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

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   EUROPEAN COMMISSION  Brussels, 23.5.2022  COM(2022) 625 final  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 {SWD(2022) 625 final} - {SWD(2022) 640 final}  
 
 
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 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 9(2) thereof, 

Having  regard  to  Regulation  (EU)  No  1176/2011  of  the  European  Parliament  and  of  the 
Council  of  16  November  2011  on  the  prevention  and  correction  of  macroeconomic 
imbalances2, and in particular Article 6(1) thereof,  

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council3,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021.  The  Recovery  and  Resilience  Facility  provides  financial  support  for  the 
implementation of reforms and investment, entailing a fiscal impulse financed by the 
Union.  It  contributes  to  the  economic  recovery  and  to  the  implementation  of 
sustainable and growth-enhancing reforms and investment, in particular to promote the 
green and digital transition, while strengthening the resilience and potential growth of 
the Member States’ economies. It also helps strengthen sustainable public finances and 
boost growth and job creation in the medium and long term. The maximum financial 
contribution  per  Member  State  under  the  Recovery  and  Resilience  Facility  [was] 
updated on [XX] June 2022, in line with Article 11(2) of Regulation (EU) 2021/241.  

(2) 

On  24  November  2021,  the  Commission  adopted  the  Annual  Sustainable  Growth 
Survey,  marking  the  start  of  the  2022  European  Semester  for  economic  policy 

1 
2 
3 

OJ L 209, 2.8.1997, p. 1. 
OJ L 306, 23.11.2011, p. 25. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
establishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, p. 17). 

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coordination.  It  took  due  account  of  the  reaffirmed  joint  commitment  of  the  Porto 
Social Summit of May 2021 to further implement the European Pillar of Social Rights, 
proclaimed  by  the  European  Parliament,  the  Council  and  the  Commission  on  17 
November  2017.  The  European  Council  endorsed  the  priorities  of  the  2022  Annual 
Sustainable Growth Survey on 25 March 2022. On 24 November 2021, on the basis of 
Regulation  (EU)  No  1176/2011,  the  Commission  also  adopted  the  Alert  Mechanism 
Report,  in  which  it  identified  Sweden  as  one  of  the  Member  States  for  which  an  in-
depth review4 would be needed. On the same date, the Commission also adopted the 
proposal  for the 2022 Joint Employment Report analysing the implementation  of the 
Employment  Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights, 
which was adopted by the Council on 14 March 2022. 

Russia’s  invasion  of  Ukraine,  in  the  wake  of  the  global  pandemic,  has  significantly 
altered the geopolitical and economic context. The impact of the invasion on Member 
States’ economies has been felt for example through higher energy and food prices and 
weaker  growth  prospects.  The  higher  energy  prices  weigh  particularly  on  the  most 
vulnerable households experiencing or at risk of energy poverty. The EU is also seeing 
an unprecedented inflow of people fleeing Ukraine. In this context, on 4 March 2022, 
the  Temporary  Protection  Directive  was  triggered5  for  the  first  time,  granting 
displaced persons from Ukraine the right to legally stay in the EU, as well as access to 
education and training, labour market, healthcare, housing and social welfare. 

Taking  account  of  the  rapidly  changing  economic  and  geopolitical  situation,  the 
European Semester resumes its broad economic and employment policy coordination 
in 2022, while evolving in line with the implementation requirements of the Recovery 
and  Resilience  Facility,  as  outlined  in  the  2022  Annual  Sustainable  Growth  Survey. 
The  implementation  of  the  adopted  recovery  and  resilience  plans  is  essential  for  the 
delivery of the policy priorities under the European Semester, as the plans address all 
or a significant subset of the relevant country-specific recommendations issued in the 
2019  and  2020  Semester  cycles.  The  2019  and  2020  country-specific 
recommendations  remain  equally  relevant  also  for  recovery  and  resilience  plans 
revised, updated or amended in accordance with Articles 14, 18 and 21 of Regulation 
(EU) 2021/241, in addition to any country-specific recommendations issued up to the 
date of submission of the modified plan.  
The General Escape Clause has been active since March 20206. In its Communication 
of  3  March  20217,  the  Commission  set  out  its  view  that  the  decision  on  the 
deactivation or continued application of the general escape clause should be taken as 
an overall assessment of the state of the economy, with the level of economic activity 
in the EU or euro area compared to pre-crisis levels (end-2019) as a key quantitative 
criterion. Heightened uncertainty and strong downside risks to  the economic outlook 
in  the  context  of  war  in  Europe,  unprecedented  energy  price  hikes  and  continued 

Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 
on the prevention and correction of macroeconomic imbalances, OJ L 306, 23.11.2011, p. 25. 
Council Implementing Decision (EU) 2022/382 of 4 March 2022 establishing the existence of a mass 
influx of displaced persons from Ukraine within the meaning of Article 5 of Directive 2001/55/EC, and 
having the effect of introducing temporary protection, OJ L 71, 4.3.2022, p. 1. 
Communication from the Commission to the Council on the activation of the general escape clause of 
the Stability and Growth Pact, Brussels, 20.3.2020, COM(2020) 123 final. 

