COMMISSION STAFF WORKING DOCUMENT 2026 Country Report - Sweden Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Sweden
Date: 2026-06-03
Institutions: European Commission, Reform and Investment Task Force
Subjects: Sweden, budget policy, economic policy, economic recovery, economic reform, employment policy, green economy, housing policy, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 3.6.2026  SWD(2026) 227 final  COMMISSION STAFF WORKING DOCUMENT 2026 Country Report - Sweden Accompanying the document Recommendation for a COUNCIL RECOMMENDATION  on the economic, social, employment, structural and budgetary policies of Sweden {COM(2026) 227 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC DEVELOPMENTS AND KEY POLICY 
CHALLENGES 

Domestic demand driven recovery 
to be slowed by energy prices 

investment 

The  pace  of  Sweden’s  economic  recovery 
is  expected  to  pick  up  in  2026.  Real  GDP 
(GDP adjusted for inflation) increased by 1.5% 
in  2025.  Economic  growth  is  expected  to 
increase in 2026, driven by domestic demand, 
supported  gains 
in  disposable  household 
income,  while  underlying  price  pressures  are 
set  to  be  weak.  Reductions  in income tax  and 
VAT are also set to support household income. 
Corporate 
is  projected  to  be 
underpinned  by  lower  financing  costs  and 
resilient  profitability.  According 
the 
Commission’s  spring  2026  economic  forecast, 
real  GDP  growth  is  projected  to  be  1.8%  in 
2026  and  increase  somewhat  to  2.2%  in 
2027. Headline inflation - as measured by the 
index  of  consumer  prices  - 
harmonised 
in  2025.  Consumer  price 
reached  2.6% 
inflation is set to  fall to 1.5% in 2026 before 
picking  up  to  just  below  2%  in  2027,  as  the 
impact  of  special  factors  such  as 
lower 
indirect taxes fades. 

to 

Sweden’s labour market remains resilient 
yet  continues  to  face  persistent  skills 
mismatches.  Sweden  combines  one  of  the 
highest  employment  rates  in  the  EU  with 
entrenched  structural  unemployment.  The 
labour  market  held  up  well  in  the  face  of 
anaemic  growth  in  recent  years,  and  the 
unemployment  rate  is  expected  to  gradually 
fall  from  8.8%  in  2025  to  just  below  7%  in 
2027,  on  the  back  of  the  expected  economic 
recovery  (see  Social  Scoreboard  in  Annex X). 
Social  partners  agreed  nominal  wage  rises  of 
around  3.5%  in  collective  wage  agreements 
extending  into  2027,  underpinning  corporate 
cost competitiveness. 

integrated 

Sweden  faces  vulnerabilities  related  to 
geopolitical  risks.  The  Swedish  economy  is 
highly 
international  value 
into 
chains  and  is  therefore  vulnerable  to  trade 
disruptions  and  financial  market  volatility.  In 
an  adverse  scenario,  rises  in  energy  costs  in 
particular  risk  translating  into  a  lower-than-
expected  decline 
inflation  and  higher 
financing  costs,  dampening  real  GDP  growth. 
Nevertheless,  the  country’s  strong  economic 
foundations  underpin  competitiveness,  with 
large  clusters 
comparative  advantages 
advanced 
surrounding 
industrial 
ICT-intensive 
services. 

technologically 

production 

and 

in 

in 

Expansive fiscal policy 

in 

The general government balance is set to 
remain  in  deficit.  The  headline  general 
government  balance  is  projected  to  remain 
negative  in  2026  and  reach  a  deficit  of  2.8% 
of  GDP,  from  1.3%  of  GDP  in  2025.  The 
headline deficit ratio is expected to fall slightly 
in  2027  with  the  structural  deficit  set  to 
remain at close to 2% in both years. The rising 
deficit  reflects  a  combination  of  tax  cuts 
(notably 
income  taxes,  VAT,  fuel  and 
electricity taxes) and expenditure increases (in 
particular  for  military  and  civil  defence  and 
support  to  Ukraine).  On  the  back  of  the 
forecast  recovery  the  deficit  is  set  to  fall 
somewhat  in  2027.  The  debt-to-GDP  ratio  is 
expected to increase somewhat from 35.1% in 
2025  to  just  below  38%  in  2027.  Expanding 
capacity of the electricity system could be very 
costly  for  government  finances  in  the  long 
term  with  the  actual  cost  depending  on 
technology choices. 

