 
UN’s  2030  Agenda  for  Sustainable  Development. 
The  aim  is  to  end  all  forms  of  poverty,  fight 
inequalities  and  tackle  climate  change,  while 
ensuring that no one is left behind. The EU and its 
Member  States  are  committed  to  this  historic 
global  framework  agreement  and  to  playing  an 
active  role  in  maximising  progress  on  the  SDGs. 
The graph below is based on the EU SDG indicator 
set  developed  to  monitor  progress  on  SDGs  in  an 
EU context. 

SDG 

related 

indicators 

Sweden  performs  very  well  or  well  on 
several 
to 
environmental  sustainability  (SDG  2,  7,  6,  9, 
11,  13,  15)  and  is  improving  on  others  (SDG 
12).  On  climate  action  (SDG  13),  the  amount  of 
net greenhouse gas emissions has decreased from 
2.2  tonnes  per  capita  in  2015  to  1.2  tonnes  in 
2020,  which  is  well  below  the  EU  average  (7 
tonnes  in  2020).  The  rate  of  road  traffic  deaths 
has also decreased from 2.6 per 100 000 persons 
in 2015 to 2.0 in 2020, which means Sweden now 
has  the  lowest  rate in  the  EU  (EU  average:  4.4  in 
2020)  (SDG  11).  Regarding  waste  generation  and 
‘circular  material  use  rate’ 
management,  the 
slightly  improved,  from  6.7%  in  2015  to  7.1%  in 
2020,  although  it  is  well  below  the  EU  average 
(12.8%)  (SDG  12).  Measures  in  the  RRP  aim  to 
accelerate the green transition in carbon-intensive 
sectors,  such  as  transport  and  industry,  while 
ensuring competitiveness of the Swedish economy.  

Sweden generally performs very well or well 
on  most  SDG 
indicators  assessing  the 
fairness of society and economy (SDG 1, 2, 3, 
4,  5,  8,  10).  Sweden  has  historically  performed 
very  well  on  economic  growth  and  employment 
(SDG  8).  With  an  employment  rate  of  80.7%  in 
2021, Sweden has one of the highest rates in the 
EU  (EU  average:  73.1%  in  2021). (12)  Sweden  is 
also among the Member States who perform best 
on ‘Good health and well-being’ (SDG 3), although 
its  performance  has  not  improved  recently  on 
‘Reduced  inequalities’  (SDG  10).  The  gap  between 

(12)  See ‘Annex 12 – Employment, skills and social policy 

challenges in light of the European Pillar of Social Rights’ for 
further information. 

19 

is  high 

participation 

in  2021,  which 

non-EU citizens and Swedish nationals in terms of 
employment  rates  has  decreased  from  30.1%  in 
2016  to  29.5% 
in 
comparison  to  the  EU  average  (14.9%  in  2021). 
On  ‘Quality  education’  (SDG  4),  the  proportion  of 
adult 
increased 
in 
significantly  from  29.6%  in  2016  to  34.7%  in 
2021  and  Sweden  continues  to  have  the  highest 
rate  in  the  EU  (EU  average  in  2021:  10.8%). 
Measures in the Swedish RRP aim to increase the 
number  of  study  places,  and  to  provide  more 
training  opportunities,  with  a  focus  on  vocational 
training and adult education. 

education 

Sweden  performs  very  well  or  well  on  SDG 
indicators  related  to  productivity  (SDG  4,  8, 
9). 
  Notably,  Sweden  has  the  highest  R&D 
intensity, with 3.53% of GDP on R&D in 2020 (SDG 
9).  In  Sweden,  the percentage  of  households  with 
very  high  capacity  network  coverage  in  2021 
(83%)  is  well  above  the  EU  average  (70%), 
representing  significant  progress  on  this  indicator 
since 2015 (60.8% in 2016) (SDG 9). Compared to 
the EU average (54%), Sweden performs relatively 
well on digital skills with 67% of adults having at 
least basic digital skills in 2021 (SDG 4). The RRP 
supports digital skills and the consequent increase 
in  human  capital  with  measures  to  increase  the 
number  of  study  places  in  higher  vocational 
education  and 
resources  for 
the  necessary 
universities and other higher education institutions. 

Sweden  performs  very  well  or  well  on  SDG 
indicators related to macroeconomic stability 
(8, 16). Sweden performs very well on SDG 8 and 
notably increased its proportion of GDP dedicated 
to  investment    from  23.8%  in  2015  to  24.8%  in 
2020  (EU  average:  22.3%  in  2020).  Sweden 
achieves  good  scores  on  indicators  measuring 
‘Peace,  justice,  and  strong  institutions’  (SDG  16), 
although  the  overall  indicator  showed  the  largest 
decline of all SDG indicators with indicators related 
to  ‘peace  and  personal  security’  and  ‘access  to 
justice’  having  declined.  For  example, 
the 
percentage  of  the  population  reporting  crime, 
violence  or  vandalism  has  increased  from  10.9% 
in  2015  to  13.8%  in  2020  and,  in  contrast  to 
2015, is now above the European average (11% in 
2019)  (SDG  16).  At  the  same  time,  the  Swedish 
people’s  trust  in  institutions  is  clear  with  64% 
having  confidence  in  the  EU  Parliament  in  2021 
(EU:  50%  in  2021).  The  RRP  helps  preserve  the 
sustainability of the Swedish economic model and 

 
 
                                                 
 
 
Graph A1.1: Progress towards SDGs in Sweden in the last five years 

For detailed datasets on the various SDGs see the annual ESTAT report ‘Sustainable development in the European Union’, 
https://ec.europa.eu/eurostat/web/products-statistical-books/-/KS-03-21-096; Extensive country specific data on the short-term 
progress of Member States can be found here: Key findings - Sustainable development indicators - Eurostat (europa.eu). 
Source: Eurostat, latest update of 28 April 2022. Data mainly refer to 2015-2020 and 2016-2021. 

thus  macroeconomic  stability  as  a  whole  through 
reforms  to  tackle  demographic  challenges.  In 
particular,  these  reforms  cover  the  pension  age 
limit and social security and tax systems. 

20 

 
   
ANNEX 2: RECOVERY AND RESILIENCE PLAN – IMPLEMENTATION 
ANNEX 2: RECOVERY AND RESILIENCE PLAN – IMPLEMENTATION 

The  Recovery  and  Resilience  Facility  (RRF)  is 
the  centrepiece  of  the  EU’s  efforts  to 
support  its  recovery  from  the  COVID-19 
pandemic,  fast  forward  the  twin  transition 
and  strengthen  resilience  against  future 
shocks.  Sweden  submitted 
its  recovery  and 
resilience  plan  (RRP)  on  28  May  2021.  The 
Commission’s  positive  assessment  on  29  March 
2022 and the Council’s approval on 4 May  paved 
the  way  for  disbursing  EUR  3.3  billion  in  grants 
under  the  RRF  over  the  period  2022-2026.  Table 
A2.1  sets  out  the  key  elements  of  the  Swedish 
RRP. 

The  share  of  funds  contributing  to  each  of  the 
RRF’s  six  policy  pillars  is  outlined  in  the  graph 
below. 

(1) See Pfeiffer P., Varga J. and in ’t Veld J. (2021), 
“Quantifying Spillovers of NGEU investment”, European 
Economy Discussion Papers, No. 144 and Afman et al. (2021), 
“An overview of the economics of the Recovery and Resilience 
Facility”, Quarterly Report on the Euro Area (QREA), Vol. 20, 
No. 3 pp. 7-16. 
Source: European Commission 2022 

Sweden’s  progress  in  implementing  its  plan 
is  published  in  the  recovery  and  resilience 
scoreboard.  The  scoreboard  also  gives  a 
transparent overview of progress on implementing 
the RRF as a whole. 

Table A2.1:  Key elements of the Swedish RRP 

Graph A2.1: Share of RRF funds contributing to each policy pillar 

(1) Each measure contributes towards two policy areas of the six pillars, therefore the total contribution to all pillars displayed on 
this chart amounts to 200% of the estimated cost of the Sweden's RRP approved in 2022. The bottom part represents the 
amount for the primary pillar, the top part the amount for the secondary pillar. 
Source: RRF Scoreboard https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/country_overview.html 

21 

Total allocation EUR 3.3 billion in grants (0.7% of 2019 GDP)Investments and Reforms 12 investments and 15 reforms Total number of Milestones and Targets56Estimated macroeconomic impact (1) Raise GDP by 0.2%-0.3% by 2026 (0.1% in spillover effects)First instalment Sweden did not yet submit a first payment request0%10%20%30%40%50%60%70%Green transitionDigitaltransformationSmart,sustainable andinclusive growthSocial andterritorialcohesionHealth, andeconomic,social andinstitutionalresiliencePolicies for thenext generation 
 
 
 
 
 
 
   
 
 
 
   
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

be  spent  by  the  end  of  2023 (17).  Among  the  11 
objectives  the  most  relevant  for  cohesion  policy 
funding  in  Sweden  are  research  and  innovation, 
competitiveness  of  SMEs,  low-carbon  economy, 
quality employment, training and lifelong learning, 
social  inclusion.  By  the  end  of  2020,  cohesion 
policy 
supported  43400 
had 
enterprises,  95000  migrants  or  people  from 
migrant 
long-term 
unemployed  and  more  than  40000  people  with 
disabilities.  

backgrounds, 

investments 

33000 

Graph A3.1: 2014-2020 European Structural and 
Investment Funds – total budget by fund 

(1) EUR billion in current prices, % of total 
(2) The data for the EAFRD and REACT-EU refer to the period 
2014-2022. 
Source: European Commission, Cohesion Open Data 

are 

funds 

policy 

Cohesion 
already 
substantially contributing to the Sustainable 
Development  Goals 
In 
Sweden, Cohesion policy funds are supporting 8 of 
the  17  SDGs  with  up  to  95%  of  the  expenditure 
contributing to meeting the goals.  

(SDGs)  objectives. 

The EU’s budget of more than EUR 1.2 trillion 
for  2021-2027  is  the  investment  lever  to 
help  implement  EU  priorities.  Underpinned  by 
an  additional  amount  of  about  EUR  800  billion 
largest 
through  NextGenerationEU  and 
instrument, the Recovery and Resilience Facility, it 
represents  significant  firepower  to  support  the 
recovery and sustainable growth. 

its 

support 

Sweden’s 

In  2021-2027,  EU  cohesion  policy  funds (13) 
will 
long-term 
development  objectives  by  investing  EUR 
2.08 billion (14). This amount includes EUR 155.7 
million  from  the  Just  Transition  Fund  directed  to 
alleviate the socio-economic impacts of the green 
transition  in  the  most  vulnerable  regions.  The 
2021-2027  cohesion  policy  funds  partnership 
agreements and programmes are designed taking 
into account the 2019-2020 CSRs and investment 
guidance  provided  within  the  context  of  the 
European  Semester,  ensuring  synergies  and 
complementarities  with  other  EU  funding. 
In 
addition,  Sweden  will  benefit  from  EUR  4.5 billion 
support for the 2023-27 period from the Common 
social, 
Agricultural 
environmental,  and  economic  sustainability  and 
innovation 
rural  areas, 
contributing  to  the  European  Green  Deal,  and 
ensuring long-term food security. 

in  agriculture  and 

Policy,  which 

supports 

In  2014-2020,  the  European  Structural  and 
Investment  Funds  (ESIF)  for  Sweden  are  set 
to  invest  EUR  4.54  billion (15)  from  the  EU 
budget.  Total  investment  including  national 
financing amounts to EUR 8.74 billion (Graph 
A3.1),  representing  around  0.27%  of  GDP  for 
2014-2020  and  5.55%  of  public 
sector 
investment (16). By 31 December 2021, 91% of the 
total  was  allocated  to  specific  projects  and  65% 
was reported as spent, leaving EUR 3.07 billion to 

(13)  European Regional Development Fund (ERDF), European 

Social Fund+ (ESF+), Cohesion Fund (CF), Just Transition Fund 
(JTF), Interreg. 

(14) Current prices, source: Cohesion Open Data  

(15)  ESIF includes cohesion policy funds (ERDF, ESF+, CF, Interreg) 
and European Agricultural Fund for Rural Development 
(EAFRD) and European Maritime and Fisheries Fund (EMFF). 
According to the ‘N+3 rule’, the funds committed for the 
years 2014-2020 must be spent by 2023 at latest (by 2025 
for EAFRD). Data source: Cohesion Open data cut-off date 
31.12.2021 for ERDF, ESF+, CF, Interreg; cut-off date 
31.12.2020 for EAFRD and EMFF 

(16)  Public investment is gross fixed capital formation plus 

(17)  Including REACT-EU. ESIF data on 

capital transfers, general government. 

https://cohesiondata.ec.europa.eu/countries/SE 

22 

4.8355%0.162%1.9522%1.6719%0.132%EAFRDEMFFERDFESFYEI 
 
                                                 
     
                                                 
 
Graph A3.2: Cohesion policy contribution to the 
SDGs 

to 

increase 

implementing growth-enhancing reforms, including 
implementing  its  RRP.  Since  2018,  Sweden  has 
received  assistance  through  11  technical  support 
projects.  Projects  delivered  in  2021  aimed,  for 
example, 
the  effectiveness  of 
employment  measures  and  the  accessibility  of 
employment services across Sweden for all target 
groups. The Commission also assisted Sweden for 
municipal 
construction  market 
stakeholders  on  planning  and  building  legislation. 
In  2022,  new  projects  will  begin  to  support  the 
transition  of  heavy  industries  located  in  the 
Norrbotten  and  Västerbotten  regions  towards 
carbon neutrality.  

staff 

and 

EUR billion in current prices 
Source: European Commission 

include 

from  other  EU 
Sweden  benefits  also 
the  Connecting 
programmes.  These 
Europe Facility, which allocated EU funding of EUR 
412.7  million  to  specific  projects  on  strategic 
transport  networks,  and  Horizon  2020,  which 
allocated EU funding of EUR 2 290 million. 

Europe), 

REACT-EU 

under 
of 

instrument 
Cohesion 

(Recovery 
The 
the 
and 
Assistance 
Territories 
under 
NextGenerationEU,  provided  EUR  366  million 
of additional funding in 2014-2020 cohesion 
policy  allocations  to  Sweden  to  ensure  a 
balanced  recovery,  support  convergence  and 
provide  vital  support  for  regions  following 
the  coronavirus  outbreak.  REACT-EU  provided 
support 
in  Sweden  for  unemployed  people, 
strengthened  national  labour  market  policies,  and 
promoted  the  sustainable  transition  of  Swedish 
businesses particularly affected by the pandemic – 
through  the  digital  transformation,  the  green 
transition, and the transition to a circular economy.  

The  Coronavirus  Response 
Investment 
Initiative (18)  provided  initial  EU  emergency 
support to  Sweden  in  relation  to  the  COVID-
19  pandemic. 
introduced  extraordinary 
flexibility enabling Sweden to re-allocate resources 
to support enterprises (20.5 million). This included 
support for the enterprises in the sectors that were 
most affected by the COVID-19 crisis, notably the 
tourism and hospitality sectors. 

It 

Commission 

tailor-made 
The 
expertise 
Support 
Instrument  to  support  Sweden  in  designing  and 

Technical 

provides 

the 

via 

(18)  Re-allocating ESIF resources according to Regulation (EU) 

2020/460 of the European Parliament and of the Council of 
30 March 2020, and Regulation (EU) 2020/558 of the 
European Parliament and of the Council of 23 April 2020. 

23 

0.000.010.010.020.200.310.450.741.57012SDG 13 Climate actionSDG 11 Sustainable citiesand communitiesSDG 3 Good health and wellbeingSDG 12 Responsibleconsumption and productionSDG 7 Affordable and cleanenergySDG 1 No povertySDG 4 Quality educationSDG 9 Industry, innovation,infrastructureSDG 8 Decent work andeconomic growth 
     
                                                 
 
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 
RECOMMENDATIONS 

Graph A4.1: Sweden’s progress on the 2019-2020 
CSRs (2022 European Semester cycle) 

The  Commission  assessed  the  2019-2021 
country-specific  recommendations  (CSRs) (19) 
addressed  to  Sweden  in  the  context  of  the 
European  Semester.  The  assessment  takes  into 
account  the  policy  action  taken  by  Sweden  to 
date (20),  as  well  as  the  commitments  in  the 
Recovery  and  Resilience  Plan  (RRP) (21).  At  this 
early  stage  of  the  RRP  implementation,  overall 
76%  of  the  CSRs  focusing  on  structural  issues  in 
2019  and  2020  have  recorded  at  least  “some 
progress”,  while  24%  recorded  “limited”  or  “no 
Considerable 
progress” 
additional  progress  in  addressing  structural  CSRs 
is  expected  in  the  years  to  come  with  the  further 
implementation of the RRP.  