Communication  from  the  Commission  to  the  Council  on  one  year  since  the  outbreak  of  COVID-19: 
fiscal policy response, Brussels, 3.3.2021, COM(2021) 105 final. 

(3) 

(4) 

(5) 

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(6) 

(7) 

supply  chain  disturbances  warrant  the  extension  of  the  general  escape  clause  of  the 
Stability and Growth Pact through 2023. 

Following  the  approach  in  the  Council  opinion  of  18  June  2021  on  the  2021 
Convergence Programme, the fiscal stance is currently best measured as the change in 
primary  expenditure  (net  of  discretionary  revenue  measures),  excluding  COVID-19 
crisis-related  temporary  emergency  measures  but  including  expenditure  financed  by 
non-repayable  support  (grants)  from  the  Recovery  and  Resilience  Facility  and  other 
EU funds, relative to medium-term potential growth8. Going beyond the overall fiscal 
stance, in order to assess whether national fiscal policy is prudent and its composition 
is conducive to a sustainable recovery consistent with the green and digital transitions, 
attention  is  also  paid  to  the  evolution  of  nationally-financed9  primary  current 
expenditure  (net  of  discretionary  revenue  measures  and  excluding  COVID-19  crisis-
related temporary emergency measures) and investment. 

On  2  March  2022,  the  Commission  adopted  a  Communication  providing  broad 
guidance  for  fiscal  policy  in  2023,  aiming  at  supporting  the  preparation  of  Member 
States’  Stability  and  Convergence  Programmes  and  thereby  strengthening  policy 
coordination10. The Commission noted that, based on the macroeconomic outlook of 
the  2022  winter  forecast,  transitioning  from  an  aggregate  supportive  fiscal  stance  in 
2020-2022  to  a  broadly  neutral  aggregate  fiscal  stance  would  appear  appropriate  in 
2023,  while  standing  ready  to  react  to  the  evolving  economic  situation.  The 
Commission announced that the fiscal recommendations for 2023 should continue to 
differentiate  across  Member  States  and  take  into  account  possible  cross-country 
spillovers. The Commission invited the Member States to reflect the guidance in their 
Stability  and  Convergence  Programmes.  The  Commission  committed  to  closely 
monitor  the  economic  developments  and  adjust  its  policy  guidance  as  needed  and  at 
the latest in its Semester spring package of late May 2022. 

(8)  With  respect  to  the  fiscal  guidance  provided  on  2  March  2022,  the  fiscal 
recommendations  for  2023  take  into  account  the  worsened  economic  outlook,  the 
heightened uncertainty and further downside risks, and the higher inflation compared 
to the winter forecast. Against these considerations, the fiscal response has to expand 
public investment for the green and digital transition and energy security, and sustain 
the purchasing power of the most vulnerable households so as to cushion the impact of 
the energy price hike and help limit inflationary pressures from second round effects 
via targeted and temporary measures; fiscal policy has to remain agile so as to adjust 
to the rapidly evolving circumstances, and be differentiated across countries depending 
on their fiscal and economic situation, including as regards the exposure to the crisis 
and the inflow of displaced persons from Ukraine. 

(9) 

On  28  May  2021,  Sweden  submitted  its  national  recovery  and  resilience  plan  to  the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 
to  Article  19  of  Regulation  (EU)  2021/241,  the  Commission  assessed  the  relevance, 

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10 

The  estimates  on  the  fiscal  stance  and  its  components  in  this  recommendation  are  Commission 
estimates  based  on  the  assumptions  underlying  the  Commission  2022  spring  forecast.  The 
Commission’s estimates of medium-term potential growth do not include the positive impact of reforms 
that are part of the Recovery and Resilience Plan and that can boost potential growth.  

Not financed by grants from the Recovery and Resilience Facility and other EU funds. 

Communication  from  the  Commission  to  the  Council:  Fiscal  policy  guidance  for  2023,  Brussels, 
2.3.2022, COM(2022) 85 final. 