Expenditure  on  defence  in  Sweden  is  set 
to  steadily 
increase.  Total  government 
expenditure  on  defence  amounted  to  2.9%  of 

2 

 
 
2026.  Corporate  indebtedness  is  also  among 
the  highest  in  the  EU  and  is  closely  linked  to 
the commercial real estate market. 

facilitating 

in 
Housing  challenges  are  persistent 
Sweden  linked  to  the  combination  of  a 
strictly  regulated  rental  market,  debt 
bias in taxation and supply constraints. In 
2025  the  Commission  recommended  that 
Sweden  improve  the  efficiency  of  its  housing 
market, including by introducing reforms in the 
rental  market, 
residential 
construction,  and  addressing  risks  related  to 
high  household  debt.  Sweden  has  the  most 
stringent  rental  regulation  in  the  OECD.  New 
rules have been introduced to make the rental 
market  more  flexible,  particularly  for  new 
builds. Nevertheless, rent controls on the older 
housing  stock 
in  place.  Supply 
constraints in urban centres continue to impact 
market  dynamics,  despite  a  new  regulatory 
framework  for  building  permits  introduced  in 
2025. Supply-side rigidities in housing, coupled 
requirements,  may 
with  easing  borrower 
further  push  house  prices  and  debt  levels  up. 
Reforms 
the 
favourable taxation of mortgages could reduce 
and 
incentives 
strengthen affordability and resilience without 
undermining stability (see Annex 16). 

debt  accumulation 

taxation  and 

to  property 

remain 

for 

a 

conducive 

business 
Despite 
robust 
environment  and  having  a 
innovation 
productivity 
ecosystem, 
growth  has  been  declining.  A  slowdown  in 
total  factor  productivity  growth  has  been  a 
drag on productivity. While labour productivity 
remains  relatively  high,  Sweden’s  relative 
advantage has been declining over time. At the 
same  time,  skills  mismatches  and  labour 
shortages  exist,  while  unemployment  remains 
high.  In  addition,  high  housing  costs  and 
housing supply shortages limit labour mobility. 
Furthermore, 
educational 
deteriorating 
outcomes  also  negatively  affect  future  skills 
development. 
these 
macroeconomic  challenges  will  be  key  to 
strengthening 
long-term 
competitiveness. 

Addressing 

Sweden’s 

GDP  in  2025  and  the  Commission  forecasts 
this  ratio  will  reach  3.8%  in  2026  (see 
Annex 2).  Plans  include  weapon  systems  with 
long  delivery  times  that  can  lead  to  some 
unevenness  in  yearly  defence  expenditure 
outlays  over  the  coming  period.  Sweden  aims 
to 
its  defence  capabilities  by 
simultaneously  expanding  both  civil  defence 
transport 
expenditure  and 
infrastructure. 

investment 

increase 

in 

Challenges linked to private debt, 
weak productivity dynamics and 
the human capital base 

Sweden  has  been  facing 
interlinked 
vulnerabilities  relating  to  its  housing 
market  and  high  levels  of  private  debt. 
The Commission undertook an in-depth review 
of  Sweden’s  economy  as  part  of 
the 
Macroeconomic  Imbalance  Procedure  in  2026 
(1). While modest advancements in policy have 
been  achieved  as  regards  flexibility  in  the 
rental  market,  recent  changes  in  the  building 
permit framework will  have a minimal  impact 
on housing supply. Policy action in other areas 
has  been  lacking.  The  favourable  taxation  of 
mortgages,  in  particular  significant  mortgage 
offering 
interest  deductibility, 
extensive  incentives  for  household  borrowing, 
while  the  recent  relaxation  of  borrower-based 
macroprudential  measures  could 
to 
increased  credit  growth  and  higher  house 
prices,  particularly  if  housing  supply  issues 
remain prevalent. The fundamental challenges 
persist without resolution. 

continues 

lead 

High  levels  of  household  and  corporate 
debt  are  intrinsically  linked  to  the  real 
estate  market.  Despite  a  gradual  decline  in 
household  debt  relative  to  GDP,  indebtedness 
remains  significantly  above  the  EU  average, 
driven  largely  by  housing-related  borrowing. 
As the economy improves following a period of 
subdued growth, household debt is expected to 
rise  again  as  borrowing  picks  up  and  eased 
requirements for borrowers come into force in 

(1)  SWD(2026) 143 final; 2026 In-Depth Review Sweden. 

3 

 
 
Key policy challenges to support 
economic growth and 
competitiveness 

employment  rates  and  mismatches  between 
their  qualifications  and  available  jobs  (see 
Annex  13).  These  educational  challenges 
impact Sweden's competitiveness, especially in 
sectors with high occupational skills shortages. 

market 
that 

faces 
potentially 

Despite high employment rates, Sweden’s 
labour 
structural 
affect 
challenges 
productivity  growth  and  competitiveness. 
Notably,  employment  rates  are  lower  and 
unemployment  rates  higher  for  people  with  a 
disadvantaged  socio-economic  background, 
those with a migrant background,  people  with 
low educational  attainment levels,  and people 
with disabilities. At the same time, labour and 
skills  shortages  persist  in  the  public  and  in 
specific  private  sectors,  such  as  energy  and 
ICT, which are crucial for the green and digital 
transitions. 