(see  Graph  A4.1). 

Source: European Commission 

(19)  2021 CSRs: https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=CELEX%3A32021H0729%2828%29&qi
d=1627675454457  
2020 CSRs: EUR-Lex - 32020H0826(27) - EN - EUR-Lex 
(europa.eu) 
2019 CSRs: EUR-Lex - 32021H0729(28) - EN - EUR-Lex 
(europa.eu) 

(20)  Incl. policy action reported in the National Reform 

Programme, as well as in the RRF reporting (bi-annual 
reporting on the progress with implementation of milestones 
and targets and resulting from the payment request 
assessment). 

(21)  Member States were asked to effectively address all or a 

significant subset of the relevant country-specific 
recommendations issued by the Council in 2019 and 2020 in 
their RRPs. The CSR assessment presented here takes into 
account the degree of implementation of the measures 
included in the RRP and of those done outside of the RRP at 
the time of assessment.  Measures foreseen in the annex of 
the adopted Council Implementing Decision on the approval 
of the assessment of the RRP which are not yet adopted nor 
implemented but considered as credibly announced, in line 
with the CSR assessment methodology, warrant “limited 
progress”. Once implemented, these measures can lead to 
“some/substantial progress” or “full implementation”, 
depending on their relevance. 

24 

No Progress6%Limited Progress18%Some Progress47%Substantial Progress23%Full Implementation6% 
 
 
                                                 
 
   
 
 
 
Table A4.1:  Summary table on 2019,2020 and 2021 CSRs 

* See footnote 21  
Source:  European Commission 

25 

SwedenAssessment in May 2022*RRP coverage of CSRs until 20262019 CSR1Limited ProgressAddress risks related to high household debt by gradually reducing the tax deductibility of mortgage interest payments or increasing recurrent property taxes.No progressStimulateinvestmentinresidentialconstructionwhereshortagesaremostpressing, in particular by removing structural obstacles to construction. Limited ProgressRelevant RRP measures planned as of 2020, 2021, 2022 and 2023 Improve the efficiency of the housing market, including by introducing more flexibility in rental prices and revising the design of the capital gains tax.Limited Progress2019 CSR 2Some ProgressFocus investment related economic policy on education and skillsSome ProgressRelevant RRP measures planned as of 2021, 2022, 2023 and 2024, maintaining investment in sustainable transport to upgrade the different transport modes, in particular railwaysSubstantial ProgressRelevant RRP measures planned as of 2021, 2022, 2023 and 2024, and research and innovation, taking into account regional disparities.Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023 and 20242019 CSR 3Some ProgressEnsure effective supervision and the enforcement of the anti-money laundering framework.Some ProgressRelevant RRP measures planned as of 2020, 2021, 2022 and 2023 2020 CSR1Substantial ProgressInlinewiththegeneralescapeclause,takeallnecessarymeasurestoeffectivelyaddressthepandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuringdebtsustainability, while enhancing investment.Not relevant anymoreNot applicableEnsuretheresilienceofthehealthsystem,includingthroughadequatesupplies of critical medical products, infrastructure and workforce.Substantial ProgressRelevant RRP measures planned as of 2021, 2022, 2023 and 20242020 CSR2Some ProgressFoster innovationRelevant RRP measures planned as of 2025and support education and skills development.Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023 and 2024Front-load mature public investment projects and Limited ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024 and 2025promote private investment to foster the economic recovery.Some ProgressFocusinvestmentonthegreenanddigitaltransition,inparticularoncleanand efficient production and use of energy,Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024 and 2025high-tech and innovative sectors, Some Progress5G networksFull Implementationand sustainable transport.Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024 and 20252020 CSR 3Substantial ProgressImprovetheeffectivenessofanti-moneylaunderingsupervisionandeffectively enforce the anti-money laundering framework.Substantial ProgressRelevant RRP measures planned as of 2020 and 20232021 CSR1Substantial ProgressIn2022,maintainasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationallyfinancedinvestment.Substantial ProgressNot applicableWheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainabilityinthemedium term.Full ImplementationNot applicableAtthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticularinvestmentsupporting the green and digital transition.Substantial ProgressNot applicableGiveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacy and sustainability of health and social protection systems for all.Substantial ProgressNot applicable 
 
 
  
 
ENVIRONMENTAL SUSTAINABILITY 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 5: GREEN DEAL 
ANNEX 5: GREEN DEAL 

intends 

The  European  Green  Deal 
to 
transform the  EU  into a  fair and prosperous 
society,  with  a  modern,  resource-efficient 
and competitive economy where there are no 
net  emissions  of  greenhouse  gases  in  2050 
and  where  economic  growth  is  decoupled 
from resource use. This Annex offers a snapshot 
of  the  most  significant  and  economically  relevant 
developments in Sweden in the respective building 
blocks  of 
is 
complemented by Annex 6 on the employment and 
social impact of the green transition and Annex 7 
for circular economy aspects of the Green Deal. 

the  European  Green  Deal. 

It 

the average for the EU. Fossil fuel subsidies have 
decreased in the past year. Budgetary exposure to 
climate  hazards  is  considered  low.  For  more 
indicators on taxation, see Annex 18. 

Graph A5.1: Fiscal aspects of the green transition 
– taxation and government expenditure on 
environmental protection 

Sweden  has  combined  sustained  economic 
growth  with  falling  greenhouse  gas  (GHG) 
emissions  over  a  long  period.  It  is  among  the 
EU Member States with the lowest GHG emissions 
per  capita.  Its  national  target  for  sectors  outside 
the  EU’s  emissions  trading  system  translates  into 
a  reduction  of  GHG  emissions  by  around  51%  in 
2030 compared to 2005 levels. This target is more 
ambitious  than  that  currently  required  by  EU 
legislation.  The  Swedish  Climate  Act,  adopted  in 
2017,  requires  Sweden to  reach  carbon  neutrality 
by 2045.  

Sweden  expects  to  meet  its  current  EU 
climate  targets,  but  will  need  to  take 
additional  policy  action  to  achieve  its  own 
objectives.  Industry and transport are considered 
priority  sectors  for  climate  mitigation  and  the 
green 
include 
transition.  Planned  measures 
in  steel 
decreasing  process-related  emissions 
industry and other key sectors, which are relatively 
expensive  to  reduce  since  the  technology  is  not 
readily  available  on  the  market  today.  Due  its 
large  forest  area,  Sweden  considers  forestry  an 
integral  part  of  its  climate  strategy  and  a  key 
contributor  to  the  economy,  providing  sustainable 
energy resources, paper and wood product. 

Source: Eurostat 

Few  countries  consume  more  energy  per 
capita  than  Sweden,  but  Swedish  GHG 
emissions  are  low  compared  with  those  of 
other  countries.  The  reason  for  Sweden’s  low 
emissions  rate  is  that  most  of  the  electricity 
supply  comes  from  hydropower  and  nuclear 
energy,  along  with  a  growing  contribution  from 
wind power. Almost 70% of electricity comes from 
renewable  sources  (data  for  2020).  Heating  is 
supplied  mainly  through  bioenergy-based  district 
heating and heat pumps. 

taxes 

is  below 

environmental 
have 
Sweden’s 
decreased 
in  the  past  5  years  while 
government  spending  on  environmental 
protection 
the  EU  average. 
Environmental  tax  revenues,  both  as  a  proportion 
of  total  tax  revenues  and  as  a  proportion  of  GDP 
are  slightly  below  the  EU  average,  with  energy 
taxes  largely  driving  environmental  taxation  The 
Swedish government spends a lower proportion of 
its  expenditure  on  environmental  protection  than 

26 

0.01.02.03.04.05.06.0Environmentaltaxes (% of GDP)Environmentaltaxes (% of totaltaxation)Governmentexpenditure onenvironmentalprotection (% oftotal expenditure)SE (2020)EU27 (2020) 
 
 
          
 
 
Graph A5.2: Thematic – Energy  
Share in energy mix (solids, oil, gas, nuclear, 
renewables) 

undisturbed forests with old growth characteristics 
are  most  at  risk.  This  indicates  that  the  existing 
forest ecosystems no longer meet their needs. 

Graph A5.3: Thematic – Biodiversity 
Terrestrial protected areas and organic farming 

(1) For terrestrial protected areas data for 2018, and data for 
the EU average (2016, 2017) is lacking. 
Source: EEA (terrestrial protected areas) and Eurostat 
(organic farming) 

In  terms  of  pollution,  air  quality  in  Sweden 
continues to give cause for concern. The latest 
available  annual  estimates  by  the  European 
Environment  Agency  suggests  about  2  800 
premature  deaths  (or  26  400  years  of  life  lost 
(YLL))  attributable  to  fine  particulate  matter 
concentrations and 220 premature deaths (2 200 
YLL)  as  a  result  of  ozone  concentration.  These 
projections do not comply with the 2030 onwards 
emission 
reduction  commitment  for  nitrogen 
oxides  or  the  2020-2029  and  2030  onwards 
emission  reduction  commitments  for  ammonia 
(NH3). 

(1) The share of renewables includes waste  
The energy mix is based on gross inland consumption, and 
excludes heat and electricity. The share of renewables 
includes biofuels and non-renewable waste 
Source: Eurostat 

In  terms  of  biodiversity  and  ecosystem 
health,  there  is  still  a  lot  of  room  for 
improvement.  With  14%  of  its  territory  classed 
as  protected  areas,  the  proportion  of  these  areas 
that  are  considered  to  be  in  a  good  conservation 
state  fell  to  23%  in  2018  compared  to  the  26% 
reported  in  2012.  The  proportion  of  protected 
species  considered  to  be  in  a  good  conservation 
state in 2018 has increased to 48% compared to 
the 46 % reported in 2012. However, conservation 
states  are  uneven  across  groups:  of  the  33 
assessments  of  16  EU  forest  habitat  types 
protected  under  the  EU  nature  directives,  only 
6.1% of the assessments (2 habitats in the alpine 
region)  are  in  a  favourable  conservation  state  in 
Sweden  while  the  rest  are  classed  as  being  in  an 
unfavourable  state.  The  proportion  of  habitats  in 
bad  or  poor  conservation  state  has  increased  to 
77% while the share of assessments for species in 
bad or poor conservation status has decreased to 
51%. The main pressures are agricultural, forestry, 
industrial and urban pollution and changes in land 
use. Close to 58% of the breeding species of birds 
showed  short-term  increases  or  stable  population 
trends (for wintering species this figure was close 
to  55  %).  Bird  species  that  are  dependent  on 
forests have are more likely to be in decline. This 
is  true  in  particular  of  breeding  species,  of  which 
in  a  bad  state.  Birds  that  require 
1/3  are 

27 

0102030405060708090100200520102015201820192020RenewablesNuclearGasOilSolid fossil fuels, peat and oil shale0510152025302016201720192020Terrestrial protected areas (% total area)Area under organic farming (% total utilised agricultural area)EU27 (terrestrial)EU27 (organic) 
          
     
Graph A5.4: Thematic – Mobility 
Share of zero emission vehicles 

(1) Zero emission vehicles include battery and fuel cell electric 
vehicles (BEV, FCEV) 
Source: European Alternative Fuels Observatory 

from 

Sweden  is one  of the  frontrunners  in  the  EU 
in terms of uptake of zero emission vehicles. 
However,  the  charging  infrastructure  appears  less 
developed  as  the  demand  per  charging  point  is 
very  high.  The  largest  proportion  of  Sweden's 
the 
greenhouse  gas  emissions  come 
transport  sector,  and  road  transport  in  particular, 
which  remains  reliant  on  oil.  The  national  goal  to 
aim  for  100%  renewable  electricity  by  2040,  to 
achieve  net  zero  emissions  of  greenhouse  gases 
by  2045,  and  the  target  to  cut  70%  of  transport 
emissions  by  2030  will  require  even  more 
investments  in  renewable  energy  in  general,  also 
in  the  transport  sector.  Further  streamlining  of 
permit  procedures  could  be  beneficial  in  this 
regard. 

28 

0.05.010.015.020.0201620172018201920202021% of new registrationsSEEU27 average 
          
Table A5.1:  Indicators underpinning progress on the European Green Deal from a macroeconomic 
perspective 

(1) The 2030 non-ETS GHG target is based on the Effort Sharing Regulation. The FF55 targets are based on the COM proposal to 
increase EU's climate ambition by 2030. Renewables and Energy Efficiency targets and national contributions under the 
Governance Regulation (Regulation (EU) 2018/1999).  (2) Distance to target is the gap between Member States’ 2030 target 
under the Effort Sharing Regulation and projected emissions, with existing measures (WEM) and with additional measures (WAM) 
respectively, as a percentage of 2005 base year emissions. (3) Percentage of total revenues from taxes and social contributions 
(excluding imputed social contributions). Revenues from the ETS are included in environmental tax revenues (in 2017 they 
amounted to 1.5% of total environmental tax revenues at the EU level). (4) Covers expenditure on gross fixed capital formation to 
be used for the production of environmental protection services (i.e. abatement and prevention of pollution) covering all sectors, 
i.e. government, industry and specialised providers. (5) The climate protection gap indicator is part of the European adaptation 
strategy (February 2021), and is defined as the share of non-insured economic losses caused by climate-related disasters. 
(6) Sulphur oxides (SO2 equivalent), Ammonia, Particulates < 10µm, Nitrogen oxides in total economy (divided by GDP). 
(7) Transportation and storage (NACE Section H). (8) Zero emission vehicles include battery electric vehicles (BEV) and fuel cell 
electric vehicles (FCEV). (9) European Commission Report (2019) 'Benchmarking smart metering deployment in the EU-28'. 
(10) European Commission (2021). Each year the DESI is re-calculated for all countries for previous years to reflect any possible 
change in the choice of indicators and corrections to the underlying data. Country scores and rankings may thus differ compared 
with previous publications. 
Source: Eurostat, JRC, European Commission, EEA, EAFO 

29 

TargetTarget2005201920202030WEMWAM2030WEMWAMNon-ETS GHG emission reduction target (1)MTCO2 eq; %; pp (2)43.2-27%-29%-40%-1-1-50%-11-11200520162017201820192020Share of energy from renewable sources in gross final consumption of energy (1)%40%53%53%54%56%60%65%Energy efficiency: primary energy consumption (1)Mtoe49.045.446.347.345.841.740.2Energy efficiency: final energy consumption (1)Mtoe33.232.332.131.931.530.929.7201520162017201820192020201820192020Environmental taxes (% of GDP)% of GDP2.22.22.12.12.12.02.42.42.2Environmental taxes (% of total taxation)% of taxation (3)5.055.034.804.764.794.735.995.895.57Government expenditure on environmental protection% of total exp.0.860.880.951.011.001.031.661.701.61Investment in environmental protection% of GDP (4) 0.390.420.420.49--0.420.380.41Fossil fuel subsidiesEUR2020bn3.023.343.013.072.28-56.8755.70-Climate protection gap (5)score 1-4Net GHG emissions1990 = 100757477767467797669GHG emissions intensity of the economykg/EUR'100.140.140.130.130.120.110.320.310.30Energy intensity of the economykgoe/EUR'100.110.110.110.110.110.100.120.110.11Final energy consumption (FEC)2015=100100.0101.4101.0100.499.297.3103.5102.994.6FEC in residential building sector2015=100100.0103.3103.9101.199.497.2101.9101.3101.3FEC in services building sector2015=100100.0104.899.2102.5100.199.6102.4100.194.4Smog-precursor emission intensity (to GDP) (4)tonne/EUR'10 (6)0.560.580.540.490.440.420.990.93-Years of life lost caused due to air pollution by PM2.5per 100.000 inh.290254234304258-863762-Years of life lost due to air pollution by NO2per 100.000 inh.102< 1< 1< 1-12099-Nitrate in ground watermg NO3/litre------21.720.7-Terrestrial protected areas% of total-10.613.8-14.114.1-25.725.7Marine protected areas% of total-15.3--15.5--10.7-Organic farming% of total utilised agricultural area17.118.319.220.320.420.38.08.59.100-0606-1212-18Net land takeper 10,000 km213.011.05.0201520162017201820192020201820192020GHG emissions intensity of transport (to GVA) (7)kg/EUR'100.520.520.450.400.380.290.890.870.83Share of zero emission vehicles (8)% in new registrations0.90.81.12.04.49.61.01.95.4Number of plug-in electric vehicles per charging point912101213168812Share of electrified railways%75.575.275.375.375.1-55.656.0-21.421.321.621.822.0-28.928.8-YearSEEUShare of smart meters in total metering points (9) - electricity% of total2018100.035.8Share of smart meters in total metering points (9) - gas% of total20180.013.1ICT used for environmental sustainability (10)%202173.465.9DigitalFiscal and financialindicators0.4 out of 4 (decrease from historical level of 1). This is a no risk category (4 being a high risk).ClimateEnergyPollutionBiodiversity2000-20062006-20122012-20184.02.61.7MobilityCongestion (average number of hours spent in road congestion per year by a representative commuting driver)Progress to policy targetsNational contribution to 2030 EU targetSWEDENEU'Fit for 55'DistanceDistance 
 