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effectiveness,  efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in 
accordance with the assessment guidelines of Annex V to that Regulation. On 4 May, 
the Council adopted its Decision on the approval of the assessment of the recovery and 
resilience plan for Sweden11. The release of instalments is conditional on a decision by 
the Commission, taken in accordance with Article 24(5) of Regulation (EU) 2021/241, 
that  Sweden  has  satisfactorily  fulfilled  the  relevant  milestones  and  targets  set  out  in 
the  Council  Implementing  Decision.  Satisfactory  fulfilment  presupposes  that  the 
achievement of preceding milestones and targets has not been reversed. 

(10)  On  29  April  2022,  Sweden  submitted  its  2022  National  Reform  Programme  and  its 
2022  Convergence  Programme,  within  the  deadline  established  in  Article  4  of 
Regulation  (EC)  No  1466/97.  To  take  account  of  their  interlinkages,  the  two 
programmes have been assessed together. In accordance with Article 27 of Regulation 
(EU)  2021/241,  the  2022  National  Reform  Programme  also  reflects  Sweden’s  bi-
annual reporting on the progress made in achieving its recovery and resilience plan.  

in 

the 

relevant 

addressing 

(11)  The Commission published the 2022 country report for Sweden12 on 23 May 2022. It 
country-specific 
assessed  Sweden’s  progress 
recommendations adopted by the Council in 2019, 2020 and 2021, and took stock of 
Sweden’s  implementation  of  the  recovery  and  resilience  plan,  building  on  the 
Recovery  and  Resilience  Scoreboard.  Based  on  this  analysis,  the  country  report 
identified gaps with respect to those challenges that are not addressed or only partially 
addressed  by  the  recovery  and  resilience  plan,  as  well  as  new  and  emerging 
challenges,  including  those  emerging  from  Russia’s  invasion  of  Ukraine.  It  also 
assessed Sweden’s progress on implementing the European Pillar of Social Rights and 
on achieving the EU headline targets on employment, skills and poverty reduction, as 
well as progress in achieving the UN’s Sustainable Development Goals.  

(12)  The  Commission  carried  out  an  in-depth  review  under  Article  5  of  Regulation  (EU) 
No  1176/2011  for  Sweden  and  published  its  results  on  23  May  202213.  The 
Commission  concluded  that  Sweden  is  experiencing  macroeconomic  imbalances. 
Vulnerabilities relate to high and rising house prices and high household indebtedness. 
Private  debt  has  risen  to  216  %  of  GDP  in  2020,  which  is  a  concern  because  of  the 
large share of debt used to buy property. Financial institutions are exposed to the real 
estate  market  through  mortgage  lending  and  credit  to  commercial  real  estate  and 
construction  firms.  Spurred  by  a  housing  shortage,  an  overregulated  rental  market, 
fiscal  incentives  to  take  up  mortgage  loans,  and  declining  interest  rates,  households 
have  increasingly  taken  on  debt  to  finance  house  purchases.  This  makes  them 
vulnerable  to  potential  interest  rate  changes.  Household  debt  stood  at  188%  of 
disposable income and 95% of GDP  at  the end of 2020.  A correction could  have an 
adverse impact  on the economy  and  the banking sector.  This  could  have a knock-on 
effect  on  countries  with  economic  and  financial  links  to  the  Swedish  economy  and 
banking  sector.  Some  measures  have  been  taken  in  recent  years  to  address  these 
imbalances  but  have  had  a  limited  impact.  Key  policy  gaps  remain  particularly  in 
relation  to  tax  incentives  for  debt-financed  home  ownership,  housing  supply  and  the 
rental market. 

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Council Implementing Decision of 4 May 2022 on the approval of the assessment of the recovery and 
resilience plan for Sweden (ST 7772/2022; ST 7772/2022 ADD 1). 
SWD(2022)625 final. 
SWD(2022)639 final. 