also 

disparities 

Regional 
affect 
productivity,  with  higher  unemployment 
rates in the south compared to the north. 
Implementing  active  labour  market  policies 
that are tailor-made to the needs of the long-
term  unemployed,  facilitating  skills  training, 
incentives  and 
and  strengthening  positive 
possibilities for the unemployed to find work in 
other  parts  of  the  country  would  help  reduce 
inequalities  and  strengthen  competitiveness 
(see Annex 18). 

several 

faces 
in 

significant 
Sweden 
its  education  system 
challenges 
despite overall good performance. There is 
a  persistent  shortage  of  qualified  teachers, 
particularly  in  early  childhood  education  and 
care, which disproportionately affects children 
with  a  disadvantaged  background.  Swedish 
students  perform  above  the  EU  average  in 
basic  and  digital  skills,  but  basic  skills  have 
declined  since  2018,  with  notable  gaps  for 
pupils  with  migrant  backgrounds.  Many 
students  struggle 
transition  to  upper 
secondary  school  or  to  continued  education 
leave 
(including  vocational  pathways)  and 
school  without 
qualifications. 
Although  adult  learning  participation  is  high, 
the  system  partly  has  to  compensate  for 
formal  education  without 
pupils 
sufficient  qualifications.  Vocational  education 
face  declining 
and 

training  graduates 

sufficient 

leaving 

to 

industrial 

infrastructure 

Challenges in the energy market and with 
grid 
impacts  Sweden’s 
ability  to  meet  climate  objectives  and 
support 
decarbonisation. 
Sweden aims to double its electricity supply in 
the  coming  decades  to  cater  to  expected 
demand  from  growing  industry,  including  new 
clean industries, and from the transport sector. 
There  are  significant  bottlenecks 
in  grid 
connection  and  construction.  Waiting  times  to 
get  connected  to  the  grid  range  from  3-7 
years  depending  on  whether  new  stations  are 
required. Addressing these issues necessitates 
investments 
to  expand  and 
substantial 
modernise 
for  both 
the  electricity  grid 
transmission  and  distribution.  A  lack  of  both 
north-south  grid  transmission  capacity  and 
cross-border connections identified as ‘projects 
of  common  interest’  to  strengthen  the  EU 
energy  system  act  as  barriers  not  only  to the 
energy  transition,  but  also  to  productivity  and 
competitiveness. 

processes 

permitting 

and 
Lengthy 
procedures  are  delaying 
the  green 
transition.  Sweden's  permitting  process  for 
rolling  out 
energy  projects, 
particularly  wind  power,  is  inefficient.  The 
environmental permitting process for industrial 
projects is also notably slow, averaging nearly 
five 
towards 
achieving decarbonisation targets. 

years,  delaying 

renewable 

progress 

4 

 
Box 1: 

UN Sustainable Development Goals (SDGs) 

Sweden performs well on competitiveness-related SDGs (SDGs 4, 8, 9) and on most SDGs related 
to sustainability (SDGs 2, 6, 7, 9, 13 and 15). However, it needs to catch up with the EU average 
on SDGs 12 (responsible consumption and production) and 14 (life below water). 

While Sweden performs well on most SDGs related to social fairness (SDGs 3, 4, 5, 7, 8 and 10), 
its progress on SDG 1 (no poverty) has been mixed.  Measures to address income poverty have 
had  some  success,  but  material  and  social  deprivation  has  deteriorated,  and  housing  cost 
pressures are rising. 

Box 2: 

Key achievements of the Recovery and Resilience Facility (RRF) 

Sweden’s  recovery  and  resilience  plan  (RRP)  represents  a  total  investment  budget  of 
EUR 3.45 billion, corresponding to 0.5% of GDP, aimed at (i) supporting the green and digital 
transitions,  (ii) strengthening  economic  resilience,  and  (iii) addressing  long-standing  structural 
challenges identified in the European Semester. 

As of May 2026, EUR 1.64 (around 48% of the total allocation) have been disbursed to Sweden 
following  the  satisfactory  fulfilment  of  27 milestones  and  targets.  Implementation  has 
progressed  steadily,  with  a  growing  number  of  reforms  and  investments  already  fulfilled  and 
delivering tangible results on the ground. 

Highlights and impact of the plan 

• 

• 

The  reforms  focus  on  improving  the  housing  market's  efficiency,  modernising 
employment  protection  and  labour  market  integration,  and  strengthening  efforts 
against money laundering and terrorist financing. 