     
 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 

The  green  transition  not  only  encompasses 
environmental 
to 
improvements 
sustainability, but also includes a significant 
social dimension.  While measures in this regard 
include the opportunity for sustainable growth and 
job creation, it must also be ensured that no one is 
left  behind  and  all groups  in  society  benefit  from 
the  transition.  Sweden’s  green  transition  offers 
opportunities  as  the  country  benefits  from  a 
comparatively strong green economy with a strong 
potential  for  job  creation;  at  the  same  time,  the 
transitioning  sectors  are  sizeable  and 
lower-
income groups are more likely to face challenges. 

crucial 

several 

examples 

emissions.  Other 

Sweden’s  recovery  and  resilience  plan  (RRP) 
includes 
reforms  and 
investments  to  support  the  green  transition. 
The  green  measures  in  the  RRP  promote  a 
sustainable  and  inclusive  recovery  for  instance 
through  investments  to  decarbonise  the industrial 
sector and in local and regional projects to reduce 
GHG 
include 
investments  in  sustainable  transport  and  energy 
efficiency  of  apartment  buildings.  In  synergy  with 
the Recovery and Resilience Facility, the European 
Social  Fund  (ESF+)  will  help  unlock  the  potential 
for ‘green jobs’ in Sweden; and the Just Transition 
Fund (EUR 156 million) will help reskill and upskill 
those who have been impacted by the transition in 
two  Swedish  regions  (see  Annex  3).  Sweden’s 
national energy and climate plan from 16 January 
information  and 
2020  provides  only 
analysis  on  the  employment  impacts  of  the 
transition  to  a  climate-neutral  economy,  and 
makes no mention of the social and skills impact. 
Sweden does not report the number of households 
in  energy  poverty,  as  it  is  considered  to  be  an 
integrated part of its broader social policy. (22)  

limited 

The  economy  has  slightly  reduced  its carbon 
footprint  and  though  transforming  sectors 
remain sizeable, the green economy provides 
strong  potential  for 
job  creation.  The 
greenhouse  gas  (GHG)  emissions  intensity  of  the 
Swedish  economy  decreased  slightly  between 
2015  and  2020  (in  terms  of  gross  value  added) 
and stands at 43% below the EU average, with the 
average  carbon  footprint  per  worker  at  8.15 
tonnes  of  GHG  emissions  (EU  average  of  13.61 
tonnes) (see Figure 1). Metals have been identified 
as a transforming sector (23), with a risk of a direct 

(22)  SWD(2020) 926 final 

(23)  SWD(2021) 275 final. 

30 

negative impact on around 4 000 jobs and further 
impacts  on  subcontractors  and  the  regional 
economy.  Sweden’s  energy-intensive 
industry, 
including  the  steel  industry (24),  provides  jobs  for 
3% of the total employed workforce, for whom up- 
and  reskilling  could  be  particularly  important  (see 
Annex  15).  The  environmental  goods  and  services 
sector  provides  jobs  to  2.9%  of  the  employed 
population (EU average: 2.2%) (25). Wind and solar 
efficiency 
and 
energy 
improvements  can  create  more  green  jobs. (26). 
Labour  shortages  linked  to  the  transition  to  a 
climate-neutral  economy  have  been  identified  in 
the manufacturing sector (27). 

expansion 

energy 

As  for  the  social  dimension  of  the  green 
transition,  ensuring  access  to  essential 
transport  and  energy  services  is  overall 
minor  but  increasing  challenge  in  Sweden. 
Since  2010,  an  increasing  proportion  of  the 
population  in  rural  areas  is  at  risk  of  poverty 
(18.2%  vs  an  EU  average  of  18%) (28).  The 
proportion  of  the  population  unable  to  keep  their 
homes adequately warm more than doubled from 
1.2%  in  2015  to  2.7%  in  2020,  although  this 
remains  well  below  the  EU  average  (8.2%).  While 
lower-income  groups  are  most  affected,  middle-
income  groups  are  also  affected  (see  Figure  2). 
Consumption  patterns  vary  across  the  population: 
the  average  carbon  footprint  of  the  top  10%  of 
emitters  is  about  5.2  times  (compared  to  an  EU 
average  of  5.3  times)  higher  than  that  of  the 
bottom 50% of the population. 

Tax  systems  are  key  to  ensuring  a  fair 
transition  towards  climate  neutrality (29). 
Sweden’s revenues from total environmental taxes 

(24)  2020 European Semester: Overview of Investment Guidance 
on the Just Transition Fund 2021-2027 per Member State 
(Annex D). 

(25)  There is currently no common EU-wide definition of green 
jobs. The environmental goods and services sector (EGSS) 
accounts only report on an economic sector that generates 
environmental products, i.e. goods and services produced for 
environmental protection or resource management. 

(26)

https://publications.jrc.ec.europa.eu/repository/handle/J

RC126047. 

(27)  Eurofound (2021), Tackling labour shortages in EU Member 

States, Publications Office of the European Union, 
Luxembourg. 

(28)  Based on COM(2021) 568 final (Annex I) as a proxy for 

potential transport challenges in the context of the green 
transition (e.g. due to vulnerability to fuel prices). 

(29)  COM(2021) 801 final. 

 
 
                                                 
                                                 
 
 
Graph A6.2: Energy poverty by income decile 

decreased  from  2.15%  of  GDP  in  2015  to  2.05% 
in  2019,  and  remained  relatively  stable  in  2020 
(compared  to  an  EU  average  of  2.24%  in  2020). 
The  labour  tax  wedge  for  low-income  earners (30) 
decreased marginally from 39% in 2015 to 38.8% 
in  2019  (38.0%  in  2021),  compared  to  an  EU 
average  of  31.9%  in  2021  (see  Annex  18). 
accompanying 
Redistributive 
measures 
environmental 
potentially 
encourage  progressive  measures  and  have  a 
positive  impact  on  the  disposable  income  of 
households  in  the  bottom  20%  of  the  income 
distribution (31). 

taxation 

could 

Graph A6.1: Fair green transition challenges 

Source: Eurostat EU SILC survey 

Numbers are the normalised indicator performance relative to 
the EU27 average. 
(1) GHG tonnes per Euro of gross added value (MS/EU)average 
(2) Share of population in rural areas at risk of poverty 
(MS/EU) 
Source: Eurostat, World inequality database 

(30)  Tax wedge for a single earner at 50% of the national 
average wage (Tax and benefits database, European 
Commission/OECD). 

(31)  SWD(2021) 641 final PART 3/3. 

31 

0.000.200.400.600.801.00GHG GVA(MS/EU) (1)GHGtonnes perworker(MS/EU)Employment share inenergy-intensiveindustries(MS/EU)AROP rural(MS/EU) (2)Energypoverty(MS/EU)Carboninequality(MS/EU)SwedenEU 2020Sweden 20150%5%10%15%20%25%12345678910Unable to keep home adequately warm (per income decile)SwedenEuropean Union 
   
 
                                                 
     
PRODUCTIVITY 
PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 

Graph A7.1: Economic importance and expansion of 
the circular economy – employment and value 
added in the circular economy sectors 

Source: Eurostat 

transition 

Environmental  technology  is  important  for 
the  transition  to  a  circular  economy.  A 
successful 
to  a  circular  economy 
requires  social  and  technological  innovation  to 
reach  its  full  potential  when  implemented  across 
all  value  chains.  Therefore,  eco-innovation  is  an 
important enabling factor for the circular economy. 
New  product  design  approaches  and  business 
models  can  help  to  produce  systemic  circularity 
innovations,  creating  new  business  opportunities. 
In  2021,  Sweden  ranked  5th  on  the  2021  Eco-
Innovation  Index,  with  a  total  score  of  142, 
indicating  that  the  country  is  a  leader  in  eco-
innovation. Further work to help Sweden maintain 
its  leading  position  in  environmental  technology 
could include sustainable product design, resource 
efficient  production  processes,  digital  solutions, 
industrial symbiosis, remanufacturing in key value 
chains, 
unsustainable 
extraction  of  raw  materials,  and  new  circular 
business  models.  There  also  appears  to  be  scope 
to shift reusable and recyclable waste away from 
incineration, 
economic 
the  post-2020 
instruments, 
recycling  targets,  in  particular  for  plastics,  are 
met.  

including 
to  ensure 

through 
that 

alternatives 

and 

to 

while 

minimising 

The  efficient  use  of  resources  is  key  to 
ensuring  competitiveness  and open strategic 
autonomy, 
the 
environmental  impact.  The  green  transition 
presents  a  major  opportunity  for  European 
industry 
clean 
creating  markets 
technologies  and  products.  It  will  have  an  impact 
across  the  entire  value  chains  in  sectors  such  as 
energy and transport, construction and renovation 
and 
create 
jobs  across 
sustainable, 
Europe. 

food  and  electronics,  helping 
local  and  well-paid 

for 

by 

Sweden has made some progress on circular 
secondary  material  usage  over  the  past 
decade.  Sweden  managed  to reduce  its  gap  with 
the EU average but is still far behind the EU’s best 
performers.  The  circular 
(secondary)  use  of 
material in Sweden was 6.8% in 2016 and 7.1% in 
2020,  compared  to  the  EU  average  of  12.8%. 
There  is  room  for  improvement  in  this  area.  In 
January  2021,  the  country  has  adopted  a  new 
action plan to follow up on its 2020 strategy. The 
action  plan  sets  out  more  than  100  different 
activities along the entire lifecycle of products. 

is  below  the  EU 
Resource  productivity 
average.  Resource  productivity  expresses  how 
efficiently the economy uses material resources to 
produce  wealth.  Improving  resource  productivity 
can  help  to  minimise  negative  impacts  on  the 
environment  and  reduce  dependency  on  volatile 
raw  material  markets.  Resource  productivity  in 
Sweden is 1.47 purchasing power standards (PPS) 
generated  per  kg  of  material  consumed  in  2020, 
while the EU average is 2.23 PPS per kg. The latest 
figures  show  a  decrease  in  Sweden’s  resource 
productivity. 

Sweden’s  economic  growth  has  not  yet been 
decoupled  from  the  generation  of  waste. 
Total  waste  generation  remains  high  (13.628 
kg/capita in 2018, down from 14.272 kg/capita in 
2016),  above  the  EU  average  of  5.234  kg/capita 
annually. Sweden’s municipal waste recycling  rate 
is  around  38%,  below  the  EU  average  of  around 
48 %, and below the 2020 and 2025 EU targets of 
50%  and  55%  respectively.  Incineration  including 
energy  recovery  accounts  for  52%  and  remains 
the  dominant  for  of  waste  treatment  in  Sweden, 
while landfilling accounts for less than 1%. 

32 

1.58%1.56%1.58%1.49%0.90%0.88%0.88%0.88%1.72%1.73%1.75%1.71%0.94%0.94%0.96%0.97%0.0%0.2%0.4%0.6%0.8%1.0%1.2%1.4%1.6%1.8%2.0%2015201620172018Persons employed in the circular economy, SE (% of totalemployment)Value added at factor cost, SE (% of GDP )Persons employed in the circular economy, EU27 (% of totalemployment)Value added at factor cost, EU27 (% of GDP ) 
 
 
     
 
 
Table A7.1:  Selected resource efficiency indicators 

Source: Eurostat 

33 

SUB-POLICY AREA201520162017201820192020EU27 Latest year EU27CircularityResource Productivity (Purchasing power standard (PPS) per kilogram)1.51.51.51.51.41.52.22020Material Intensity (kg/EUR)0.70.70.70.70.70.70.42020Circular Material Use Rate (%)6.76.86.76.66.57.112.82020Material footprint (Tonnes/capita)22.823.722.623.624.2-14.62019Waste Waste generation (kg/capita, total waste)-14 272-13 628--5 2342018Landfilling (% of total waste treated)-39.3-41--38.52018Recycling rate (% of municipal waste)47.548.446.845.846.638.347.82020Hazardous waste (% of municipal waste)-1.7-2.1--4.32018CompetitivenessGross value added in environmental goods and services sector (% of GDP)3.33.33.43.43.5-2.32019Private investment in circular economy (% of GDP)0.10.10.10.1--0.12018 
 
        
 
or  recent  strategies  on  AI  and  the  provision  and 
use  of  data.  Sweden  usually  involves  academia 
and  the  private  sector  in  joint  partnerships  to 
ensure a rapid transfer of knowledge.  

Sweden  performs  well  on  digital  public 
services,  but  its  decentralised  model  of 
governance  leaves some  room  for  improving 
coordination.  The  country  scores  above  the  EU 
average  in  digital  public  services  for  people  and 
businesses, but interoperability and data exchange 
between  different  authorities  could  be  improved. 
is  the  task  of  the  Agency  for  Digital 
This 
Government (DIGG), which acts as a central hub in 
this area.  

ANNEX 8: DIGITAL TRANSITION 
ANNEX 8: DIGITAL TRANSITION 

The Digital Economy and Society Index (DESI) 
monitors EU Member States’ digital progress. 
The  areas  of  human  capital,  digital  connectivity, 
the 
technologies  by 
businesses  and  digital  public  services  reflect  the 
Digital Decade four cardinal points (32). This Annex 
describes Sweden’s DESI performance.  

integration  of  digital 

to 

the 

contribution 

digital 
Sweden's 
objectives  represents  20.5%  of  its  Recovery 
and  Resilience  Plan  allocation.  The  most 
prominent digital  investments support the roll out 
of  high-speed  broadband,  increasing  the  number 
of study places in higher education and vocational 
training  and  further  digitalisation  of  the  Swedish 
public administration.   

Sweden  is  one  of  the  top  performers  on  the 
human  capital  aspects  of  the  DESI.  The 
country  performs  above the  EU  average  for  basic 
and advanced digital skills. To ensure that there is 
no  shortage  of  skilled  digital  workers,  Sweden 
considers and focuses on digital skills as a central 
component of all relevant strategies and measures 
(both  higher-level  education  and  vocational 
training). 

Sweden  scores  high  on  connectivity.  The  very 
high  capacity  network  coverage  is  well  above  the 
EU  average  and  announced  in  its  broadband 
plan (33)  that  it  aims  to  cover  the  entire  country 
with  access  to  high-speed  connectivity,  mainly 
using fibre. In areas where the costs of using fibre 
are  prohibitive  (affecting  2%  of  the  population) 
mobile  technologies  are  being  assessed.  On  5G 
coverage  in  populated  areas,  Sweden  fell  during 
2021 considerably behind the EU average. 