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the economy  and  support 

(13)  On  20  July  2020,  the  Council  recommended  Sweden  to  take  in  2020  and  2021  all 
necessary measures, in  line with  the general  escape clause, to  effectively  address  the 
pandemic,  sustain 
the  ensuing  recovery.  It  also 
recommended  Sweden  to  pursue,  when  economic  conditions  allow,  fiscal  policies 
aimed  at  achieving  prudent  medium-term  fiscal  positions  and  ensuring  debt 
sustainability,  while  enhancing  investment.  In  2021,  based  on  data  validated  by 
Eurostat, Sweden’s general government deficit fell from 2.7% of GDP in 2020 to 0.2% 
in  2021.  The  fiscal  policy  response  by  Sweden  supported  the  economic  recovery  in 
2021,  while  temporary  emergency  support  measures  declined  from  3.3%  of  GDP  in 
2020 to 2.2% in 2021. The measures taken by Sweden in 2021 have been in line with 
the Council Recommendation of 20 July 2020. The discretionary budgetary measures 
adopted  by  the  government  in  2020  and  2021  were  mostly  temporary.  At  the  same 
time, some of the discretionary measures adopted over the period 2020 to 2021 were 
not  temporary  or  matched  by  offsetting  measures,  mainly  consisting  of  several 
expenditure measures as well as income tax cuts. Based on data validated by Eurostat, 
general government debt stood at 36.7% of GDP in 2021. 

(14)  The  macroeconomic  scenario  underpinning  the  budgetary  projections  in  the  2022 
Convergence  Programme  is  realistic.  The  government  projects  real  GDP  to  grow  by 
3.1%  in  2022  and  1.6%  in  2023.  By  comparison,  the  Commission’s  2022  spring 
forecast  projects  a  lower  real  GDP  growth  of  2.3%  in  2022  and  1.4%  in  2023.  The 
Government  expects  that  the  headline  deficit  will  increase  to  0.5%  of  GDP  in  2022 
and turn into a surplus of 0.5 % in 2023. The increase in 2022 mainly reflects weaker 
economic  growth  and  additional  spending  priorities,  which  taken  together  dominate 
the  unwinding  of  emergency  measures.  According  to  the  Programme,  the  general 
government debt-to-GDP ratio is expected to decrease to 33.5% in 2022, and to keep 
declining to 30.7 % in 2023. Based on announced policy measures known at the cut-
off date of the  forecast,  the Commission  2022 spring  forecast  projects  a  government 
deficit for 2022 of 0.5% of GDP, turning into a 0.5% surplus in 2023. This is in line 
with the deficit projected in the 2022 Convergence Programme. The Commission 2022 
spring forecast projects a similar general government debt-to-GDP ratio, of 33.8% in 
2022 and 30.5% in 2023.  

(15) 

Based  on  the  Commission  spring  2022  forecast,  the  medium-term  (10-year  average) 
potential output growth is estimated at 1.9 %. However, this estimate does not include 
the impact  of the  reforms that are part of the Recovery  and Resilience Plan that  can 
boost Sweden’s potential growth. 

In 2022, the government phased out the majority of measures taken in response to the 
COVID-19 crisis, such that the temporary emergency support measures are projected 
to  decline  from  2.2%  of  GDP  in  2021  to  1.2%  in  2022.  The  government  balance  is 
impacted  by  the  measures  adopted  to  counter  the  economic  and  social  impact  of  the 
increase in energy prices, which in the Commission spring 2022 forecast are estimated 
at  0.4% of GDP in 2022 and 0.0% of GDP in  2023.14 Compared to  the EU average, 
Sweden has a lower energy intensity of the economy and a lower share of household 
expenditure  on  energy.15  These  measures  consist  of  social  transfers  to  households  to 
compensate for higher electricity prices and cuts  to fuel taxes in agriculture, forestry 

14 

15 

The figures represent the level of annual budgetary costs of those measures taken since autumn 2021, 
including current revenue and expenditure as well as – where relevant – capital expenditure measures. 
The share of household expenditure on energy is measured by the weight of the energy component in 
the HICP basket. 

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and  fisheries.  These  measures  have  been  announced  as  temporary.  However,  in  case 
energy  prices  remain  elevated  also  in  2023,  some  of  these  measures  might  be 
continued. Some of these measures are not targeted, notably the transfer to households 
to cover higher electricity prices. The costs to offer temporary protection to displaced 
persons from Ukraine are projected in the Commission 2022 spring forecast at 0.1% of 
GDP in 2022 and 202316, while the increased cost  of defence expenditure amount to 
just under 0.1% of GDP in 2022 alone.  

