Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Sweden
Date: 2024-06-19
Institutions: European Commission, Secretariat-General
Subjects: Sweden, budget policy, economic policy, economic recovery, economic reform, employment policy, fiscal policy, housing policy, social policy, stability pact

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   EUROPEAN COMMISSION  Brussels, 19.6.2024  COM(2024) 627 final  Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Sweden {SWD(2024) 600 final} - {SWD(2024) 627 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the economic, social, employment, structural and budgetary policies 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  (EU)  2024/1263  of  29  April  2024  on  the  effective 
coordination  of  economic  policies  and  multilateral  budgetary  surveillance  and  repealing 
Council Regulation (EC) No 1466/971, and in particular Article 3(3) 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 to the Member 
States  for  the  implementation  of  reforms  and  investment,  entailing  a  fiscal  impulse 
financed by the EU. In line with the European Semester priorities, it helps achieve the 
economic  and  social  recovery  and  implement  sustainable  reforms  and  investment,  in 
particular  to  promote  the  green  and  digital  transitions  and  make  the  Member  States’ 
economies  more  resilient.  It  also  helps  strengthen  public  finances  and  boost  growth 
and job creation in the medium and long term, improve territorial cohesion within the 
EU and support the continued implementation of the European Pillar of Social Rights. 

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2 
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establishing 
http://data.europa.eu/eli/reg/2021/241/oj 

OJ L 2024/1263, 30.4.2024 ELI: http://data.europa.eu/eli/reg/2024/1263/oj. 
OJ L 306, 23.11.2011, p. 25. ELI: http://data.europa.eu/eli/reg/2011/1176/oj 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
17)  ELI: 

and  Resilience  Facility 

the  Recovery 

18.2.2021, 

(OJ  L 

57, 

p. 

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(2) 

(3) 

(4) 

(5) 

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The  REPowerEU  Regulation4,  adopted  on  27  February  2023,  aims  to  phase  out  the 
EU’s  dependency  on  Russian  fossil  fuel  imports.  This  would  help  achieve  energy 
security  and  diversify  the  EU’s  energy  supply,  while  increasing  the  uptake  of 
renewables,  energy  storage  capacities  and  energy  efficiency.  Sweden  added  a  new 
REPowerEU chapter to its national recovery and resilience plan in order to finance key 
reforms and investments that will help achieve the REPowerEU objectives. 

On  16  March  2023,  the  Commission  issued  a  Communication  on  the  ‘Long-term 
competitiveness of the EU: looking beyond 2030’5, in order to inform policy decisions 
and  create  the  framework  conditions  for  increasing  growth.  The  Communication 
frames competitiveness along nine mutually reinforcing drivers. Among these drivers, 
access to private capital, research and innovation, education and skills, and the single 
market  emerge  as  paramount  policy  priorities  for  reform  and  investment  to  address 
current productivity challenges as well as to build up the long-term competitiveness of 
the  EU  and  its  Member  States  On  14  February  2024,  the  Commission  followed  this 
Communication  with  the  Annual  Single  Market  and  Competitiveness  Report6.  The 
report  details  the  competitive  strengths  and  challenges  of  Europe's  Single  Market, 
tracking yearly developments according to the nine competitiveness drivers identified.     

On 21 November 2023, the Commission adopted the 2024 Annual Sustainable Growth 
Survey7, marking the start of the 2024 cycle of the European Semester for economic 
policy  coordination.  The  European  Council  endorsed  the  priorities  of  the  survey 
around  the  four  dimensions  of  competitive  sustainability  on  22  March  2024.  On  21 
November 2023, on the basis of Regulation (EU) No 1176/2011, the Commission also 
adopted the 2024 Alert Mechanism Report, in which it identified Sweden as one of the 
Member States that may be affected or may be at risk of being affected by imbalances, 
and for which an in-depth review would be needed. The Commission also adopted a 
recommendation  for  a  Council  recommendation  on  the  economic  policy  of  the  euro 
area, which the Council adopted on 12 April 2024, as well as the proposal for the 2024 
Joint  Employment  Report  analysing 
the  Employment 
the 
Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights,  which  the 
Council adopted on 11 March 2024. 