Sweden  is  an  EU  forerunner  in  integrating 
digital  technologies.  The  country  scores  well 
above  the  EU  average  for  SMEs  with  at  least  a 
basic level of digital skills and the companies’ use 
of advanced technologies like cloud. There are new 

(32)  2030 Digital Compass: the European Way for the Digital 

Decade Communication, COM (2021) 118 final 

(33) Source: Government Offices of Sweden, A Completely 
Connected Sweden by 2025 – a Broadband Strategy 
(https://www.government.se/496173/contentass
ets/afe9f1cfeaac4e39abcdd3b82d9bee5d/swe
den-completely-connected-by-2025-
eng.pdf￼)https://www.government.se/496173/c
ontentassets/afe9f1cfeaac4e39abcdd3b82d9b
ee5d/sweden-completely-connected-by-2025-
eng.pdf 

34 

 
 
                                                 
 
Table A8.1:  Key Digital Economy and Society Index indicators 

(*) The 5G coverage indicator does not measure users’ experience, which may be affected by a variety of factors such as the type 
of device used, environmental conditions, number of concurrent users and network capacity. 5G coverage refers to the percentage 
of populated areas as reported by operators and national regulatory authorities. 
Source:  Digital Economy and Society Index 

35 

EUEU-top performanceHuman capitalDESI 2020DESI 2021DESI 2022DESI 2022DESI 2022At least basic digital skillsNANA67%54%79%% individuals202120212021ICT specialists7.0%7.5%8.0%4.5%8.0%% individuals in employment aged 15-7420192020202120212021Female ICT specialists21%21%22%19%28%% ICT specialists20192020202120212021ConnectivityFixed Very High Capacity Network (VHCN) coverage77%81%83%70%100%% households201920202021202120215G coverage (*)NA14%18%66%99.7%% populated areas2020202120212021Integration of digital technologySMEs with at least a basic level of digital intensityNANA86%55%86%% SMEs202120212021Big data10%19%19%14%31%% enterprises20182020202020202020CloudNANA69%34%69%% enterprises202120212021Artificial IntelligenceNANA10%8%24%% enterprises202120212021Digital public servicesDigital public services for citizensNANA8575100Score (0 to 100)202120212021Digital public services for businessesNANA8882100Score (0 to 100)202120212021Sweden 
 
   
 
ANNEX 9: INNOVATION 
ANNEX 9: INNOVATION 

This  Annex  provides  a  general  overview  of 
the  performance  of  Sweden’s  research  and 
innovation system.   

Sweden  continues  to  be  the    EU  innovation 
leader, a position it has held for many years, 
although  its  lead  on  the  EU  average  has 
decreased  slightly  over  time. (34)  Sweden 
invests  considerable  resources  in  R&D  and  is  one 
of the most innovative economies in the EU. With 
3.5%  of  GDP  allocated  to  R&D  in  2020,  Sweden 
has  the  highest  R&D  spending  in the  EU  and it is 
one  of  the  top  performers  in  terms  of  business 
investment  on  R&D  (2.53%  of  GDP  in  2020)  and 
public investment on R&D (0.97% of GDP in 2020). 
However, R&D intensity is lower than the Swedish 
national goal in the Europe 2020 strategy (around 
4% by 2020) and Sweden’s recovery and resilience 
plan does not have a focus on R&D investment.  

Sustaining  a  high-quality  public  research 
base  and  a  sufficient  pool  of  talent  have 
been  instrumental  in  keeping  the  Swedish 
knowledge  economy  competitive.  The  country 
benefits  from  an  innovation-friendly  environment, 
highly skilled workers, attractive research systems 
and  internationally  competitive  and  innovative 
large  companies.  Despite  these  strengths  and 
although Sweden is a leading country in the EU in 
terms of researchers and scientific publications in 
relation  to  population  size,  there  has  not  been  a 
corresponding increase in scientific impact (35), and 
the  number  of  new  doctoral  graduates  has  fallen 
over  the  past  7  years. (36)  A  shortage  of  highly 
skilled  personnel 
in  science,  technology  and 
engineering might hamper investment in R&D. The 
availability  of  skilled  staff  is  also  a  key  factor 
among  Sweden’s  most  R&D  intensive  companies 
in decisions on where to invest  in R&D, and more 
than  40%  of  companies  consider  it more  difficult 

(34)  European innovation scoreboard 2021 country profile, 
https://ec.europa.eu/docsroom/documents/45937 

(35)  Swedish Research Barometer, p. 59-64, 

https://www.vr.se/english/analysis/reports/our-reports/2022-
01-25-the-swedish-research-barometer-2021.html and 
https://ec.europa.eu/info/research-and-
innovation/statistics/performance-indicators/european-
innovation-scoreboard_en 

(36)  New doctoral graduates per 1,000 population aged 25-34, 

https://ec.europa.eu/research-and-
innovation/en/statistics/performance-indicators/european-
innovation-scoreboard/eis 

to recruit R&D personnel than 5 years ago. (37) The 
number of new graduates in science & engineering 
per  thousand  people  aged  25-34  has  fallen  over 
the  last  10  years,  scoring  about  a  quarter  below 
the EU average. 

The  proportion  of  public  sector  support  for 
business enterprise expenditure on R&D, both as a 
percentage  of  GDP  and  measured  as 
tax 
incentives,  is  comparably  low,  while  the  size  of 
venture  capital  available  remains  well  above  the 
EU average. 

(37)  Royal Swedish Academy of Engineering Sciences, 
https://www.iva.se/projekt/naringslivets-fou-
investeringar/fou-barometern-2021/ 

36 

 
 
                                                 
                                                 
 
 
Table A9.1:  Key research, development and innovation indicators 

Source: DG Research and Innovation - Common R&I Strategy and Foresight Service - Chief Economist Unit        
Data: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical database), Invest Europe        

37 

CompoundEUannual growthaverage2010-20Key indicators R&D Intensity (GERD as % of GDP)3.173.223.323.393.51.02.32Public expenditure on R&D as % of GDP0.990.970.960.950.97-0.10.78Business enterprise expenditure on R&D (BERD) as % of GDP:0.5:0.48:2.60.36Quality of the R&I systemScientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 12.712.912.7::0.0019.9PCT patent applications per billion GDP (in PPS)9.29.19.1:: -0.23.5Academia-business cooperationPublic-private scientific co-publications as % of total publications12.212.113.312.611.5-0.69.05Human capital and skills availabilityNew graduates in science & engineering per thousand pop. aged 25-3414.313.912.112.4:-1.516.3Public support for business enterprise expenditure on R&D (BERD)Total public sector support for BERD as % of GDP:::0.122:-0.60.196R&D tax incentives: foregone revenues as % of GDP:0.0120.0130.015:6.10.100Green innovation Share of environment-related patents in total patent applications filed under PCT (%)13.4  12.3 12.5: :  -0.912.8 Finance for innovation and Economic renewalVenture Capital (market statistics) as % of GDP0.0870.0530.0650.0730.0880.10.054Employment in fast-growing enterprises in 50% most innovative sectors6.55.57.66.5:-0.15.52020Sweden2010201520182019 
 
      
 
ANNEX 10: INDUSTRY AND SINGLE MARKET 
ANNEX 10: INDUSTRY AND SINGLE MARKET 

prosperity,  well-being 

Productivity  growth  is  a  critical  driver  of 
and 
economic 
convergence over the long run. A major source 
of  productivity  for  the  EU  economy  is  a  well-
functioning single market, where fair and effective 
competition  and  a  business  friendly  environment 
are  ensured, 
in  which  small  and  medium 
enterprises  (SMEs)  can  operate  and  innovate 
without  difficulty.  Businesses  and  industry  rely 
heavily  on  robust  supply  chains  and  are  facing 
bottlenecks that bear a negative impact on firms’ 
productivity 
levels,  employment,  turnover  and 
entry/exit  rates.  This  may  impact  the  Member 
States’  capacity  to  deliver  on  Europe’s  green  and 
digital transformation. 

labour  market  performs 
The  Swedish 
comparatively  well.  Only  8%  of  firms  report 
labour  shortages  in  2021,  compared  to  an  EU 
average  of  14%.  This  represents  an  improvement 
in  2017.  Regulated 
from  the  10%  reported 
professions  experience  lower  levels  of  regulatory 
restrictions compared to the EU average, including 
for 
lawyers,  accountants,  civil  engineers  and 
the 
architects,  with 
profession  of  real  estate agent  where  regulations 
in  Sweden  exceed  the  EU  average.  Still,  labour 
shortages  and  skills  mismatches  persist,  with 
in 
shortages  being  particularly  pronounced 
education,  health  care,  social  work,  ICT,  industry 
and  construction.  Similar  to  other  developed 
countries,  Sweden’s  labour  productivity  growth 
rate has fallen in recent years.  

the  only  exception  for 

Sweden  performs  relatively  well  when  it 
comes to the business environment. Access to 
finance conditions remain good and above the EU 
average.  According  to  the  2021  EIB  Investment 
Survey,  only  4%  of  firms  in  Sweden  can  be 
considered  financially  constrained  in  terms  of 
external finance. This is similar to the EU average 
(5%). 
the  proportion  of  SMEs 
experiencing  late  payments  remains  below  EU 
average. 

In  addition, 

Barriers  to  investments  in  Sweden  are  low 
overall.  However,  private  sector  investment 
have  steadily  decreased  since  2017,  and 
long-term  barriers  to  investments  persist. 
Generally, Swedish firms are less concerned about 
barriers to investment than firms in the EU overall. 
Despite high levels of private sector investment as 
of  2020  (5.2%  in  Sweden  vs.  2.6%  EU  average), 
Sweden  has  seen  a  sustained  decrease  in  private 
investments  of  26.4%  from  2017  to  2020. 

Moreover, long-term barriers to investment persist. 
The barrier most frequently mentioned by firms is 
the availability of skilled staff (78%). 

Overall,  the  Swedish  economy  has  been 
relatively  less  affected  by  global  supply 
chain  disruptions  than  other  EU  countries, 
due to its greater reliance on intra-EU imports and 
its  domestic  production  of  key  raw  materials. (38) 
Sweden  produces  93%  of  all  iron  ore  in  Europe, 
while also leading production of other base metals 
(copper,  zinc,  lead),  precious  metals  (silver,  gold) 
and  industrial  minerals  (limestone).  Only  19%  of 
companies  reported  a  shortage  in  materials  and 
equipment,  below  the  EU  average  of  26%.  In 
addition,  Sweden  holds  mineral  potential  for 
several  critical  metals,  including  for  example 
graphite, 
indium, 
cobalt, 
phosphorus and vanadium. This high proportion of 
manufacturing  is  partially  explained  by  the  much 
in 
higher 
Sweden.  The  Swedish  Government  initiated  a 
revision of the Minerals Act and the environmental 
code  following industry complaints that the policy 
is 
framework 
complex, long and uncertain. 

in  relation  to  mining  permits 

levels  of  public  sector 

investment 

tungsten, 

lithium, 

(38)  That being said, highly integrated cross-border supply such 
as for car manufacture, were affected by disruptions 
(including forced plant closures) especially in the early phase 
of the pandemic. 

38 

 
 
                                                 
 
Table A10.1:Key Single Market and Industry indicators 

(*) latest available 
Source: See above in the table the respective source for each indicator in the column “Description”. 

39 

SUB-POLICY AREAINDICATOR NAMEDESCRIPTION20212020201920182017Growth ratesEU27 average*Value added by source (domestic)VA that depends on domestic intermediate inputs, % [source: OECD (TiVA), 2018]69.5562.6%Value added by source (EU)VA imported from the rest of the EU, % [source: OECD (TiVA), 2018]16.1119.7%Value added by source (extra-EU)% VA imported from the rest of the world, % [source: OECD (TiVA), 2018]14.317.6%Cost competi-tivenessProducer energy price (industry)Index (2015=100) [source: Eurostat, sts_inppd_a]132108.2125.3120.9105.924.6%127.3Material Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]19101719190%26%Labour Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]8471210-20%14%Sectoral producer pricesAverage (across sectors), 2021 compared to 2020 and 2019, index [source:Eurostat]6.5%5.4%Concentration in selected raw materialsImport concentration a basket of critical raw materials, index [source: COMEXT]0.150.170.170.150.16-6%17%Installed renewables electricity capacity Share of renewable electricity to total capacity, % [source:Eurostat, nrg_inf_epc]65.062.460.760.67%Net Private investmentsChange in private capital stock, net of depreciation, % GDP [source: Ameco]5.25.76.56.9-24.6%2.6%Net Public investmentsChange in public capital stock, net of depreciation, % GDP [source: Ameco]1.81.71.71.520%0.4%Single Market integrationIntra-EU tradeRatio of Intra-EU trade to Extra-EU trade, index [source: Ameco]1.471.491.441.471.48-0.4%1.59Professional services restrictivenessRegulatory restrictiveness indicatorRestrictiveness of access to and exercise of regulated professions (professions with above median restrictiveness, out of the 7 professions analysed in SWD (2021)185 [source: SWD (2021)185; SWD(2016)436 final])1   10.0%3.37Professional qualifications recognitionRecognition decisions w/o compensationProfessionals qualified in another EU MS applying to host MS, % over total decisions taken by host MS [source: Regulated professions database]26.245%Transposition - overall5 sub-indicators, sum of scores [source: Single Market Scoreboard]Below averageOn averageAbove averageAbove averageInfringements - overall4 sub-indicators, sum of scores [source: Single Market Scoreboard]On averageOn averageOn averageBelow averageInvestment protectionConfidence in investment protectionCompanies confident that their investment is protected by the law and courts of MS if something goes wrong, % of all firms surveyed [source: Flash Eurobarometer 504]7756%BankruptciesIndex (2015=100) [source: Eurostat, sts_rb_a]n.a.n.a.n.a.n.a.n.a.n.a.70.1 (2020)Business registrationsIndex (2015=100) [source: Eurostat, sts_rb_a]n.a.n.a.n.a.n.a.n.a.n.a.105.6Late paymentsShare of SMEs experiencing late payments in past 6 months, % [source: SAFE]35.229.232.5n.a.n.a.8.1%45%EIF Access to finance index - LoanComposite: SME external financing over last 6 months, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.590.70.660.63-7.3%0.56 (2020)EIF Access to finance index - EquityComposite: VC/GDP, IPO/GDP, SMEs using equity, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.940.870.730.97-2.7%0.18 (2020)% of rejected or refused loansSMEs whose bank loans’ applications were refused or rejected, % [source: SAFE]5.99.62.116.63.471.4%12.4%SME contractorsContractors which are SMEs, % of total [source: Single Market Scoreboard]666364660.0%63%SME bidsBids from SMEs, % of total [source: Single Market Scoreboard]47767877-39.0%70.8%Public procurement SINGLE MARKETCompliance - cooperation EC and MSBUSINESS ENVIRONMENT - SMEsBusiness demog-raphyAccess to financeInvestment dynamicsHEADLINE INDICATORSEconomic structureRESILIENCEShortages / supply chain disruptionsStrategic dependen-cies 
 
      
 
Graph A11.1: Performance on evidence-based 
policy making indicators 

(1) RIA: Regulatory impact assessment  
Source: OECD (iREG indicators) 

The  Swedish  recovery  and  resilience  plan 
aims to promote digitalisation in general and 
the  digitalisation  of  public  administration  in 
particular.  Alongside  Denmark,  Sweden  has  the 
highest  proportion  of  individuals  who  use  the 
internet  to  interact  with  public  authorities  within 
the EU-27. However, the e-government benchmark 
score is just above the EU27 average. The Swedish 
recovery and resilience plan includes investment in 
broadband deployment within the country and the 
creation  of  a  single  digital  management  system 
for  the  whole  government.  By  ensuring  that  one 
management  system  is  used  by  all  authorities, 
Sweden  aims  to  simplify  public  engagement  with 
the government, improve transparency and deliver 
a higher quality of services. 