(16)  On  18  June  2021,  the  Council  recommended  that  in  2022  Sweden17  maintain  a 
supportive  fiscal  stance,  including  from  the  impulse  provided  by  the  Recovery  and 
Resilience Facility, and preserve nationally-financed investment. It also recommended 
Sweden to pursue, when economic conditions allow, a fiscal policy aimed at achieving 
prudent medium-term fiscal positions and ensuring fiscal sustainability in the medium 
term, and at the same time, to enhance investment to boost growth potential 

(17) 

In 2022, based on the Commission’s 2022 spring forecast and taking into account the 
information incorporated in Sweden’s 2022 Convergence Programme, the fiscal stance 
is  projected  to  be  supportive  at  -0.6%  of  GDP  as  recommended  by  the  Council.18 
Sweden  plans  to  provide  continued  support  to  the  recovery  by  making  use  of  the 
Recovery  and  Resilience  Facility  to  finance  additional  impulse,  as  recommended  by 
the Council. The positive contribution to economic activity of expenditure financed by 
Recovery and Resilience Facility grants and other EU funds is projected to increase by 
0.1  percentage  points  of  GDP  compared  to  2021.  Nationally-financed  investment  is 
projected  to  provide  a  neutral  contribution  to  the  fiscal  stance  in  2022.19  Therefore, 
Sweden  plans  to  preserve  nationally-financed  investment,  as  recommended  by  the 
Council.  At  the  same  time,  the  growth  in  nationally-financed  primary  current 
expenditure  (net  of  new  revenue  measures)  in  2022  is  projected  to  provide  an 
expansionary  contribution  of  0.4  percentage  points  to  the  overall  fiscal  stance.  This 
includes  the  additional  impact  of  the  above-mentioned  measures  to  address  the 
economic and social impact of the increase in energy prices (0.4% of GDP)as well as 
the  costs  to  offer  temporary  protection  to  displaced  persons  from  Ukraine  (0.1%    of 
GDP). 

(18) 

In  2023,  the  fiscal  stance  is  projected  in  the  Commission  2022  spring  forecast  at 
+1.3% of GDP on a no-policy change assumption.20 Sweden is projected to continue 

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18 

19 

20 

The total number of displaced persons from Ukraine to the EU is assumed to gradually reach 6 million 
by  the  end  of  2022,  and  their  geographical  distribution  is  estimated  based  on  the  size  of  the  existing 
diaspora, the relative population of the receiving Member State, and the actual distribution of displaced 
persons from Ukraine across the EU as of March 2022. For budgetary costs  per person, estimates are 
based on the Euromod microsimulation model of the Commission’s Joint Research Centre, taking into 
account both cash transfers people may be eligible for as well as in-kind benefits such as education and 
healthcare. 
Council  Recommendation  of  18  June  2021  delivering  a  Council  opinion  on  the  2021  Convergence 
Programme of Sweden, OJ C 304, 29.7.2021, p. 131.  
A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 
Other  nationally-financed  capital  expenditure  is  projected  to  provide  a  neutral  contribution  of  0.0 
percentage point of GDP. 

A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 

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using  the  grants  from  the  Recovery  and  Resilience  Facility  in  2023  to  finance 
additional  support  of  the  recovery.  The  positive  contribution  to  economic  activity  of 
expenditure financed by Recovery and Resilience Facility grants and other EU funds is 
projected to increase by  0.1 percentage point of GDP compared to 2022. Nationally-
financed  investment  is  projected  to  provide  a  slightly  contractionary  contribution  to 
the  fiscal  stance  of  0.1  percentage  point  in  2023.21  At  the  same  time,  the  growth  in 
nationally-financed  primary  current  expenditure  (net  of  new  revenue  measures)  in 
2023 is projected to provide a contractionary contribution of 1.1 percentage points to 
the overall fiscal stance. This includes the impact from the phasing out of the measures 
addressing the increased energy prices (0.4 % of GDP). 

(19) 

In the 2022 Convergence Programme, the general  government surplus is expected to 
gradually  increase  to  0.8%  of  GDP  in  2024  and  to  1.4%  by  2025.  Therefore,  the 
general  government  deficit  is  planned  to  remain  below  3%  of  GDP  over  the 
Programme  horizon.  According  to  the  Programme,  the  general  government  debt-to-
GDP  ratio  is  expected  to  continue  to  decrease,  specifically  to  28.9%  in  2024  and  to 
further  decline  to  26.4%  in  2025.  Based  on  the  Commission’s  analysis,  debt 
sustainability risks appear low over the medium term. 