implementation  of 

On  30  April  2024,  the  EU’s  new  economic  governance  framework  came  into  force. 
The  framework  includes  the  new  Regulation  of  the  European  Parliament  and  of  the 
Council  (EU)  2024/1263  on  the  effective  coordination  of  economic  policies  and 
multilateral  budgetary  surveillance  and  repealing  Council  Regulation  (EC)  No 
1466/97.  It  also  includes  the  amended  Regulation  (EC)  No  1467/97  on  the 
implementation  of  the  excessive  deficit  procedure  and  the  amended  Directive 
2011/85/EU  on  the  budgetary  frameworks  of  Member  States8.  The  objectives  of  the 

Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council  of  27  February  2023 
amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans 
and  amending  Regulations  (EU)  No  1303/2013,  (EU)  2021/1060  and  (EU)  2021/1755,  and  Directive 
2003/87/EC (OJ L 63, 28.2.2023, p. 1) ELI: http://data.europa.eu/eli/reg/2023/435/oj 
COM(2023) 168 final.  
COM(2024) 77 final. 
COM(2023) 901 final. 
Council  Regulation  (EU)  2024/1264  of  29  April  2024  amending  Regulation  (EC)  No  1467/97  on 
speeding  up  and  clarifying  the  implementation  of  the  excessive  deficit  procedure  (OJ  L,  2024/1264, 
30.4.2024,  ELI:  http://data.europa.eu/eli/reg/2024/1264/oj)  and  Council  Directive  (EU)  2024/1265  of 
29  April  2024  amending  Directive  2011/85/EU  on  requirements  for  budgetary  frameworks  of  the 
Member States (OJ L, 2024/1265, 30.4.2024, ELI: http://data.europa.eu/eli/dir/2024/1265/oj). 

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new  framework  are  public  debt  sustainability  and  sustainable  and  inclusive  growth 
through gradual  fiscal consolidation  as  well as  reforms  and investments.  It  promotes 
national  ownership  and  has  a  greater  medium-term  focus,  combined  with  more 
effective and coherent enforcement. Each Member State should submit to the Council 
and  to  the  Commission  a  national  medium-term  fiscal-structural  plan.  National 
medium-term  fiscal-structural  plans  contain  the  fiscal,  reform  and  investment 
commitments  of  a  Member  State,  covering  a  planning  horizon  of  4  years  or  5  years 
depending on the regular length of the national legislature. The net expenditure9 path 
in  the  national  medium-term  fiscal-structural  plans  should  comply  with  the 
requirements of Regulation (EU) 2024/1263, including the requirements to put or keep 
general government debt on a plausibly downward path by the end of the adjustment 
period  at  the  latest,  or  for  it  to  remain  at  prudent  levels  below  60%  of  GDP,  and  to 
bring  and/or  maintain  the  government  deficit  below  the  3%  of  GDP  reference  value 
over  the  medium  term.  Where  a  Member  State  commits  to  a  relevant  set  of  reforms 
and investments in accordance with the criteria set out in Regulation (EU) 2024/1263, 
the  adjustment  period  may  be  extended  by  3  years  at  most.  For  the  purpose  of 
supporting the preparation of those plans, on [21 June] 2024, the Commission is set to 
provide Member States with guidance on the content of the plans and the subsequent 
annual progress reports that they will need to submit and, in accordance with Article 5 
of Regulation (EU) 2024/1263, will transmit to them technical guidance on the fiscal 
adjustments  (reference  trajectories  and  technical  information,  where  applicable).  
Member  States  should  submit  their  medium-term  fiscal-structural  plans  by  20 
September  2024,  unless  the  Member  State  and  the  Commission  agree  to  extend  the 
deadline by a reasonable period of time. Member States should ensure the involvement 
of their national parliaments, and the consultation of independent fiscal institutions, of 
social partners and other national stakeholders, as appropriate.   

In 2024, the European Semester for economic policy coordination continues to evolve 
in  line  with  the  implementation  of  the  Recovery  and  Resilience  Facility.  The  full 
implementation  of  the  recovery  and  resilience  plans  remains  essential  for  delivering 
the policy priorities under the European Semester, as the plans help effectively address 
all  or  a  significant  subset  of  challenges  identified  in  the  relevant  country-specific 
recommendations  issued  in  recent  years.  The  2019,  2020,  2022  and  2023  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.   