The capacity and quality of the Swedish civil 
service  remains  high.  Civil  servants  are  highly 
educated  and  are  strongly  encouraged  to  develop 
themselves  during  their  career.  Sweden  is  among 
the  best  performing  countries  on  gender  parity  in 
senior 
service  management  positions. 
However,  the  proportion  of  public  sector  workers 
between 55 and 74 is above that of the EU-27. 

civil 

ANNEX 11: PUBLIC ADMINISTRATION 
ANNEX 11: PUBLIC ADMINISTRATION 

capacity 

administrative 

Good 
enables 
economic  prosperity,  social  progress,  and 
fairness. Public administrations at all government 
levels deliver crisis response, ensure the provision 
of  public  services,  and  contribute  building  the 
resilience needed for the sustainable development 
of the EU economy.  

of 

inquiry 

Its  public  procurement 

Public administration in Sweden is one of the 
most  effective  in  the  EU-27 (39).  The  Swedish 
system  of  checks  and  balances  is  inclusive  and 
structured. 
system 
performs  highly  on  the  Single  Market  Scoreboard 
indicators and the country is relatively advanced in 
promoting open data. Several measures have been 
taken  to 
legislative 
improve  the  quality  of 
proposals,  such  as  ex  ante  evaluations  by  the 
commission 
public 
consultations (40).The  indicator  on  evidence-based 
policymaking  shows  performance  around  the 
average (Graph A11.1), with lower scores in terms 
of  stakeholder  engagement.  Sweden´s  open  civil 
society  landscape  contributes  actively  to  public 
consultations.  However,  there  appears  to  be 
limited  planning  of  public  consultations,  limited 
transparency  during  the  consultation  process  and 
the  absence  of  a  central  website  to  engage  with 
the  public  and  stakeholders  on  consultations. (41) 
be 
Another 
lengthening the consultation period. (42) 

improvement  would 

potential 

and 

(39)  Worldwide governance indicators, 2020. 

(40)  Riksdag, Making laws, https://www.riksdagen.se/en/how-the-
riksdag-works/what-does-the-riksdag-do/makes-laws/ 

(41)  OECD, Sweden: Indicators of regulatory policy and 

governance 2021, 2021. 

(42)  Rule of law report visits to Sweden 2022. 

40 

00.20.40.60.811.21.41.61.8SEEU27averageSEEU27averageMethodologyRIAOversightStakeholder consulationSystematic adoptionEx post evaluationTransparency 
 
                                                 
        
 
Table A11.1:Public administration indicators – Sweden 

(1) High values stand for good performance barring indicators # 7 and 8. (2) Break in the series in 2018. (3) Measures the user 
centricity (including for cross-border services) and transparency of digital public services as well as the existence of key enablers 
for the provision of those services. (4) Break in the series in 2018 and in 2021.(5) Defined as the absolute value of the difference 
between the share of men and women in senior civil service positions.  
Source: ICT use survey, Eurostat (# 1); E-government benchmark report (# 2); Open data maturity report (# 3); Fiscal governance 
database (# 4, 9, 10); Labour Force Survey, Eurostat (# 5, 6, 8), European Institute for Gender Equality (# 7), Single Market 
Scoreboard public procurement composite indicator (# 11); OECD indicators of regulatory policy and governance (# 12).  

low.  The  clearance 

The  justice  system  performs  efficiently.  The 
time  needed  to  resolve  administrative  cases  at 
first  instance  in  2020  was  107  days,  remaining 
comparatively 
rate  has 
improved  for  civil  and  commercial  litigious  cases 
(from 97.5% in 2019 to 102.8% in 2020) and for 
administrative  cases  in  2020  (from  101.7%  in 
2019  to  102.3%  in  2020).  The  quality  of  the 
justice  system  is  overall  good:  digital  tools  are 
broadly  used 
judicial 
independence, no systemic deficiencies have been 
reported. (43)  

in  courts.  As  regards 

(43)  For more detailed analysis of the performance of the justice 
system in Sweden, see the 2022 EU Justice Scoreboard 
(forthcoming) and the country chapter for Sweden in the 
Commission’s 2022 Rule of Law Report (forthcoming). 

41 

SE20172018201920202021EU27187.090.088.088.093.070.82nananana73.670.93nananana83.981.1442.942.942.942.9na56.8568.468.971.572.873.455.3636.939.043.134.540.818.676.08.60.60.62.221.8823.822.422.023.724.221.390.800.800.800.70na0.72101.31.31.81.8na1.5113.06.77.38.0na-0.7121.66nana1.66na1.7  Public Financial Management Medium term budgetary framework indexStrength of fiscal rules indexPublic procurement composite indicatorIndex of regulatory policy and governance practices in the areas of stakeholder engagement, Regulatory Impact Assessment (RIA) and ex post evaluation of legislation Scope Index of Fiscal Institutions  Educational attainment level, adult learning, gender parity and ageingShare of public administration employees with tertiary education, levels 5-8  (4)Participation rate of public administration employees in adult learning (4)Gender parity in senior civil service positions (5)Share of public sector workers between 55 and 74 years (4)  Evidence-based policy making2021 open data maturity indexIndicator (1)E-government Share of individuals who used internet within the last year to interact with public authorities (2)2021 e-government benchmark´s overall score (3)   Open government and independent fiscal institutions 
                                                 
 
       
 
FAIRNESS 
FAIRNESS 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  

The European Pillar of Social Rights provides 
for  upward  convergence 
the  compass 
towards better working and living conditions 
in the EU. The implementation of its 20 principles 
on  equal  opportunities  and  access  to  the  labour 
market,  fair  working  conditions,  social  protection 
and inclusion, supported by the 2030 EU headline 
targets  on  employment,  skills  and  poverty 
reduction, will strengthen the EU’s drive towards a 
digital,  green  and  fair  transition.  This  Annex 
provides  an  overview  of  Sweden’s  progress  in 
achieving  the  goals  under  the  European  Pillar  of 
Social Rights. 

been an increase in the unemployment rate of 1.9 
percentage points (pps), from 7.4% in Q1-2020 to 
in  Q3-2020  before  the  unemployment 
9.3% 
levelled  off  and  declined  to  8.4%  in  Q4-2021. 
Long-term  unemployment  increased  marginally, 
from 1.8% in Q1-2020 to 1.9% in Q4-2021. Even 
before  the  crisis,  Sweden  faced  challenges  in 
terms of integrating people with low levels of skills 
and  those  born  outside  Sweden,  in  particular 
women  into  the  labour  market.  In  Q3-2021,  the 
unemployment  rate  of  people  with  low  levels  of 
skills  was  28.1%  compared  to  4.3%  of  the  high-
skilled, while unemployment of those born outside 
the EU stood at 22.5%, against 5% of those born 
in  Sweden.  The  recovery  and  resilience plan (RRP) 
has  measures 
these 
challenges  by 
in  more  places  for 
students  in  vocational  education  in  combination 
with  courses  in  Swedish  for  immigrants.  The 
pandemic 
the 
employment 
people  with 
disabilities,  as  the  disability  employment  gap 
increased  by  4 pps  from 2019  to  reach  28.9%  in 
2020.  EU  cohesion  policy funds  will,  among  other 
things,  support  measures  to  facilitate  upskilling 
and reskilling employed and unemployed people. 

disproportionately 
participation 

addressing 

investing 

affected 

towards 

of 

Educational  inequalities  persist,  as  do  skills 
labour  market.  The 
mismatches  on  the 
proportion  of  early  leavers  from  education  and 
training  is  below the  EU  average  but  increased in 
2020  and  is  significantly  higher  for  those  born 
outside the EU compared to those born in Sweden 
(16.3% vs 6.3% in 2021). Teacher shortages are a 
long-standing  issue  in  Sweden  (see  Annex  13  for 
further  analysis  on  bottlenecks  for  teachers  and 
general education). The employment rate of recent 
higher  education  graduates  is  high  (at  90.8%  in 
2020, above the EU average of 83.7%). Recorded 
'participation  in  adult  learning  over  the  preceding 
four  weeks'  is  high  based  on  the  latest  available 
data for 2020 (28.6% vs 9.2% in the EU). Sweden 
nonetheless  experiences  a  persistent 
skills 
mismatch,  with  a  lack  of  highly  skilled  workers. 
The  Swedish  Public  Employment  Service  predicts 
that the shortage of skilled labour will continue to 
be a significant obstacle to growth over the next 5 
years. Reskilling and upskilling the workforce is key 
for  Sweden  to  address  the  skills  mismatch,  thus 
helping  it  reach  the  2030  EU  headline  targets  on 
skills and employment. 

The  labour  market  in  Sweden  is  recovering  
but important challenges remain in terms of 
long-term unemployment. The employment rate 
slightly fell after the crisis, but remains among the 
highest in  the  EU  at  81.3%  (Q4  2021).  There  has 

42 

 
 
 
 
 
 
Despite a slight decline in 2020, Sweden has 
seen  increasing  income  inequality  in  recent 
years.  The  income  of  the  richest  20%  of  the 
population  was  more  than  four  times  higher  than 
that of the poorest 20% in 2020, having increased 
from more than three times higher in 2005, albeit 
with  a  slight  decline  recorded  in  2020.  This  is, 
however,  better  than  the  EU  average  (4.12  for 
Sweden compared to an EU average of 5.24). The 
at-risk-of-poverty or social exclusion rate (AROPE) 
has been relatively stable in Sweden over the last 
decade. However, it reached a new high of 18.4% 
in 2019, before falling to 17.7% in 2020.  A 29.4 
pps difference was recorded in 2019 between the 
AROPE  rates  of  those  born  in  Sweden  and  those 
born  outside  the  EU  (a  rate  of  11.9%  for  those 
born  in  Sweden  vs  41.3%  for  those  born  outside 
the EU, above the EU average of 38.1%). Children 
have a higher AROPE rate than adults, and children 
born outside the EU are more than three times as 
likely to be at risk of poverty compared to children 
born  in  Sweden.  The  AROPE  of  people  with 
disabilities  is  almost  double  compared  to  those 
without  disabilities  (29%  vs  15.7%  in  2020),  and 
the  EU  average.  Housing 
slightly  exceeds 
shortages  have  been  widespread  in  recent  years 
and  led  to  a  lack  of  affordable  housing,  in 
particular  affecting  young  people  and  migrants. 
integration  of  people  born 
Strengthening  the 
outside  the  EU  is  key  for  Sweden  to  reach  the 
2030  EU  headline  target on  poverty  reduction.  To 
foster equal opportunities and social inclusion, the 
European  Social  Fund  Plus  (ESF+)  continues  to 
support measures to strengthen the integration of 
those  born  outside  Sweden  in  the  labour  market, 
particularly  those  having  the  largest  difficulty  in 
finding a job. 

43 

 
ANNEX 13: EDUCATION AND SKILLS 
ANNEX 13: EDUCATION AND SKILLS 

This  Annex  outlines  the  main  challenges  for 
Sweden's  education  and  training  system  in 
light of the EU-level targets of the European 
Education  Area  strategic  framework  and 
other  contextual  indicators,  based  on  the 
analysis  from  the  2021  Education  and 
Training  Monitor.  While  education  outcomes  in 
Sweden  are  better 
the  EU  average, 
inequalities  at  all  levels  of  education  and  a 
shortage  of  qualified  teachers  are  important 
challenges.  

than 

Educational outcomes are good, but affected 
by  inequalities,  especially  based  on  migrant 
background.  Overall  performance  is  better  than 
the EU average and close to or above the EU level 
targets.  However,  participation  in  early  childhood 
education  is  lower  for  children  with  migrant 
backgrounds  and  early  school  leaving  is  twice  as 
frequent  among  foreign-born  compared  to  people 
born  in  Sweden.  While  basic  skills  have  improved 
overall, the gap  in reading between students with 
a migrant background and students without such a 
background is one of the highest in the EU, both in 
mean  scores  (83  points  -  Figure  13.1)  and  in 
relation  to  underachievers  (25.5  pps,  and  even 
38.2  pps  for  pupils  born  abroad),  and  is  growing. 
Disadvantaged and migrant pupils more frequently 
feel  that  they  do  not  belong  in  school,  and  this 
further reduces their educational outcomes.  

The  pandemic  risks  increasing  inequality. 
Schools  had  difficulty  in  providing  pupils  with 
individualised  support,  which  may 
increase 
inequalities (44), although the government provided 
additional  funding  to  address  equity  issues  and 
reduce  losses  caused  by  the  pandemic.  General 
enrolment in higher education increased during the 
pandemic, 
from 
disadvantaged  backgrounds,  whose  dropout  rates 
increased during distance education. 

students 

but 

not 

for 

Graph A13.1: Gap in reading performance between 
native students and students with migrant 
background 

Source: OECD, PISA 2018 

Inequalities  in  education  are  increasing  and 
are  often  linked  to  school  choice.  The  gap 
between  schools  with  the  highest  and  those  with 
the  lowest  results  is  widening  in  115  out  of  188 
municipalities,  and  the  number  of  schools  where 
many  pupils  are  not  eligible  for  upper  secondary 
education  has  nearly  doubled  in  5  years (45).  The 
results from the latest PISA-study show that pupils 
in  private  schools  perform  better  on  average. 
Pupils from public schools (12.4 pps gap) and from 
schools where many pupils repeat a year (8.7 pps 
gap  vs  EU  3.4  pps  gap)  more  frequently  leave 
school  without  a  certificate.  Pupils  with  migrant 
backgrounds generally go to public schools due to 
the  private  schools’  enrolment  process.  The 
government  is  now  proposing  changes  to  remove 
obstacles for equal access for all pupils (46). 

(44)  National Agency for Education (NAE), (2021). Covid-19-
pandemins påverkan på skolväsendet. Delredovisning 3 
Skolverket, Stockholm. 
https://www.skolverket.se/publikationsserier/regeringsuppdra
g/2021/covid-19-pandemins-paverkan-pa-skolvasendet-
delredovisning-3 

(45)  See Education and Training Monitor 2020, chapter on 

Sweden. 

(46)

https://www.regeringen.se/pressmeddelanden/2022/02

/regeringen-foreslar-andringar-i-skollagen-for-ett-mer-
rattvist-skolval/. 

44 

-20020406080100CYMTHRIEPTLUEEITELFRBEATSIDEDKNLSEFIScore-point difference 
 
                                                 
     
                                                 
 
 
Table A13.1:EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

The 2018 EU average on PISA reading performance does not include ES; u = low reliability, : = not available; Data is not yet 
available for the remaining EU-level targets under the European Education Area strategic framework, covering underachievement 
in digital skills, exposure of vocational educational training graduates to work based learning and participation of adults in 
learning. 
Source: Eurostat (UOE, LFS), OECD (PISA) 

It 

(40%  vs  20%). 

Teacher  shortages  remain  a  significant 
challenge.  Staff  shortages  reported  in  PISA  are 
above the OECD average, and more pronounced in 
disadvantaged  schools 
is 
projected that by 2035 there will be a shortage of 
12 000  teachers  (5.6%  of  the  relevant  teacher 
population  in  2020),  which  means  that  annually 
800  more  teachers  need  to  acquire  qualifications 
than  is  currently  the  case (47),  despite  many 
initiatives  to  increase  the  number  of  qualified 
teachers.  Participation  in  the  formal  qualification 
programme  is  far  lower  than  the  EU  average 
(5.1%; EU-22 14.7%). The shortage of teachers is 
significant  in  the  three  largest  cities.  Relative  to 
the  teacher  population,  the  shortage  is  worst  in 
Gotland,  Uppsala  and  Västmanlands  län.  Some 
schools in rural areas of northern Sweden have no 
certified subject teacher. This shortage of teachers 
might  be  further  aggravated  by  workload-related 
stress  during  the  pandemic  (reported  by  78%  of 

(47)  https://www.skolverket.se/skolutveckling/forskning-och-

utvarderingar/skolverkets-utvarderingar-och-
rapporter/prognos-over-behovet-av-larare-och-forskollarare 

45 

teachers in ECEC and schools) (48), and an elevated 
infection risk for teachers in compulsory schooling 
and  in  ECEC,  which  did  not  transition  to  distance 
teaching  but  continued  face-to-face  teaching 
during the pandemic (49). 

(48)  Lärarförbundet, (2020b). ”Läget är katastrofalt, pressat och 
ohållbart.” - Lärarnas syn på hur det fungerar att arbeta 
under covid-19. Lärarförbundet, Stockholm. 
https://res.cloudinary.com/lararforbundet/image/upload/v160
4063733/b3fb4e66eab617072acab1dafa2643f5/La_get_a
_r_katastrofalt_pressat_och_oha_llbart.pdf. 

(49)  Coronakommissionen (2021) Sverige under pandemin. Volym 
1. Smittspridning och smittskydd.. SOU 2021:89. Stockholm. 
Statens offentliga utredningar. 
https://coronakommissionen.com/wp-
content/uploads/2021/10/sverige-under-pandemin-volym-
1_webb.pdf, pp. 84-85. 