(20)  The combination of high house prices and household debt poses risks of a disorderly 
correction.  Sweden  has  implemented  several  macro-prudential  measures  in  recent 
years  to  reduce  household  debt  relative  to  income  and  the  value  of  the  mortgaged 
property. However, other incentives to borrow and take on debt remain in place. As a 
result,  the  policy  measures  taken  so  far  appear  to  have  had  a  limited  impact  on 
mortgage lending growth. House prices have been increasing since the middle of the 
1990s, outpacing the growth of household income. This trend accelerated during 2021, 
with  nominal  house  prices  growing  by  11.3%  year-on-year  in  the  third  quarter.  The 
main reasons for this include tax incentives favouring home ownership and mortgage 
debt,  accommodative  credit  conditions  and  relatively  low  mortgage  repayment  rates. 
The  overall  tax  burden  on  property  is  relatively  low  in  Sweden  because  of  generous 
tax deductions of mortgage interest payments and low recurrent property taxes. While 
capital gain taxes have been lowered in 2020 and 2021 to reduce the cost for existing 
homeowners to buy and move houses, this change may have slightly raised the entry 
barrier for first-time buyers through an increase in house prices. Despite a significant 
increase in new construction in recent years and an increase in the number of building 
permits granted, a shortage of houses is expected to continue in the coming years. In 
addition,  the  existing  housing  stock  is  not  used  efficiently.  Together,  this  makes  it 
harder for people to change jobs and likely contributes to intergenerational inequality. 
In  the  rental  market,  regulated  below-market  rents  benefit  a  limited  group  of 
households. There is no link between the rent and the household’s needs and income. 
Efficiency  gains  would  be  made  if  rents  followed  market  prices  more  closely 
complemented with rental support based on income and net wealth.  

(21) 

In accordance with Article 19(3), point (b), and Annex V, criterion 2.2 to Regulation 
(EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually 
reinforcing reforms and investments to be implemented by 2026. These help address 
all  or  a  significant  subset  of  the  economic  and  social  challenges  outlined  in  the 
country-specific  recommendations  addressed  to  Sweden  by  the  Council  in  the 

21 

Other  nationally-financed  capital  expenditure  is  projected  to  provide  a  neutral  contribution  of  0.0 
percentage point of GDP. 

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European  Semester  in  2019  and  2020, 
to  any  country-specific 
recommendations  issued  up  to  the  date  of  adoption  of  a  plan.  In  particular,  it 
introduces  reforms  and  investments  to  support  the  green  and  digital  transitions,  to 
make the health care system more resilient, reduce the risk of money laundering, and 
raise the education and skills level.  

in  addition 

(22)  The  implementation  of  the  recovery  and  resilience  plan  of  Sweden  is  expected  to 
contribute  to  making  further  progress  on  the  green  and  digital  transition.  Measures 
supporting  the  climate  objectives  in  Sweden  account  for  44%  of  the  plan’s  total 
allocation, while measures supporting digital objectives account for 21% of the plan’s 
total allocation. The fully fledged implementation of the recovery and resilience plan, 
in line with the relevant milestones and targets, will help Sweden swiftly recover from 
the fallout of the COVID-19 crisis, while strengthening its resilience. The systematic 
involvement of social  partners and other  relevant  stakeholders  remains important  for 
the  successful  implementation  of  the  recovery  and  resilience  plan,  as  well  as  other 
economic and employment policies going beyond the plan, to ensure broad ownership 
of the overall policy agenda.  

(23)  Sweden  submitted  the  cohesion  policy  programming  documents  between  November 
2021 and February 2022.22  In line with  Regulation (EU) 2021/1060  of the  European 
Parliament  and  of  the  Council  of  24  June  2021,  Sweden  shall  take  into  account  the 
relevant  country-specific  recommendations  in  the  programming  of  the  2021-2027 
cohesion  policy  funds.  This  is  a  prerequisite  for  improving  the  effectiveness  and 
maximising  the  added  value  of  the  financial  support  to  be  received  from  cohesion 
policy  funds,  while  promoting  the  coordination,  complementarity  and  coherence 
between  these  funds  and  other  Union  instruments  and  funds.  The  successful 
implementation  of  the  Recovery  and  Resilience  Facility  and  cohesion  policy 
programmes also depends on the removal of bottlenecks to investment to support the 
green and digital transition and balanced territorial development. 

(24)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan, Sweden faces a number of additional challenges related to (i) overvalued house 
price levels alongside a continued rise in household debt; (ii) unequal opportunities in 
education for pupils  from  disadvantaged and migrant  background  and the need for a 
better integration of disadvantaged  groups in  the labour market; and (iii) the need to 
further decrease the dependence on fossil fuels, including from Russia. 