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, 
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 
2022,  the  Council  adopted  its  Decision  on  the  approval  of  the  assessment  of  the 

Net expenditure as defined in Article 2 of Council Regulation (EU) 2024/1263 of 29 April 2024(OJ L 
2024/1263,  30.4.2024.  ELI:  http://data.europa.eu/eli/reg/2024/1263/oj).  Net  expenditure  means 
government  expenditure  net  of  (i)  interest  expenditure,  (ii)  discretionary  revenue  measures,  (iii) 
expenditure  on  programmes  of  the  Union  fully  matched  by  Union  funds  revenue,  (iv)  national 
expenditure  on  co-financing  of  programmes  funded  by  the  Union,  (v)  cyclical  elements  of 
unemployment benefit expenditure, and (vi) one-offs and other temporary measures. 

(6) 

(7) 

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(8) 

(9) 

recovery and resilience plan for Sweden10, which was amended on 9 November 2023 
following Article 11(2) of Regulation (EU) 2021/241 on the update of the maximum 
financial  contribution  for  non-repayable  financial  support,  as  well  as  to  include  the 
REPowerEU chapter11. 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. 

On  26  April  2024,  Sweden  submitted  its  2024  National  Reform  Programme  and  its 
2024  Convergence  Programme,  in  line  with  Article  8(1)  of  Regulation  (EC)  No 
1466/97.  In  accordance  with  Article  27  of  Regulation  (EU)  2021/241,  the  2024 
National Reform Programme also reflects Sweden’s biannual reporting on the progress 
made in achieving its recovery and resilience plan.  
The Commission published the 2024 country report for Sweden12 on 19 June 2024. It 
assessed  Sweden’s  progress 
country-specific 
recommendations  adopted by the Council  between 2019  and  2023 and  took stock of 
Sweden’s implementation of the recovery and resilience plan. 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. 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.  

addressing 

relevant 

the 

in 

(10)  The  Commission  carried  out  an  in-depth  review  under  Article  5  of  Regulation  (EU) 
No 1176/2011 for Sweden. The main findings of the Commission staff’s assessment of 
macroeconomic  vulnerabilities  for  Sweden  for  the  purposes  of  that  Regulation  were 
published in March 202413. On 19 June 2024, the Commission concluded that Sweden 
is experiencing macroeconomic imbalances. In particular, Sweden faces vulnerabilities 
related to  its real  estate  market  and high  private  debt,  which remain relevant  despite 
some  recent  correction,  and  policy  action  to  tackle  them  has  been  limited.  After 
significant increases for several years, real estate prices have been declining since late 
2022. Private sector debt declined relative to GDP because of the high nominal GDP 
growth,  on account  of the high  inflation, while debt  levels  still increased in  nominal 
terms. The rapid increase in interest rates has negatively impacted the debt service of 
households  and  of  commercial  real  estate  companies,  reduced  demand,  and  affected 
property prices. The prevalence of variable interest rates and of mortgages with very 
long  durations,  has  put  pressure  on  household  balance  sheets,  reducing  repayment 
capacity and triggering a fall in consumption and contributing to the recession of 2023. 
At the same time, the new housing construction dropped sharply. Despite recent falls, 
house prices continue to still be significantly overvalued; commercial real estate prices 
also  appear  not  to  have  adjusted  fully  yet  and  there  are  risks  for  debt  servicing  if 

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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; ST7772/2022 ADD1). 
Council Implementing Decision of 9 November 2023 amending the Implementing Decision of  4 May 
2022  on  the  approval  of  the  assessment  of  the  recovery  and  resilience  plan  for  Sweden  (ST  14474 
2023). 
SWD(2024) 627 final. 
SWD(2024) 85 final. 

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interest  rates  remain  high  and  valuations  decline.  The  financial  sector  is  highly 
exposed  to  the  real  estate  sector,  but  its  strong  metrics  should  serve  as  a  bulwark 
against the propagation of real estate problems to the wider economy. Policy progress 
has been limited, and in the absence of firmer action, the identified vulnerabilities will 
persist and may lead to a re-surge in debt-financed housing acquisition and house price 
overvaluation.  Measures  that  increase  housing  supply  could  go  a  long  way  in 
preventing  these  issues.  In  addition,  taxation  continues  to  promote  debt-financed 
housing  acquisition  through  the  significant  tax  deductibility  of  mortgage  interest 
payments and to favour homeownership. The rental market has not been reformed. 

(11)  Based  on  data  validated  by  Eurostat14,  Sweden’s  general  government  balance 
decreased from a surplus of 1.2% of GDP in 2022 to a deficit of 0.6% in 2023, while 
the general government debt fell from 33.2% of GDP at the end of 2022 to 31.2% at 
the end of 2023.  