96%94.1%91.9%95.6%201992.8%2019Reading< 15%18.4% 20.4%18.4%201822.5%2018Mathematics< 15%20.8% 22.2%18.8%201822.9%2018Science< 15%21.6% 21.1%19.0%201822.3%2018Total< 9 %7.0%11.0%8.4%9.7%Men7.6%12.5%10.2%11.4%Women6.4%9.4%6.5%7.9%Cities6.4%9.6%5.8% 8.7%Rural areas8.2%12.2%11.0%10.0%Native5.9%10.0%6.3%8.5%EU-born11.6%20.7%:u21.4%Non EU-born14.3%23.4%16.3%u21.6%Total45%46.5%36.5%49.3%41.2%Men38.9%31.2%40.9%35.7%Women54.5%41.8%58.2%46.8%Cities56.8%46.2%62.2%51.4%Rural areas31.1%26.9%30.7%29.6%Native47.2%37.7%50.8%42.1%EU-born59.9%32.7%69.9%40.7%Non EU-born41.4%27.0%39.5%34.7%39.3% 38.3%38.6%201938.9%2019Share of school teachers (ISCED 1-3) who are 50 years or overBy country of birthBy genderBy degree of urbanisationBy country of birthTertiary educational attainment (age 25-34)Early leavers from education and training (age 18-24)Participation in early childhood education (age 3+)Low achieving 15-year-olds in:By genderBy degree of urbanisation20152021IndicatorTargetSwedenEU27SwedenEU27 
                                                 
                                                 
 
   
 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 

Especially  relevant  in  light  of  the  ongoing 
COVID-19 pandemic, resilient healthcare is a 
prerequisite  for  a  sustainable  economy  and 
society.  This  Annex  provides  a  snapshot  of  the 
healthcare sector in Sweden.  

Graph A14.2: Projected increase in public 
expenditure on health care over 2019-2070 
(reference scenario) 

Life  expectancy  in  Sweden  is  higher  than  in 
the EU as a whole, but fell in 2020 by almost 
10  months  due  to  COVID-19.  As  of  17  April 
2022, Sweden reported 1.81 cumulative COVID-19 
deaths  per  1  000  inhabitants  and  242  confirmed 
cumulative COVID-19 cases per 1 000 inhabitants. 
from 
Sweden  had 
preventable and treatable causes in 2018, pointing 
to an overall effective health system. 

rates  of  mortality 

low 

Graph A14.1: Life expectancy at birth, years 

Source: European Commission/EPC (2021) 

in 

the  Social  Scoreboard 

times,  a  greater  proportion  of 

Waiting  times  for  health  services  are  a 
longstanding  issue,  although reported  unmet 
needs  for  medical  care  are  low  (see  also 
indicators  on  the  unmet  needs  for  medical 
from 
the  
Annex  12).  Despite  a  commitment  by  the 
government  to  increase  its  efforts  to  reduce 
waiting 
the 
population  had  to  wait  longer  than  3  months  to 
access  specialists  or  interventions  during  the 
COVID-19 pandemic. The COVID-19 pandemic also 
highlighted the need for skilled nurses, particularly 
in  elderly  care  settings.  Swedish  health  care  is 
expected to benefit from the RRP through training 
for elderly care providers, the increased number of 
study  places  in  vocational  education  and  training 
(Yrkesvux)  with  a  focus  on  health  and  social  care 
and  the  introduction  of  a  protected  title  for 
assistant nurses. The government identified cancer 
care  as  a  priority  for  new  investment  in  2019-
2021.  While  the  strategy  has  a  strong  focus  on 
quality  and  equity  in  treatment,  it  also  covers 
prevention  and  early  detection.  Further,  Sweden’s 
efforts towards a more rational  use of antibiotics 
have 
of 
reduced 
antimicrobials over the years, to a level well below 
the EU average. 

consumption 

effectively 

Source: Eurostat database 

Health  spending  relative  to  GDP  in  Sweden 
was the third highest in the EU in 2019. Most 
health  spending  is  publicly  funded  (85%).  The 
growth  rate  in  health  spending  was  relatively 
modest in the years prior to the pandemic, but the 
government 
in 
response  to  COVID-19.  Public  expenditure  on 
health  is  projected  to  increase  by  0.8  percentage 
points (pp) of GDP by 2070, slightly below the 0.9 
pp increase for the EU.  

increased  spending  on  health 

46 

80.580.980.981.081.380.482.282.482.582.683.282.4201520162017201820192020EUSweden 
 
       
       
 
Table A14.1:Key health indicators 

Doctors' density data refer to practising doctors in all countries except FI, EL, PT (licensed to practice) and SK (professionally 
active). Nurses' density data refer to practising nurses in all countries (imputation from year 2014 for FI) except IE, FR, PT, SK 
(professionally active) and EL (nurses working in hospitals only). More information: https://ec.europa.eu/health/state-health-
eu/country-health-profiles_en 
Source: Eurostat, except: * Eurostat and OECD, ** ECDC.  

47 

20162017201820192020EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)67.666.665.660.292.1 (2017)Cancer mortality per 100 000 population229.4229.6221.3216.7252.5 (2017)Current expenditure on health, % GDP 10.910.810.910.99.9 (2019)Public share of health expenditure, % of current health expenditure84.384.784.884.979.5 (2018)Spending on prevention, % of current health expenditure 3.23.33.43.32.8 (2018)Acute care beds per 100 000 population215.3203.6196.3190.5387.4 (2019)Doctors per 1 000 population *4.24.34.30.03.8 (2018)Nurses per 1 000 population *10.910.910.90.08.2 (2018)Consumption of antibacterials for systemic use in the community, daily defined dose per 1 000 inhabitants per day **11.711.310.810.38.914.5 (2020) 
 
       
 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

education degree, only 42% do in Central Norrland 
and Upper Norrland.    

Graph A15.1: Changes to labour productivity 
across Swedish regions 

(1) Unit: real GVA in MM EUR (2015 prices) by employment in 
thousands of persons 
(2) The light red circle shows the capital city region. The blue 
circles show the remaining NUTS2 regions. The green diamond 
shows the national average. The purple line shows the EU27 
average. 
Source: Eurostat 

regions 

in  Sweden  have 

Most 
lower 
greenhouse gas emission intensity per capita 
than  the  EU  average  but  the  two  northern 
sparsely  populated  areas,  stand  out.    The 
areas  face  considerable  challenges  because  of 
their greenhouse gas emission-intensive industries 
(steel,  metal),  for  which  the  industries  have 
developed  roadmaps,  setting  out  steps  to  reach 
carbon neutrality by 2045. 

is  an 

The  regional  dimension 
important 
factor  when  assessing  economic  and  social 
developments  in  a  Member  State.  Taking  into 
account  this  dimension  enables  a  well-calibrated 
and targeted policy response that fosters cohesion 
and  ensures  sustainable  and  resilient  economic 
development across all regions. 

Sweden’s  regions  are  performing  well  but 
regional  disparities  have  increased  slightly. 
In  terms  of  GDP  per  head  (purchasing  power 
standards)  in  2019,  almost  all  of  its  NUTS2 
regions  were  above  or  close  to  the  EU  average. 
The  capital 
region  of  Stockholm  performed 
strongly,  at  166%  of  the  EU  average.  North-
Central  Sweden,  on  the  other  hand,  had  the 
weakest  performance  at  94%.    GDP  per  head 
growth  was  lower  in  the  northern  regions  (Figure 
15.1).  Between  2010  and  2019,  GDP  per  head 
growth  rates  was  0.6%  per  year  in  Central 
Norrland, 1.1% in North-Central Sweden and 1.2% 
in  Upper  Norrland  while  it  was  1.7%  in  the 
Stockholm region and at least 1.3% in the rest of 
the country’s regions. 

The  productivity  gap  between  the  most  and 
the  least  productive  region  has  increased 
over  the  past  two  decades  (Graph  15.2), 
although labour productivity was higher than 
the EU average in all NUTS 2 regions in 2019. 
The  capital  region  is  a  strong  leader,  while 
Småland and islands reaches 70% of Stockholm’s 
performance.  Factors  causing  low  productivity  are 
poor 
in 
knowledge-intensive  sectors,  suboptimal  R&D 
levels  of  educational 
expenditure,  and 
attainment (50). 

lower  employment 

transport 

lower 

links, 

Småland  and  islands  is  the  third  least 
region  by  car,  after  Upper 
accessible 
Norrland  and  North-Central  Sweden. 
In 
addition,  Småland  and  islands  has  the  smallest 
percentage of individuals employed in knowledge-
intensive  services,  at  48.3%  of  total  employment. 
Employment  in  high-technology  sectors  is  also 
much higher in the capital region where it employs 
10.4% of the workers compared to 1.9% in North-
Central Sweden and 2.5% in Småland and islands. 
Significant  disparities  are  also  observed  in  terms 
of  educational  attainment.  While  around  62%  of 
the  population  of  Stockholm  has  a  tertiary 

(50)  As identified by the OECD. See Regional differences in 
productivity in Sweden: insights from OECD Regions, 
ECO/WKP(2021)39. 

48 

 
 
                                                 
     
 
Graph A15.2: CO2 emissions from fossil fuels per 
head, 2018 in Sweden 

Source: European Commission 

Graph A15.3: Regional performance groups, 2021 
in Sweden 

Source: European Commission 

Gotland  contributes  to  almost  5 %  of  the 
total  greenhouse  gas  (GHG)  emissions  in 
Sweden,  mainly  from  its  mineral  (cement) 
industry. Due to its relatively small population, it 
is  the  most  emission-intensive  region  in  Sweden 
and  has  the  highest  proportion  of  employment  in 
ETS  installations  (at  NUTS  3  level)  in  the  EU 
(source:  Eighth  report  on  economic,  social  and 
territorial cohesion). 

The  steel,  metal  and  cement  industries  in 
these  regions  account  for  a  significant 
proportion  of  the  GHG  emissions  in  Sweden. 
processes, 
Restructuring 
and 
modernizing 

the 
regional 

economies 

industrial 

of 
the 

be 

ensure 

supporting the re- and upskilling of the workforce 
sustainable 
to 
crucial 
will 
competitiveness.  By  directing 
the  EU  Just 
Transition  Fund  towards  the  NSPAs  and  Gotland, 
there  is  a  great  potential  to  achieve  emission 
and 
reductions 
employment levels. 

and  maintain 

economic 

Graph A15.4: Territories most affected by the 
climate transition in Sweden 

*Gotland and Västra Götaland were proposed as additional 
territories by Sweden. Gotland has been provisionally agreed 
to by the Commission as an extension of the scope of the JTF 
Source: European Commission 

The  population  is  growing  in  all  Swedish 
regions,  but  at  a  much  faster  pace  in  the 
capital  region.  Between  2011  and  2019, 
Stockholm  experienced  a  15.6%  increase  in  its 
population,  while  population  growth  was  around 
1.9%  in  Central  Norrland, 2.7%  in  Upper  Norrland 
and  3.7%  in  North-Central  Sweden  (3.7%).  These 
three  regions  are  least  accessible  regions  in 
Sweden.  While  in  the  Stockholm  region,  96.7%  of 
the  population  living  within  120km  radius  can  be 
reached in less than 90 minutes, this ratio falls to 
64%  in  Central  Norrland  and  55.5%  in  North-
Central  Sweden.  Accessibility  is  also  lower  in 
Småland  and  islands,  where  this  figure  stood  at 
61.4%  in  2018.  A  combination  of  these  factors 
explains why Central Norrland, Upper Norrland and 
North-Central Sweden.also score the lowest on the 
Regional  Competitiveness  Index,  all  below  62, 
while  the  other  regions  in  Sweden  are  above  80, 
and the Stockholm region is at 100. 

Disparities  across  the  country’s 
markets 

labour 
increased  during  the  COVID-19 

49 

 
   
 
   
   
Table A15.1:Selected indicators at regional level – Sweden 

Source:  Eurostat, *EDGAR Database 

pandemic,  with  the  unemployment  rate  in 
2020  ranging  from  6.3%  in  Upper  Norrland 
to  10.5%  in  South  Sweden.  All  regions  in 
Sweden were affected by the COVID-19 pandemic, 
which contributed to an increase in unemployment 
the  same 
across  Sweden  although  not  of 
magnitude  across  all  regions.  Northern  regions 
were  less  affected  than  the  other  regions.  From 
2019  to  2020,  the  unemployment  rate  increased 
by  0.2  percentage  points  (pps)  in  Upper  Norrland. 
On  the  other  hand,  the  unemployment  rate 
increased  by  2.1  pps  in  East-Central  Sweden,  1.4 
pps  in  Småland  and  islands  and  1.6  pps  in  South 
Sweden. 

50 

NUTS 2 RegionGDP per head (PPS)Real productivity growthGDP per head growthPopulation growthPopulation with high educational attainmentR&D expenditureTransport performance by carRegional Competitiveness IndexCO2 emissions from fossil fuels  per headInnovation performanceEU27=100, 2019Avg % change on preceding year, 2010-2019Avg % change on preceding year, 2010-2019Total % change, 2011-2019% of population aged 30-34, 2017-2019% of GDP, 2017% Pop. within a 1h30 travel / within 120 km radius, 2018Range 0-100, 2019tCO2 equivalent, 2018RIS regional performance groupEuropean Union1001.001.391.839.42.1957.37.2Sverige1191.121.509.651.93.3280.081.3Stockholm1661.491.6915.662.03.7596.7100.02.8Leader innovator +Östra Mellansverige1000.681.1910.047.73.5177.481.66.5Leader innovator -Småland med öarna1001.031.297.244.91.5961.467.74.8Strong innovatorSydsverige1011.101.3610.052.83.2385.484.84.2Leader innovatorVästsverige1151.051.579.550.24.8385.081.44.4Leader innovatorNorra Mellansverige940.801.063.745.11.2055.561.94.3Strong innovator -Mellersta Norrland1010.410.591.942.00.8164.057.68.4Strong innovator -Övre Norrland1150.641.252.742.52.3059.659.910.9Strong innovator + 
 
   
 
MACROECONOMIC STABILITY 
MACROECONOMIC STABILITY 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 

perspective.  Support  measures  have  significantly 
driven  up  prices  of  both  financial  assets  and  real 
estate.  As  a  result,  households  needed  to  take 
increasingly  larger  mortgages  in  2021,  further 
inflating household indebtedness, which continues 
to  increase  faster  than  disposable  income  and 
GDP.  As  regards  macro-prudential  measures,  the 
countercyclical  capital  buffer  will  be  increased  to 
1%  as  of  29  September  2022,  after  it  had  been 
reduced to zero in March 2020. 

real 

Commercial 

Risks  also  relate  to  the  commercial  real 
estate  market. 
estate 
companies  continue  to  rely  on  both  bank-  and 
market-based  financing  and  their  debt  levels  are 
increasing in  relation  to  their income. Given these 
increased  vulnerabilities,  banks  need  to  hold 
sufficient capital buffers. Against this backdrop, in 
January 2020 the Swedish FSA imposed additional 
capital  requirements  on  banks’  exposures 
in 
lending to the commercial real estate sector. 

including 

(AML/CFT) 

framework. 

Sweden has continued to strengthen its anti-
laundering  and  counter-terrorism 
money 
financing 
It  has 
introduced  or  proposed  a  number  of  significant 
in  the  area  of 
legislative  reforms, 
information  exchange  between  the  public  and 
private  sector.  The  budget,  resources  and  tools 
available  to  its  supervisory  and  other  public 
authorities have been steadily increasing and their 
effective  cooperation  has  been  improved.  The 
Financial  Supervisory  Authority 
its 
supervision,  making  this  more  risk-based,  which 
resulted,  in  the  application  of  more  targeted, 
appropriate  and  dissuasive  sanctions  where  there 
was 
compliance  with  AML/CFT 
requirements. 

inadequate 

intensified 

is 

banking 

Swedish 

intermediaries 

This  Annex  provides  an  overview  of  key 
developments  in  Sweden’s  financial  sector. 
The 
large, 
system 
interconnected  and  uses  global 
concentrated, 
financial  markets  for  its  funding,  which  makes  it 
sensitive  to  shocks.  Despite  a  relatively  high 
degree  of  capital  market  financing,  compared  to 
other  EU  countries,  banks  remain  the  most 
important  financial 
in  Sweden. 
Banks’  total  assets  amount  to  almost  300%  of 
GDP (51),  of  which  the  five  largest  banks  hold  a 
share of 55%. To cover their funding gap, Swedish 
banks  mostly  rely  on  short-term  foreign  currency 
debt  and  on  covered  bond  issuances  backed  by 
residential  mortgages.  This  exposes  banks  to 
changes  in  the  risk  sentiment  of  the  global 
financial markets and to liquidity shortages, which 
could lead to higher funding costs. Swedish banks 
also  have  large  holdings  of  each  other’s  covered 
bonds,  which  increases  interconnectedness  and 
entails  significant  contagion  risks  in  the  event  of 
disruptions.  