(25)  Despite  good  outcomes  overall,  inequalities  in  the  Swedish  education  system  impact 
the  level  of  basic  skills  of  pupils  from  disadvantaged  socio-economic  and  migrant 
backgrounds.  The  difference  in  performance  between  pupils  born  in  Sweden  and 
foreign-born pupils has increased markedly, against the backdrop of a doubling of the 
number  of  pupils  with  a  migrant  background  between  2009  and  2018.  Even  though 
international  testing  results  show  that  basic  skills  have  improved  overall,  the 
difference in reading skills between pupils with and without a migrant background is 
amongst the highest in the EU. Furthermore, the rate of early school leaving is much 
higher  for  foreign  born  pupils.  Inequalities  in  education  are  increasing  and  are  often 

22 

Regulation  (EU)  2021/1060  of  the  European  Parliament  and  of  the  Council  of  24  June  2021  laying 
down  common  provisions  on  the  European  Regional  Development  Fund,  the  European  Social  Fund 
Plus,  the  Cohesion  Fund,  the  Just  Transition  Fund  and  the  European  Maritime,  Fisheries  and 
Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the 
Internal  Security  Fund  and  the  Instrument  for  Financial  Support  for  Border  Management  and  Visa 
Policy. OJ L 231, 30.6.2021, p. 159. 

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linked to the limited school choice opportunities for pupils with migrant backgrounds. 
The difference in educational outcomes has a large impact on the chances of pupils in 
disadvantaged  situations  to  develop  the  relevant  skills  to  finding  employment.  There 
are  opportunities  to  improve  the  set-up  and  governance  of  the  education  system, 
including  the  enrolment  process,  as  well  as  address  lasting  shortages  of  qualified 
teachers  to  promote  the  quality  and  equity  of  the  educational  system.  Sweden  also 
faces challenges integrating beyond-school-age low-skilled and foreign-born people in 
the  labour  market.  Overall,  this  contributes  to  continued  gaps  in  labour  market 
participation and skills for a sizeable number of workers. 

(26) 

In  response  to  the  mandate  by  the  EU  Heads  of  State  or  Government  set  out  in  the 
Versailles Declaration, the REPowerEU plan aims to phase out the European Union’s 
dependence on fossil fuel imports from Russia as soon  as possible. For this purpose, 
the most suitable projects, investments and reforms at national, regional and EU level 
are being identified in dialogue with the Member States. These measures aim to reduce 
overall reliance on fossil fuels and shift fossil fuel imports away from Russia.  

(27)  Stepping  up  efforts  to  meet  renewable  targets  laid  down  in  the  national  energy  and 
climate  plan  is  crucial.  Although  Sweden  has  the  highest  share  of  renewables  in 
energy consumption in the EU (51.1 % in 2020) it is amongst the Member States with 
the  highest  energy  consumption  per  person.  Furthermore,  a  large  share  of  Sweden's 
greenhouse  gas  emissions  comes from the transport sector,  especially  road transport. 
This  sector  remains  heavily  reliant  on  oil,  which  accounts  for  17.7%  of  the  total 
energy mix. In addition, power and grid capacity constraints, especially in the south of 
Sweden,  continued  to  increase  in  2021,  limiting  the  expansion  and  location  of 
commercial  activities  there.  This  issue  is  further  aggravated  by  the  lack  of 
transmission  capacity  between  the  north  and  south.  Additional  investment  in 
renewable  energy,  grid  and  network  capacity,  and  interconnectivity  between  the 
country’s regions is needed to reach the national goal of 100% renewable electricity by 
2040  and  to  achieve  net  zero  carbon  emissions  by  2045.  Further  streamlining 
permitting  procedures  would  ease  the  burden  of  deploying  renewable  energy,  in 
particular wind power. Moreover, reducing energy consumption by increasing energy 
efficiency is essential to reduce carbon emissions and energy costs for consumers and 
businesses.  Increasing  investment  in  renewables  and  electrification,  addressing 
infrastructure  bottlenecks,  boosting  energy  efficiency  and  lowering  fossil  fuel 
consumption in transport will contribute to reducing the overall dependence on fossil 
fuels,  including  from  Russia.  The  weight  of  fossil  fuels  (2.6%  gas,  3.2%  coal  and 
17.7%  oil  in  2020)  in  the  Swedish  energy  mix  is  substantially  lower  than  the  EU 
average (24.4%  gas,  10.8% coal  and 32.7% oil  in 2020). However, there is  scope to 
further  reduce  Sweden’s  dependence  on  Russian  fossil  fuels.  This  is  especially  the 
case  for  oil  (in  2020,  20%  of  refined  oil  imports  and  8%  of  total  crude  oil  imports 
came from Russia) and gas (13% of total gas imports in 2020 came from Russia). Gas 
and  oil  dependency,  while  significant,  are  below  the  EU  average  of  44%  import  gas 
dependency,  23%  crude  oil  import  dependency,  and  35%  refined  oil  import 
dependency  on  Russia.23  Furthermore,  advancing  interconnection  projects  with 
neighbouring  countries  could  increase  the  security  of  Sweden’s  energy  supply  and 
adaptability  to  regional  variances,  in  light  of  recent  geopolitical  events.  It  should  be 

23 

Eurostat (2020), share of Russian imports over total imports of natural gas, crude oil and hard coal. For 
the  EU27  average,  the  total  imports  are  based  on  extra-EU27  imports.  For  Sweden,  total  imports 
include intra-EU trade. Crude oil does not include refined oil products. 