(12)  On  12  July  2022,  the  Council  recommended15  that  Sweden  take  action  to  ensure  in 
2023 that the growth of nationally financed primary current expenditure is in line with 
an  overall  neutral  policy  stance16,  taking  into  account  continued  temporary  and 
targeted support to households and firms most vulnerable to energy price hikes and to 
people fleeing  Ukraine. Sweden should stand ready to  adjust current  spending  to  the 
evolving  situation.  Sweden  was  also  recommended  to  expand  public  investment  for 
the  green  and  digital  transitions,  and  for  energy  security  taking  into  account  the 
REPowerEU  initiative,  including  by  making  use  of  the  Recovery  and  Resilience 
Facility and other Union funds. In 2023, according to the Commission estimates,  the 
fiscal stance17 was broadly neutral, at 0% of GDP. The growth in nationally financed 
primary current expenditure (net of discretionary revenue measures) in 2023 provided 
a broadly neutral contribution to the fiscal stance of 0.1% of GDP and was in line with 
the Council recommendation. The broadly neutral contribution of nationally financed 
primary  current  expenditure  was  due  to  the  reduction  of  the  emergency  support 
measures  (targeted  and  untargeted)  to  households  and  firms  in  response  to  energy 
price  hikes  (by  0.3  percentage  points  of  GDP),  partly  offset  by  a  series  of  smaller 
measures,  inter  alia  a  reduction  of  the  energy  tax  on  fuel.  Nationally  financed 
investment  amounted  to  4.9%  of  GDP  in  2023,  with  an  increase  of  0.2  percentage 
points  from  2022.  Sweden  financed  public  investment  for  the  green  and  digital 
transitions,  and  for  energy  security,  such  as  the  Industry  leap  and  Climate  leap 
schemes,  providing  funding  for  climate  projects  and  low-emission  technology  in 
industries,  and  investment  in  broadband  expansion.  Sweden  has  not  yet  submitted  a 
payment request under the Recovery and Resilience Facility. 

14 
15 

16 

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Eurostat-Euro Indicators, 22.4.2024. 
Council  Recommendation  of  12  July  2022  on  the  National  Reform  Programme  of  Sweden  and 
delivering a Council opinion on the 2022 Convergence Programme of Sweden OJ C 334, 1.9.2022, p. 1.  
Based on the Commission 2024 spring forecast, the medium-term potential output growth of Sweden in 
2023 is estimated at 7.7% in nominal terms, based on the 10-year average real potential growth rate and 
the 2023 GDP deflator. 
The fiscal stance is defined as a measure of the annual change in the underlying budgetary position of 
the  general  government.  It  aims  to  assess  the  economic  impulse  stemming  from  fiscal  policies,  both 
those  that  are  nationally  financed  and  those  that  are  financed  by  the  EU  budget.  The  fiscal  stance  is 
measured as the difference between (i) the medium-term potential growth and (ii) the change in primary 
expenditure  net  of  discretionary  revenue  measures  (and  excluding  temporary  emergency  measures 
related to the COVID-19 crisis) and including expenditure financed by non-repayable support (grants) 
from  the  Recovery  and  Resilience  Facility  and  other  Union  funds.  A  negative  (positive)  sign  of  the 
indicator indicates an expansionary (contractionary) fiscal policy. 

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(13)  The  key  projections  in  the  2024  Convergence  Programme  can  be  summarised  as 
follows. The macroeconomic scenario underpinning the budgetary projections foresees 
real GDP growth at 0.7% in 2024 and 2.5% in 2025, while it projects KPIF (consumer 
price inflation without interest costs) inflation at 2.1% in 2024 and 1.7% in 2025. The 
general government deficit is expected to increase to 1.2% of GDP in 2024 and decline 
to  0.3%  of  GDP  in  2025,  while  the  general  government  debt-to-GDP  ratio  is  set  to 
increase to 32.0% by the end of 2024 and, subsequently, decrease to 31.4% by the end 
of 2025. After 2025, the general government balance is projected to reach a surplus of 
0.7% of GDP in 2026 and 1.7% in 2027. Therefore, the general government balance is 
planned to remain below the 3% of GDP deficit reference value over the programme 
horizon.  In  turn,  after  2025,  the  general  government  debt-to-GDP  is  projected  to 
decrease to 30.0% in 2026 and to 28.0% in 2027. 