The  Swedish  banking  sector  features  high 
profitability  and  strong  capital  and  liquidity 
positions. Despite negative and low interest rates 
in recent years, bank profitability still ranks among 
the highest in Europe (return on equity of 10,1%). 
Most  pandemic-related  loan  loss  provisions  have 
been reversed over the past 12 months, bolstering 
net  profits.  The  non-performing  loans  ratio  is 
among  the  lowest  in  the  EU  (0.9%).  The  capital 
adequacy  ratio  was  22.2%  in  2021,  above  the 
capital  requirements,  which  were  adjusted  in 
October  2020  in  order  to  adapt  to  the  EU's 
banking  package  and  which  also  reflect  the 
extension  of  the  risk  weight  on  residential 
mortgage  exposures.  However,  the  leverage  ratio 
remains  among  the 
in  the  EU.  The 
comparatively  low  level  of  own  funds  indicates 
vulnerabilities. A sharp increase in deposits during 
the  pandemic  decreased  the  loan-to-deposit  ratio 
to  145.5%  but  the  inflow  of  deposits  is  expected 
to taper off as the economy normalises. 

lowest 

Some long-standing vulnerabilities have been 
exacerbated  by  the  pandemic.  The  residential 
housing  market  functions  poorly  and  the  tax 
system  is  not  well  designed  as  regards  limiting 
debt  bias  in  taxation  or  from  a  financial  stability 

(51)  This includes foreign banks’ operations on the Swedish 

market. 

51 

 
 
 
                                                 
 
 
Table A16.1:Financial soundness indicators 

(1) Last data: Q3-2021. 
Source: ECB, Eurostat, Refinitiv 

52 

20172018201920202021Total assets of the banking sector (% of GDP)289.6272.8279.1315.3290.5Share (total assets) of the five largest bank (%)58.254.354.855.1-Share (total assets) of domestic credit institutions (%)192.777.779.178.780.2Financial soundness indicators:1- non-performing loans (% of total loans)1.31.01.11.00.9- capital adequacy ratio (%)25.920.721.622.322.2- return on equity (%)10.912.210.98.410.1NFC credit growth (year-on-year % change)5.76.13.64.06.8HH credit growth (year-on-year % change)7.05.55.15.66.8Cost-to-income ratio (%)154.251.956.557.154.2Loan-to-deposit ratio (%)1172.7190.7187.9163.2146.5Central bank liquidity as % of liabilities0.00.00.01.2-Private sector debt (% of GDP)198.6201.0203.8215.6-Long-term interest rate spread versus Bund (basis points)33.325.529.347.364.2Market funding ratio (%)61.361.261.961.2-Green bond issuance (bn EUR)3.86.511.312.014.6 
 
   
 
ANNEX 17: MACROECONOMIC IMBALANCE PROCEDURE ASSESSMENT MATRIX 
ANNEX 17: MACROECONOMIC IMBALANCE PROCEDURE ASSESSMENT MATRIX 

market,  lowering  their  ability  to  move  up  the 
potential 
property 
homeowners the entrance into the housing market 
will become even more costly. 

ladder.  Moreover, 

for 

Policy  measures  have  still  not  sufficiently 
addressed  household  debt  and  house  prices. 
The amortization requirement has been reinstated 
as  of  1  September  2021.  Irrespective  of  policy 
actions and the inquiries started, the overall policy 
framework  still  provides  an  incentive  for  debt 
accumulation  feeding  into  house  price  increases. 
Policy  gaps  remain  for  housing-related  taxation 
and for the functioning of housing supply and the 
rental  market.  The  Swedish  RRP  contains  three 
measures 
regulations,  one 
investment  measure  for  rental  and  student 
accommodation  and  a  reduction  of  the  capital 
gains tax in two steps. 

to  ease  building 

For  those  reasons,  and  more  generally  on  the 
basis  of  the  elements  of  the  in-depth  review 
undertaken  for  Sweden  under  Regulation  (EU)  No 
1176/2011  on  the  prevention  and  correction  of 
macroeconomic imbalances as summarised in the 
Staff  Working  Document  (SWD  (2022)639  final), 
the  Commission  has  considered 
its 
Communication  “European  Semester  –  2022 
Spring  Package”  (COM(2022)600  final)  that 
Sweden 
experience 
macroeconomic imbalances. 

continues 

to 

in 

The  Macroeconomic 
Imbalance  Procedure 
the  main 
Assessment  matrix  presents 
elements  of  the  in-depth  review.  It  reports  in 
accordance  with  Article  5  of  Regulation  (EU)  No 
1176/2011  on  the  prevention  and  correction  of 
macroeconomic  imbalances,  as  summarized  in 
SWD  (2022)639 (52).  For  Member  States  selected 
in  the  2022  Alert  Mechanism  Report  it  presents, 
separately  for  each  source  of  imbalance  and 
adjustment issue, the main findings regarding the 
gravity  and 
identified 
challenges, as well as policy response and gaps. 

the  evolution  of  the 

As 

household 

indebtedness. 

Sweden  is  characterised  by  vulnerabilities 
relating  to  high  and  rising  house  prices  and 
high 
a 
consequence,  Sweden  is  exposed  to  potential 
adverse  shocks  and  a  possible  disorderly 
correction  with  harmful  implications  for  the  real 
economy  and  the  banking  sector  and  possible 
spill-over  effects  to  countries  with  a  strong 
presence  of  Swedish  banks.  Furthermore,  fiscal 
incentives  for  housing  loans  imply  foregone  tax 
revenue  and  may  divert  investment  in  productive 
and  innovative  assets.  Nominal  household  debt 
grew  on  average  5.7%  between  2011  and  2020 
and  by  6.2%  year-on-year  in  the  first  three 
quarters  of  2021.  Household  debt  is  likely  to 
continue increasing  both  in  nominal  terms  and  as 
a  ratio  to  disposable  income.  After  the  correction 
and  stabilisation  over  2017-2019  house  prices 
have accelerated in 2020 and 2021 and are set to 
increase  further  to  above  current  levels  that 
already appear significantly overvalued 

to  come 

labour  market  and 

House price growth is expected to slow down. 
The  strong 
increasing 
household  disposable  income  are  expected  to 
support  house  prices.  However,  this  should  be 
counteracted  by  the  downward  pressure  that  is 
expected 
the  already  high 
from 
valuations, 
construction  at  a  pace  above 
household  formation  and  rising  nominal  interest 
into  rising 
rates  that  are  quickly  translated 
mortgage  rates  due  to  the  typically  low  interest 
fixation  period  of  mortgages  in  Sweden.  Higher 
interest  rates  will  affect  in  particular  first-time 
buyers  as  they  have  taken  on  high  debt  usually 
with  variable  interest  rates  to  enter  the  housing 

(52)  European Commission (2022), COMMISSION STAFF 

WORKING DOCUMENT In-Depth Review for Sweden in 
accordance with Article 5 of Regulation (EU) No 1176/2011 
on the prevention and correction of macroeconomic 
imbalances. 

53 

 
 
                                                 
 
 
Table A17.1:Assessment of Macroeconomic Imbalances matrix 

(Continued on the next page) 

54 

 Gravity of the challenge Evolution and prospects Policy response Imbalances (unsustainable trends, vulnerabilities and associated risks) Private debt   Sweden continues to have one of the highest levels of private debt in the EU, at 218% of GDP in 2021. High private indebtedness increases the  vulnerability to macroeconomic shocks, as subsequent deleveraging may lead to large corrections in consumption and investment.  Household debt is a particular concern; it stood at 187% of disposable income and 94% of GDP at the end of 2021 (24 percentage points above the Commission's prudential benchmark, and 15 percentage points above the fundamental benchmark).  Households have good repayment ability and assets, but the distribution of debt and assets across age groups is uneven and a large part of household assets is exposed to liquidity and/or market risks.  Household debt grew at 6.4% year-on-year in 2021, somewhat higher than the average over the past decade. The Riksbank projects that household debt will return to the trend growth rate and reach almost 220% of disposable income in 2025. Interest payments have decreased over time as a share of disposable income, as the interest rate declined. Average interest rates on housing loans declined further in 2021 with households also extending the periods for which mortgage rates are fixed. The amortization requirement has been reinstated as from 1 September 2021. The requirement had been suspended in response to the pandemic and the related economic crisis. Households have to amortize 3% annually of their debt if the LTV is above 70% (raised by 2%-pt if LTI is above 450%, 2% if the LTV is between 50 and 70% (raised by 1%-pt if LTI is above 450%) and by 1% if the LTV is below 50%. Policy gaps remain regarding the incentives to take on mortgage debt. The full and unconditional tax deductibility of mortgage interest payments and the low ceiling on recurrent property taxation have not been addressed.    Non-financial corporate debt is relatively high compared to other EU countries, but it is matched by the high value of corporate assets and significant equity cushions. It mainly reflects a large share of international companies. Exposure to external financing is high. Commercial real estate companies are exposed to real estate price developments, have assumed more debt with a reduction in the number of large players implying also a concentration of financial risks. The corporate debt-to-GDP ratio has started to rise again after a period of 'passive' deleveraging. The risk from commercial real estate has risen in 2021 as credit growth to the sector increased by over 10% on the year and the proportion of bank loans with elevated credit risk almost doubled from 2019 to 2020, reaching nearly 10%.  Finansinspektionen raised the capital requirements specifically for bank loans to commercial real estate in January 2020.  Banks are well capitalised, non-performing loans remain among the lowest in the EU, and profitability is among the highest. These indicators somewhat mitigate, but do not fully offset, risks stemming from high private sector indebtedness. The reliance of Swedish banks on wholesale funding could amplify the impact of a sharp housing adjustment. The major banks’ loan-to-deposit ratios remain among the highest and leverage ratios among the lowest in the EU. Swedish banks serve a large share of the market in the Nordic-Baltic region, thus representing a source of possible spillovers in the event of sudden deleveraging needs.   Banks continue to have a high exposure to the real estate market: mortgage loans to households and commercial real estate firms constitute almost 50 % of the banks' total domestic lending, 55 % of which is mortgage loans to households. Additional exposure to the commercial real estate market comes from lending to construction firms. Commercial real estate firms are increasingly funding themselves directly in the market, bringing in foreign funding. Although this puts part of the risk on non-bank and foreign investors, it also implies an increased overall leverage that increases the risks of the bank loans to commercial real estate firms.  The countercyclical capital buffer was lowered to 0% in response to the crisis. The buffer rate will be raised to 1.0% on 29 September 2022. The buffer stood at 2.5% until 16 March 2020. The application of the risk-weight floor for banks’ Swedish mortgage exposures of 25% was extended on 17 December 2021 until 30 December 2023. The FSA recommended banks to be restrictive in using earnings for dividend pay-outs and share buybacks from December 2020 till September 2021.  
 
 
   
 
Table (continued) 

Source: European Commission 

55 

Housing sector   House prices have grown almost continuously since the second half of the 1990s. Following price declines in 2018, prices started to rise moderately till the end of 2020. Swedish house prices continue to appear significantly overvalued. Price-to-income and price-to-rent ratios were about 45-66 % above their long-term average as of 2021. A model-based estimate suggests prices are slightly above fundamentally justified levels, reflecting also low interest rates. These valuation gaps are among the highest in the EU.  High house prices are driven predominantly by a combination of structural bottlenecks in housing supply, especially in the main urban areas, combined with a favourable tax treatment of home ownership and mortgage debt, as well as a regulated rental market (preventing an efficient allocation of the rental housing stock and limiting access to housing). Overvalued house prices combined with a large mortgage debt stock entail risks of a disorderly correction and adverse consequences for the real economy and potentially the banking sector. House price growth accelerated during 2021, reaching nominal growth of 11.1% y-o-y in the fourth quarter. Real house prices stood 10% higher at the end of 2021 in comparison with the previous high reached in 2017 Q3. As a consequence, prices are  increasingly out of line with fundamentals.  Housing investment has recovered from the slump during and following the global financial and economic crisis. Construction permits were handed out between 2015 and 2021 at almost double the rate of 2009 – 2014. Even at this higher rate, new housing supply is still falling short of the current needs. The authorities have taken several measures, however with only limited impact on the overall imbalances. Demand side measures are the temporary suspension of the amortisation requirement until September 2021, the raised ceiling on deferred capital gains from SEK 1.45 million to SEK 3 million in combination with the abolishment of interest payments on the amount of the capital gains deferred. These on balance supported price increases. Supply side measures taken have been the investment support for rental housing and housing for students, and amendments to the building and planning act to allow for a private right of initiative. Several inquiries have been launched with an aim to ease administrative procedures or to liberalise rent setting.  However, planning and building regulations in combination with the approaches differing between municipalities, weak competition in the construction sector and the lack of actions to reform the rental market (liberalising rents in newly produced and existing rental real estate still stiffen the reaction of supply to increased demand. Public housing investments lag behind other housing investments with a declining proportion of public housing dwellings in overall housing stock as a consequence.   
 
   
 
ANNEX 18: TAXATION 
ANNEX 18: TAXATION 

This  Annex  provides  an 
indicator-based 
overview  of  the  Sweden’s  tax  system.  It 
includes  information  on  the  tax  structure,  i.e.  the 
types  of  tax  that  Sweden  derives  most  revenue 
from,  the  tax  burden  for  workers,  and  the 
progressivity  and  redistributive  effect  of  the  tax 
information  on  tax 
system. 
collection  and  compliance  and  on  the  risks  of 
aggressive tax planning. 

It  also  provides 

Sweden’s tax revenues are high in relation to 
GDP,  and  the  tax  system  relies  heavily  on 
labour  taxation.  In  2020,  Sweden’s  labour  tax 
revenues as a percentage of GDP were the highest 
among  EU  Member  States  and  revenues  from 
consumption  taxes  as  a  percentage  of  GDP  were 
also  above  the  EU  aggregate.  Revenues  from 
capital  taxes  and  environmental  taxes  were, 
however,  below  the  EU  aggregate.  Moreover, 
revenues  from  recurrent  taxes  on  immovable 
property,  which  are  considered  to  be  particularly 
conducive  to  economic  growth,  are  low  compared 
to other EU countries. Despite some minor reforms 
in  2021,  only  limited  progress  has  been made  on 

Graph A18.1: Tax wedge indicators 2021 

broader property tax reforms. 

Sweden’s labour tax burden is relatively high 
at  different  income  levels.  The  tax  wedge  at 
lower income levels (for single earners at 50% and 
at  67%  of  the  average  wage)  was  relatively  high 
in  2020,  as  was  the  tax  wedge  at  the  higher 
income  level  of  167%  of  the  average  wage.  The 
wedge for the highest income percentile, however, 
was lower than in 2021. At the same time, the tax 
wedge  at 100% of the average wage was a little 
below  the  EU  average.  Second  earners  at  a  wage 
level of 67% of the average wage, whose spouse 
earned  the  average  wage,  also  faced  a  slightly 
higher  tax  wedge  than  the  EU  average,  though 
they were – unlike in many other Member States – 
not  taxed  more  heavily  than  single  people  at  the 
same wage level. The Swedish tax benefit systems 
reduced  income  inequality,  as  measured  by  the 
GINI  coefficient,  by  more  than  the  EU  average  in 
2020. 