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noted  that  further  increase  in  ambition  for  reducing  greenhouse  gas  emissions  and 
increasing renewables and energy efficiency  will be needed for Sweden to be in line 
with the ‘Fit for 55’ objectives. 

(28)  While  the  acceleration  of  the  transition  towards  climate  neutrality  and  away  from 
fossil  fuels  will  create  significant  restructuring  costs  in  several  sectors,  Sweden  can 
make  use  of  the  Just  Transition  Mechanism  in  the  context  of  cohesion  policy  to 
alleviate the socio-economic impact  of the transition  in  the most  affected  regions.  In 
addition,  Sweden  can  make  use  of  the  European  Social  Fund  Plus  to  improve 
employment opportunities and strengthen social cohesion.  

(29) 

(30) 

In  the  light  of  this  assessment,  the  Council  has  examined  the  2022  Convergence 
Programme and its opinion24 is reflected in recommendation (1) below.  

In the light of the Commission’s in-depth review and this assessment, the Council has 
examined  the  2022  National  Reform  Programme  and  the  2022  Convergence 
Programme.  Its  recommendations  under  Article  6  of  Regulation  (EU)  No  1176/2011 
are  reflected  in  recommendations  (1)  and  (2)  below.  Policies  referred  to  in 
recommendations  (1)  and  (2)  help  inter-alia  address  imbalances  linked  to  the  poorly 
functioning housing market and overvalued house prices coupled with a continued rise 
in household debt. 

HEREBY RECOMMENDS that Sweden take action in 2022 and 2023 to:  

1. 

2. 

3. 

In 2023, ensure that the growth of nationally-financed current expenditure is in line 
with  an  overall  neutral  policy  stance,  taking  into  account  continued  temporary  and 
targeted support to households and firms most vulnerable to energy price hikes and 
to  people  fleeing  Ukraine.  Stand  ready  to  adjust  current  spending  to  the  evolving 
situation.  Expand  public  investment  for  the  green  and  digital  transition  and  for 
energy  security,  including  by  making  use  of  the  RRF,  RePowerEU  and  other  EU 
funds. For the period beyond 2023, pursue a fiscal policy aimed at achieving prudent 
medium-term  fiscal  positions.  Reduce  risks  related  to  high  household  debt  and 
housing  market  imbalances  by  reducing  the  tax  deductibility  of  mortgage  interest 
payments  or  by  increasing  recurrent  property  taxes.  Stimulate  investment  in 
residential construction to ease the most urgent shortages, in particular by removing 
structural  obstacles  to  construction  and  by  ensuring  the  supply  of  buildable  land. 
Improve  the  efficiency  of  the  housing  market,  including  by  introducing  reforms  to 
the rental market. 

Proceed with the implementation of its recovery and resilience plan, in line with the 
milestones  and  targets  included  in  the  Council  Implementing  Decision  of  4  May 
2022.  Swiftly  finalise  the  negotiations  with  the  Commission  of  the  2021-2027 
cohesion  policy  programming  documents  with  a  view 
their 
implementation.  

to  starting 

Reduce  the  impact  that  pupils’  socio-economic  and  migrant  backgrounds  have  on 
their educational outcomes by providing equal access opportunities to schools and by 
addressing  the  shortages  of  qualified  teachers.  Develop  skills  of  disadvantaged 
groups,  including  people  from  migrant  backgrounds,  by  adapting  resources  and 
methods to their needs to help their integration into the labour market. 

24 

Under Article 9(2) of Council Regulation (EC) No 1466/97. 

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4. 

Reduce overall reliance on fossil fuels by accelerating the deployment of renewables 
and  boosting  complementary  investment  in  network  infrastructure,  strengthening 
internal  grids  within  the  country  to  ensure  sufficient  network  capacity,  improving 
energy  efficiency,  and  further  streamlining  permitting  procedures  in  relation  to 
renewable energy projects. 

Done at Brussels, 

For the Council 
The President 

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