(14)  The  Commission  Spring  2024  Forecast  projects  real  GDP  to  grow  by  0.2%  in  2024 
and 2.1% in 2025, and HICP inflation to stand at 2.0% in 2024 and 1.8% in 2025. 

(15)  The Commission Spring 2024 Forecast projects a government deficit of 1.4% of GDP 
in  2024,  reflecting  inter  alia  weakening  growth  in  tax  revenue  and  increased 
expenditure  in  particular  on  index-linked  pensions  in  the  regional  and  municipal 
subsector, while the general  government  debt-to-GDP ratio is  set  to  increase to  32% 
by  the  end  of  2024.  Based  on  the  Commission’s  estimates,  the  fiscal  stance  is 
projected to be expansionary by 0.6% of GDP in 2024. 

(16)  Expenditure amounting to 0.1% of GDP is expected to be financed by non-repayable 
support  (“grants”)  from  the  Recovery  and  Resilience  Facility  in  2024,  compared  to 
0.1%  of  GDP  in  2023,  according  to  the  Commission  Spring  2024  Forecast. 
Expenditure  financed  by  Recovery  and  Resilience  Facility  grants  will  enable  high-
quality investment and productivity-enhancing reforms without a direct impact on the 
general government balance and debt of Sweden. 

(17)  On  14  July  2023,  the  Council  recommended18  that  Sweden  maintain  a  sound  fiscal 
position in 2024.. When executing their 2023 budgets and preparing their budgets for 
2024,  Member  States  were  invited  to  take  into  account  that  the  Commission  would 
propose to the Council the opening of deficit-based excessive deficit procedures based 
on  the  outturn  data  for  2023.  According  to  the  Commission  Spring  2024  Forecast, 
Sweden’s structural balance is projected at 0.0% of GDP in 2024, from 0.1% in 2023, 
thereby above the country’s medium-term budgetary objective (MTO) of a structural 
balance of -1% of GDP. This is in line with what was recommended by the Council. 

(18)  Moreover,  the  Council  recommended  that  Sweden  take  action  to  wind  down  the 
emergency  energy  support  measures  in  force  as  soon  as  possible  in  2023  and  2024. 
The Council further specified that, should renewed energy price increases necessitate 
new or continued support measures, Sweden should ensure that these were targeted at 
protecting  vulnerable  households  and  firms,  fiscally  affordable,  and  preserve 
incentives for energy savings. According to the Commission Spring 2024 Forecast, the 
net  budgetary cost19  of  emergency  energy support  measures is estimated  at  less than 
0.1% of GDP in 2023 and projected at less than 0.1% in 2024 and 0% in 2025.  The 

18 

19 

Council  Recommendation  on  the  2023  National  Reform  Programme  of  Sweden  and  delivering  a 
Council opinion on the 2023 Convergence Programme of Sweden, OJ C 312, 1.9.2023, p.  252. 
The figure represents the level of the annual budgetary cost of those measures, including revenue and 
expenditure and, where applicable, net of the revenue from taxes on windfall profits of energy suppliers. 

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(19) 

emergency  energy  support  measures  are  projected  to  be  wound  down  as  soon  as 
possible in 2023 and 2024. This is in line with what was recommended by the Council. 

In addition, the Council also recommended that Sweden preserve nationally financed 
public  investment  and  ensure  the  effective  absorption  of  Recovery  and  Resilience 
Facility  grants  and  other  EU  funds,  in  particular  to  foster  the  green  and  digital 
transitions.  According  to  the  Commission  Spring  2024  Forecast,  nationally  financed 
public investment is projected to increase to 5.1% of GDP in 2024 from 4.9% of GDP 
in  2023.  This  is  in  line with  what  was  recommended  by  the  Council.  In  turn,  public 
expenditure  financed  from  revenues  from  EU  funds,  including  Recovery  and 
Resilience Facility grants, is expected to remain stable at 0.2% of GDP in 2024.  

(20)  Based on policy measures known at the cut-off date of the forecast and on a no-policy-
change  assumption,  the  Commission  Spring  2024  Forecast  projects,  for  2025,  a 
general  government  deficit  of  0.9%  of  GDP  and  a  general  government  debt-to-GDP 
ratio of 31.3%, on the back of the expected economic recovery.  