The tax wedge measures the difference between the total labour cost of employing a worker and the worker’s net earnings: sum 
of personal income taxes and employee and employer social security contributions, net of family allowances, expressed as a 
percentage of total labour costs (the sum of the gross wage and social security contributions paid by the employer). It is 
calculated for specific types of tax payers in terms of household composition and income level expressed as % of average wage. 
Data on tax wedges can be consulted in the ‘Tax and benefit database’ by ECFIN 
https://europa.eu/economy_finance/db_indicators/tab/. 
(1) The second earner average tax wedge measures how much extra personal income tax plus employee and employer social 
security contributions (SSCs) the family will have to pay as a result of the second earner entering employment, as a proportion of 
the second earner’s gross earnings plus the employer SSCs due on the second earner’s income. For a more detailed discussion see 
OECD (2016), Taxing Wages 2016, OECD Publishing, Paris. http://dx.doi.org/10.1787/tax_wages-2016-en  
(*) EU-27 simple average, as no aggregated EU-27 value. 
Source: European Commission 

56 

38.039.842.650.539.8At 50% of Average Wage (Single person)At 67% of Average Wage (Single person)At 100% of Average Wage (Single person)At 167% of Average Wage (Single person)For second earner at 67% of Average Wage(Two earner couple, 1st earner 100% of AW)(1)SEEU-27 (*) 
 
 
 
 
   
Table A18.1:Taxation indicators 

For more data on tax revenues as well as the methodology applied see European Commission, Directorate-General for Taxation 
and Customs Union, Taxation trends in the European Union: data for the EU Member States, Iceland, Norway and United Kingdom: 
2021 edition, Publications Office, 2021, https://data.europa.eu/doi/10.2778/843047 and the ‘Data on Taxation’ webpage (data 
https://ec.europa.eu/taxation_customs/taxation-1/economic-analysis-taxation/data-taxation_en). For more details on VAT GAP see 
European Commission, Directorate-General for Taxation and Customs Union, “VAT gap in the EU : report 2021”, Publications 
Office, 2021, https://data.europa.eu/doi/10.2778/30877  
(1) Forward-looking Effective Tax Rate (OECD). 
(*) EU-27 simple average as there is no aggregated EU-27 value. 

Source:  European Commission and OECD 

of 

terms 

compliance 

In 
and 
tax 
administration, Sweden is a top performer in 
the  EU.  With  outstanding  tax  arrears  at  0.1%  of 
total  tax revenue in 2019, Sweden is significantly 
below the EU average of 31.8%. Further, the ‘VAT 
gap’,,  an  indicator  of  the  effectiveness  of  VAT 
enforcement  and  compliance,  at  1.4%  in  2019 
was significantly below that of the EU average of 
the 
10.5%.  As  part  of 
government  intends  to  strengthen  anti-money 
laundering rules, including by giving tax authorities 
access to information on holders of accounts and 
deposit boxes held by financial undertakings. 

the  Swedish  RRP, 

57 

2010201820192020202120102018201920202021Total taxes (including compulsory actual social contributions) (% of GDP)42.943.842.842.943.237.940.139.940.1Labour taxes (as % of GDP)24.225.624.924.920.020.720.721.5Consumption taxes (as % of GDP)12.612.211.912.110.811.111.110.8Capital taxes (as % of GDP)6.16.06.05.87.18.28.17.9Total property taxes (as % of GDP)1.01.21.11.11.92.22.22.3Recurrent taxes on immovable property (as % of GDP)0.70.70.70.71.11.21.21.2Environmental taxes as % of GDP2.72.12.12.02.42.42.42.2Tax wedge at 50% of Average Wage (Single person) (*)39.039.438.838.938.033.932.432.031.531.9Tax wedge at 100% of Average Wage (Single person) (*)42.843.042.642.742.641.040.240.139.939.7Corporate Income Tax - Effective Average Tax rates (1) (*)21.020.420.419.819.519.3Difference in GINI coefficient before and after taxes and cash social transfers (pensions excluded from social transfers)7.89.89.79.78.47.97.48.3Outstanding tax arrears: Total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)0.20.131.931.8VAT Gap (% of VTTL)3.31.411.210.5Dividends, Interests and Royalties (paid and received) as a share of GDP (%)9.710.79.210.710.5FDI flows through SPEs (Special Purpose Entities), % of total FDI flows (in and out)5.15.04.847.846.236.7Tax structureProgressivity & fairnessTax administration & complianceFinancial Activity RiskEU-27Sweden 
 
 
   
 
 
ANNEX 19: KEY ECONOMIC AND FINANCIAL INDICATORS 
ANNEX 19: KEY ECONOMIC AND FINANCIAL INDICATORS 

Table A19.1:Key economic and financial indicators 

(1) NIIP excluding direct investment and portfolio equity shares 
(2) Domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches. 
Source: Eurostat and ECB as of 2 May 2022, where available; European Commission for forecast figures (Spring forecast 2022) 

58 

2004-072008-122013-1820192020202120222023Real GDP (y-o-y)3.80.72.52.0-2.94.82.31.4Potential growth (y-o-y)2.71.72.12.01.71.91.71.7Private consumption (y-o-y)3.31.72.60.7-4.75.83.21.5Public consumption (y-o-y)0.51.41.60.3-1.32.80.8-3.0Gross fixed capital formation (y-o-y)6.9-0.54.0-0.3-0.36.12.02.5Exports of goods and services (y-o-y)7.70.83.36.0-4.67.54.13.1Imports of goods and services (y-o-y) 7.51.24.22.1-5.69.44.51.8Contribution to GDP growth:Domestic demand (y-o-y)3.21.02.60.3-2.54.82.10.6Inventories (y-o-y)0.1-0.10.2-0.1-0.70.40.10.1Net exports (y-o-y)0.5-0.1-0.21.80.2-0.40.00.7Contribution to potential GDP growth:Total Labour (hours) (y-o-y)0.60.70.80.60.40.50.40.5Capital accumulation (y-o-y)0.70.60.70.80.70.80.80.8Total factor productivity (y-o-y)1.40.40.50.70.60.60.50.5Output gap1.6-1.6-0.30.4-4.2-1.4-0.8-1.2Unemployment rate6.97.97.47.08.58.87.87.0GDP deflator (y-o-y)1.41.71.82.51.83.04.33.9Harmonised index of consumer prices (HICP, y-o-y)1.31.91.11.70.72.75.33.0Nominal compensation per employee (y-o-y)4.03.02.63.02.54.32.73.7Labour productivity (real, hours worked, y-o-y)2.40.10.92.30.32.20.30.1Unit labour costs (ULC, whole economy, y-o-y)1.12.81.71.54.30.82.63.2Real unit labour costs (y-o-y)-0.31.0-0.1-1.02.5-2.1-1.6-0.7Real effective exchange rate (ULC, y-o-y)-0.31.2-1.5-4.9....Real effective exchange rate (HICP, y-o-y)-0.80.0-2.1-3.83.03.0..Net savings rate of households (net saving as percentage of net disposable income)4.710.413.115.718.016.9..Private credit flow, consolidated (% of GDP)12.77.87.910.012.616.9..Private sector debt, consolidated (% of GDP)153.3190.5194.0198.7212.5218.0..of which household debt, consolidated (% of GDP)61.375.184.588.594.693.7..of which non-financial corporate debt, consolidated (% of GDP)92.1115.4109.5110.2117.9124.3..Gross non-performing debt (% of total debt instruments and total loans and advances) (2)..1.00.90.8...Corporations, net lending (+) or net borrowing (-) (% of GDP)4.32.1-2.0-1.91.1-0.80.51.3Corporations, gross operating surplus (% of GDP)25.424.524.224.424.524.825.626.2Households, net lending (+) or net borrowing (-) (% of GDP)0.53.95.26.57.66.74.94.1Deflated house price index (y-o-y)10.11.55.50.43.0...Residential investment (% of GDP)3.93.74.84.75.05.3..Current account balance (% of GDP), balance of payments7.16.13.55.56.15.54.95.8Trade balance (% of GDP), balance of payments6.75.23.54.44.74.4..Terms of trade of goods and services (y-o-y)-0.4-0.1-0.20.40.80.7-1.20.5Capital account balance (% of GDP)-0.2-0.2-0.10.00.10.2..Net international investment position (% of GDP)-11.8-8.9-3.916.214.117.8..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (1)-21.4-22.1-17.0-8.1-6.4-5.6..IIP liabilities excluding non-defaultable instruments (% of GDP) (1)122.5153.3161.2145.5144.6151.2..Export performance vs. advanced countries (% change over 5 years)6.5-5.8-9.1-4.45.0...Export market share, goods and services (y-o-y)-0.7-4.3-1.33.05.4-2.3-0.5-1.1Net FDI flows (% of GDP)2.32.51.51.30.9-1.1..General government balance (% of GDP)1.9-0.10.10.6-2.7-0.2-0.50.5Structural budget balance (% of GDP)..0.20.4-0.40.50.01.2General government gross debt (% of GDP)44.938.241.834.939.636.733.830.5 
 
 
 
 
  
 
ANNEX 20: DEBT SUSTAINABILITY ANALYSIS 
ANNEX 20: DEBT SUSTAINABILITY ANALYSIS 

‘adverse interest-growth rate’ scenario assumes a 
in  the 
less  favourable  snowball  effect  than 
baseline.  In  the  ‘financial  stress’  scenario,  the 
country  temporarily  faces  higher  market  interest 
rates in 2022.  

Graph 2 shows the outcome of the stochastic 
projections.  These  projections  show  the  impact 
on  debt  of  2  000  different  shocks  affecting  the 
government’s 
economic 
growth,  interest  rates  and  exchange  rates.  The 
cone covers 80% of all the simulated debt paths, 
therefore excluding tail events. 

budgetary 

position, 

Table  2  shows  the  S1  and  S2  fiscal 
sustainability 
indicators  and  their  main 
drivers.  S1  measures  the  consolidation  effort 
needed to bring debt to 60% of GDP in 15 years. 
S2  measures  the  consolidation  effort  required  to 
stabilise  debt  over  an  infinite  horizon.  The  initial 
budgetary position measures the effort required to 
cover  future  interest  payments,  the  ageing  costs 
component  accounts  for  the  need  to  absorb  the 
projected 
public 
expenditure  such  as  pensions,  health  care  and 

in  ageing-related 

change 

This  annex  assesses  fiscal  sustainability 
risks for Sweden over the short, medium and 
long term. It follows the same multi-dimensional 
approach as the 2021 Fiscal Sustainability Report, 
updated  on  the  basis  of  the  Commission  2022 
spring forecast. 

Table  1  presents 
the  baseline  debt 
projections.  It  shows  the  projected  government 
debt  and  its  breakdown  into  the  primary  balance, 
the  snowball  effect  (the  combined  impact  of 
interest payments and nominal GDP growth on the 
debt  dynamics)  and  the  stock-flow  adjustment. 
These projections assume that no new fiscal policy 
measures  are  taken  after  2023,  and  include  the 
expected  positive  impact  of  investments  under 
Next Generation EU. 

Graph  1  shows  four  alternative  scenarios 
around  the  baseline, to  illustrate the  impact 
of changes in assumptions. The ‘historical SPB’ 
scenario  assumes  that  the  structural  primary 
balance (SPB) gradually returns to its past average 
level.  In  the  ‘lower  SPB’  scenario,  the  SPB  is 
permanently  weaker  than  in  the  baseline.  The 

Table A20.1:Debt sustainability analysis for Sweden 

Source: European Commission 

59 

Table 1. Baseline debt projections20192020202120222023202420252026202720282029203020312032Gross debt ratio (% of GDP)34.939.636.733.830.528.125.723.220.818.516.414.412.410.5Change in debt-4.04.7-3.0-2.9-3.2-2.4-2.5-2.5-2.4-2.2-2.1-2.0-2.0-1.9of whichPrimary deficit-1.02.40.00.3-0.7-0.9-1.1-1.3-1.4-1.5-1.5-1.5-1.5-1.5Snowball effect-1.30.7-2.7-2.2-1.5-1.5-1.4-1.2-1.0-0.8-0.7-0.6-0.5-0.4Stock-flow adjustment-1.71.6-0.3-1.1-1.00.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)5.612.77.15.84.33.62.71.60.6-0.4-0.8-0.9-0.9-1.0S1S2Overall index (pps. of GDP)-5.70.9of whichInitial budgetary position-3.3-1.1Debt requirement-2.4Ageing costs0.02.1of whichPensions-0.4-0.1Health care0.20.7Long-term care0.41.9Others-0.3-0.4                                                                       Table 2. Breakdown of the S1 and S2 sustainability gap indicators010203040502019202120232025202720292031BaselineHistorical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioGraph 1. Deterministic debt projections (% of GDP)p10-p20p20-p40p40-p60p60-p80p80-p900102030405020192020202120222023202420252026Graph 2. Stochastic debt projections(% of GDP)MedianBaseline 
 
 
 
  
 
the sustainability gap indicator S1 (at -5.7 pps. of 
GDP) signals that the country has significant room 
to  reduce  its  primary  surplus,  without  breaching 
the  60%  of  GDP  reference  target  (Table 2). 
Overall,  the  low  risk  reflects  the  current  surplus 
and low debt. 

Long-term  risks  to  fiscal  sustainability  are 
low.  Over  the  long  term,  both  the  sustainability 
gap indicator S2 (at 0.9 pps. of GDP) and the DSA 
point  to  low  risks.  The  S2  indicator  suggests  that 
public 
long-term  care  costs  would  have  a 
significant upward impact (Table 2). 

long-term  care,  and 
requirement 
measures  the  additional  adjustment  needed  to 
reach the 60% of GDP debt target. 

the  debt 

risk 

sustainability 

Finally,  the  heat  map  presents  the  overall 
classification 
fiscal 
(Table A20.2).  The  short-term  risk  category  is 
based  on  the  S0  indicator,  an  early-detection 
indicator of fiscal stress in the upcoming year. The 
medium-term  risk  category  is  derived  from  the 
debt  sustainability  analysis  (DSA)  and  the  S1 
indicator.  The  DSA  assesses  risks to  sustainability 
based  on  several  criteria: the  projected  debt level 
in 10 years’ time, the debt trajectory (‘peak year’), 
the plausibility of fiscal assumptions and room for 
tighter  positions  if  needed  (‘fiscal  consolidation 
space’),  the  probability  of  debt  not  stabilising  in 
the  next  5  years  and  the  size  of  uncertainty.  The 
long-term  risk  category  is  based  on  the  S2 
indicator and the DSA.  

short-term 

Overall, 
fiscal 
sustainability are low. The Commission’s early-
detection indicator (S0) does not signal short-term 
fiscal risks (Table A20.2). 

risks 

to 

Medium-term  risks  to  fiscal  sustainability 
are  low.  Both  elements  of  the  Commission’s 
medium-term  analysis  lead  to  this  conclusion. 
First,  the  debt  sustainability  analysis  (DSA)  shows 
that  government  debt  is  projected  to  continue 
falling  significantly  from  about  34%  of  GDP  in 
2022  to  around  11%  of  GDP  in  2032  in  the 
baseline  (Table 1).  This  debt  path is  rather  robust 
to  possible  shocks  to  fiscal,  macroeconomic  and 
financial  variables,  as  illustrated  by  alternative 
scenarios  and  stochastic  simulations,  all  pointing 
to  low  risks  (Tables  A20.1  and  A20.2).  Moreover, 

Table A20.2:Heat map of fiscal sustainability risks for Sweden 

(1)  Debt level in 2032: green: below 60% of GDP, yellow: between 60% and 90%, red: above 90%. (2) The debt peak year 
indicates whether debt is projected to increase overall over the next decade. Green: debt peaks early; yellow: peak towards the 
middle of the projection period; red: late peak. (3) Fiscal consolidation space measures the share of past fiscal positions in the 
country that were more stringent than the one assumed in the baseline. Green: high value, i.e. the assumed fiscal position is 
plausible by historical standards and leaves room for corrective measures if needed; yellow: intermediate; red: low. (4) Probability 
of the debt ratio exceeding in 2026 its 2021 level: green: low probability, yellow: intermediate, red: high (also reflecting the initial 
debt level). (5) The difference between the 90th and 10th percentiles measures uncertainty, based on the debt distribution under 
2000 different shocks. Green, yellow and red cells indicate increasing uncertainty. 
Source: European Commission 

60 

BaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallLOWLOWLOWLOWLOWLOWDebt level (2032), % GDP1110121211Debt peak year20212021202120212021Fiscal consolidation space60%60%66%60%60%Probability of debt ratio exceeding in 2026 its 2021 level0%Difference between 90th and 10th percentiles (pps. GDP)9Short termMedium termLong termOverall                               (S0)Overall     (S1+DSA)S1Debt sustainability analysis (DSA)S2Overall     (S2+DSA)OverallLOWLOWDeterministic scenariosStochastic projectionsLOWLOWLOWLOW