(21) 

In accordance with Article 19(3), point (b), and Annex V, criterion 2.2 of 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 are expected 
to  help  effectively  address  all  or  a  significant  subset  of  challenges  identified  in  the 
relevant  country-specific  recommendations.  Within  this  tight  timeframe,  proceeding 
swiftly  with  the  effective  implementation  of  the  plan,  including  the  REPowerEU 
chapter,  is  essential  to  boost  Sweden’s  long-term  competitiveness  through  the  green 
and digital transition, while ensuring social fairness. To deliver on the commitments of 
the  plan  by  August  2026,  it  is  essential  for  Sweden  to  significantly  accelerate  the 
implementation of reforms and investments. The systematic involvement of local and 
regional  authorities,  social  partners,  civil  society  and  other  relevant  stakeholders 
remains essential to ensure broad ownership for the successful implementation of the 
recovery and resilience plan. 

(22)  As  part  of  the  mid-term  review  of  the  cohesion  policy  funds,  in  accordance  with 
Article  18  of  Regulation  (EU)  2021/1060,  Sweden  is  required  to  review  each 
programme  by  March  2025,  taking  into  account,  among  other  things,  the  challenges 
identified in the 2024 country-specific recommendations, as well as its national energy 
and climate plan. This  review  forms the basis for the definitive allocation of the EU 
funding  included  in  each  programme.  Sweden  has  made  progress  in  implementing 
cohesion  policy and the  European Pillar of Social  Rights,  but  challenges  remain and 
disparities persist between the capital region and the rest of the country. It is important 
to  accelerate  cohesion  policy  implementation,  and  the  priorities  agreed  in  the 
programmes  are  still  relevant.  It  is  crucial  to  continue  to  support  innovation 
contributing to the further greening of society with the ambition of reaching a climate-
neutral economy, while continuing to address socio-economic regional disparities and 
disparities between urban and non-urban areas. In addition, it remains key to promote 
upskilling and reskilling, with particular attention to vulnerable groups, in particular to 
those  with  a  migrant  background.  Sweden  could  also  make  use  of  the  Strategic 
Technologies  for  Europe  Platform  initiative  to  boost  investments  in  technologies 
supporting  the  green  transition.  Developing  and  manufacturing  clean  and  resource-
efficient  technologies, including strengthening value chains  and addressing shortages 
of labour and skills, is important for the long-term sustainability and competitiveness 
of Swedish regions and their small to medium-sized enterprises. 

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(23)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan  and  other  EU  funds,  Sweden  faces  several  additional  challenges  related  to: 
(i) deteriorating educational outcomes of pupils, in particular those with disadvantaged 
socio-economic and migrant backgrounds; (ii) skills gaps, which are most pronounced 
for  people  from  disadvantaged  socio-economic  and  migrant  backgrounds;  and 
(iii) reducing greenhouse gas emissions. 

(24)  Based  on  the  2022  Programme  for  International  Student  Assessment  (PISA)  results, 
the  basic  skills  of  Swedish  students  have  deteriorated  since  2018.  The  largest 
deterioration has taken place in mathematics, where the share of underperformers was 
well  above  the  EU  target.  The  underperformance  rate  has  increased  even  more  for 
students  from  disadvantaged  socio-economic  backgrounds,  and  the  gap  between 
native-born students and those with a migrant background, is very high. Furthermore, 
the  persistent  shortage  of  qualified  teachers  risks  to  negatively  impact  the  quality  of 
the education system and the performance of students.  

(25) 

In 2022, 15% of all students finishing lower secondary school had grades that were too 
low or incomplete, excluding them from qualifying for upper secondary school.  This 
affects  in  particular  students  with  a  disadvantaged  socio-economic  and  migrant 
background as many fail to qualify for upper secondary education. This group is also 
underrepresented in  private schools,  whose pupils have on average better chances of 
qualifying for further studies. As most jobs in Sweden require an upper secondary or 
higher qualification, the ensuing gap in educational attainment also increases the risk 
of not finding a job, with negative consequences for integration.   

(26)  There are wide gaps between different groups in terms of skills levels and educational 
attainment.  These  gaps  are  most  pronounced  for  young  people  born  outside  the  EU, 
who are less likely to have completed upper secondary school and less likely to be in 
employment,  education  or  training  than  those  born  in  Sweden.  This  reduces  their 
chances of employment and represents a risk for Sweden’s ability to further improve 
its sustainable competitiveness. Furthermore, these skills gaps further aggravate labour 
shortages,  which  are  especially  evident  in  the  industry  and  services  sectors,  and 
represent a major challenge for the development and the green industrial transition of 
the country’s northernmost regions.  

(27)  With the current  policies, it appears unlikely  that  Sweden will reach  its  2030 targets 
under  the  EU’s  policy  to  reduce  greenhouse  gas  emissions.  Updated  comprehensive 
scenarios for greenhouse gas emissions reflecting policy changes in 2023 and 2024 are 
still  lacking,  as  the  currently  available  government  climate  action  plan  focuses  on  a 
longer horizon until 2045, without quantitative scenarios on emissions trajectories for 
the period to 2030. However, several studies by official and independent bodies seem 
to  confirm  that  Sweden’s  current  policies  will  result  in  a  significant  shortfall  to  the 
EU’s 2030 greenhouse gas emission targets. Emission reductions in road transport are 
key  if  Sweden  is  to  achieve  its  2030  targets  under  the  EU’s  policy  to  reduce 
greenhouse  gas  emissions.  Road  transport  accounts  for  three  quarters  of  energy 
demand for oil  and petroleum products,  which is  the main source of greenhouse gas 
emission from fossil fuels in Sweden. 

(28)  Even  though  Sweden  has  the  EU’s  highest  share  of  renewables  in  total  energy 
consumption, it still has an untapped potential for renewables. This potential could be 
harnessed  to  accommodate  the  ongoing  electrification  of  industries  in  the  south  of 
Sweden, and the innovative, green industrial developments and decarbonisation in the 
north  of  Sweden,  which  require  even  greater  electricity  production.  There  are  still 

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several  obstacles  to  expanding  the  country’s  renewable  energy  production  capacity. 
This could result in Sweden not achieving its envisioned expansion of wind capacity 
by 13 GW and of solar power capacity by around 5 GW between 2021 and 2030. One 
such obstacle is permitting barriers for both offshore and onshore wind power. These 
barriers emanate from inefficient permitting procedures and veto rights of communes 
and defence authorities, among other things. 

(29) 

In  light  of  the  Commission’s  in-depth  review  and  its  conclusion  on  the  existence  of 
imbalances,  recommendations under Article 6 of Regulation  (EU) No 1176/2011  are 
reflected  in  recommendation  (1)  below.  Policies  referred  to  in  recommendation  (1) 
help  to  address  vulnerabilities  linked  to  high  household  debt  and  highly  valued  real 
estate. 

HEREBY RECOMMENDS that Sweden take action in 2024 and 2025 to:  

1. 

2. 

3. 

4. 

Submit  the  medium-term  fiscal-structural  plan  in  a  timely  manner.  Reduce  risks 
related  to  high  household  debt  and  housing  market  imbalances  by  reducing  the  tax 
deductibility of mortgage interest payments and increasing recurrent property taxes, 
while  developing  appropriate  tools  for  better  policy  assessment  and  targeting. 
Stimulate investment in residential construction to ease the most urgent shortages, in 
particular by removing structural obstacles to construction. Improve the efficiency of 
the housing market, including by introducing reforms in the rental market.   

In  light  of  prolonged  delays,  significantly  accelerate  the  implementation  of  the 
the  REPowerEU  chapter,  ensuring 
recovery  and  resilience  plan, 
the 
completion  of  reforms  and 
implementation  of  cohesion  policy  programmes.  In  the  context  of  their  mid-term 
review continue focusing on the agreed priorities, while considering the opportunities 
provided  by  the  Strategic  Technologies  for  Europe  Platform  initiative  to  improve 
competitiveness.  

investments  by  August  2026.  Accelerate 

including 

Improve  educational  performance,  including  of  students  with  disadvantaged  socio-
economic  and  migrant  backgrounds,  by  addressing  the  persistent  shortage  of 
qualified  teachers,  by  ensuring  equal  access  opportunities  to  the  schooling  system 
and  by  further  supporting  the  transition  of  students  to  upper  secondary  school. 
Develop  the skills  of the labour force, particularly those from  disadvantaged socio-
economic and migrant backgrounds, through targeted policy measures and resources, 
to improve their integration into the labour market. 

Ensure the achievement of greenhouse gas emissions reduction targets by reducing in 
particular  emissions  from  road  transport,  and  accelerate  and  streamline  permitting 
procedures  for  deploying  renewables,  in  particular  for  offshore  and  onshore  wind 
energy. 

Done at Brussels, 

For the Council 
The President 

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