The investments reduce carbon dioxide emissions at local and regional levels, upgrade 
railway  infrastructure,  expand  broadband  coverage,  increase  new  low  cost  rental  and 
student  housing  supply,  create  additional  capacity  in  higher  education,  and  improve 
elderly care by upskilling and training relevant staff. 

to 

sharply 

Achieving  climate  objectives  is  at  risk, 
rising 
particularly  due 
transport  emissions.  Sweden's  emission 
reduction  efforts  have  stalled  because  of 
in  the  transport 
policy  reversals,  notably 
fuel 
sector.  Significantly 
blending  obligations  (which  aim  to  reduce 
greenhouse  gas  emissions  from  diesel  and 
petrol  by  blending  in  biofuel),  together  with 
lower fuel taxes and tax exemptions, have led 
to  an  increase  in  greenhouse  gas  emissions. 
Unless  it  changes  its  policies,  Sweden  is 
projected to miss its 2030 emissions target. 

less  ambitious 

Efforts are being made to address 
economic security challenges 

supply 

chains  and 

Sweden  is  working  to  achieve  strategic 
independence. This includes progressing with 
energy  supply 
independence,  accelerating 
industrial decarbonisation, reducing reliance on 
non-EU 
investment 
dependencies,  and  counteracting  coercion 
from non-EU countries. Sweden has important 
mineral resources that can help provide the EU 
with  critical  raw  materials  (see  Annex 5).  It  is 
also  taking  measures  to  safeguard  its  highly-
develop  electronic  payments  system  against 
the 
disruptions.  This 
availability and use of cash along with having 
options 
different 

includes  supporting 

alternative 

payment 

5 

 
 
 
Box 3: 

Contribution of cohesion policy funds 

EU  cohesion  policy  funding  is  supporting  Sweden’s  efforts  to  boost  competitiveness, 
environmental  sustainability,  skills  and  social  fairness.  In  the  2021-2027  programming 
period, EU cohesion policy funds (2) are providing EUR 1.7 billion (amounting to EUR 4 billion with 
national  co-financing).  The  value  of  selected  projects  corresponded  to  67.2%  of  the  total 
allocation as of March 2026, with additional calls for projects underway. 

• 

Innovation,  business  environment  and  productivity.  EUR 600 million  have  been 
allocated  towards  research  and  innovation,  digitisation  and  SMEs  competitiveness.  Almost 
11 000 firms have already received support. 

•  Decarbonisation  and  sustainability.  EUR 200 million  have  been  dedicated  to  clean 
transition  projects,  supporting  areas  such  as  the  circular  economy,  energy  efficiency  and 
renewable  energy.  In  addition,  EUR 155 million  of  funding  is  contributing  to  the  industrial 
transition of steel and metal industries, reducing their greenhouse gas emissions. 

•  Skills, quality jobs and social fairness:  EUR 1.1 billion has been allocated to improving 
labour  market  access  and  skills  initiatives.  EUR 247 million  is  supporting  the  work  of  the 
public employment services in helping people find jobs. A further EUR 115 million has been 
dedicated towards addressing the specific challenges of northern sparsely populated areas, 
including capacity building and helping people find jobs. 

The  mid-term  review(3)  largely  maintained  the  programme’s  funding  along  current  priorities 
while  raising  the  targets  across  the  board  due  to  a  stronger-than-expected  performance.  It 
reallocated  EUR 64 million  to  increase  the  cohesion  policy’s  contribution  to  emerging  strategic 
priorities.  More  than  two  thirds  of  this  reallocation  support  defence,  particularly  industrial 
capacities for dual use purposes. The mid-term review will also strengthen water management in 
Sweden.  In  addition  to  cohesion  policy  funding,  Sweden  will  allocate  up  to  EUR 389.6 million 
under  the  Social  Climate  Fund  over  2026-2032  to  help  mitigate  the  social  impact  of  the  new 
Emissions Trading System (ETS2), supporting vulnerable households and those most affected by 
transport poverty. 

available  (see  Annex 6).  Sweden  is  joining 
forces  with 
its  Baltic  Sea  neighbours  to 
combat disruption  of  underseas  infrastructure 
such as communication cables. 

funding 

instruments 

EU 
provide 
considerable  resources  to  Sweden.  They 
support investments and structural reforms to 
environmental 
increase 
sustainability,  skills,  social 
fairness  and 
security.   

competitiveness, 

(2)  ERDF, ESF+, and JTF. 

(3)  The mid-term review is carried out halfway through the 

2021-2027 programming period. It is as formal 
assessment process required under Article 18 of the 
Common Provisions Regulation that aims to assess the 
implementation of programmes and, where necessary, 

propose adjustments to improve their performance, 
ensure their relevance in light of new and emerging 
needs and keep them aligned with other EU policies. 

6 

 
 
 
 
 
 
 
 
INNOVATION, BUSINESS ENVIRONMENT AND 
PRODUCTIVITY 

A robust high-tech innovation 
ecosystem 

by 

high 

driven 

Sweden  is  an  EU  leader  in  research  and 
innovation, 
R&D 
expenditure  and  a  robust  high-tech 
innovation ecosystem. Sweden invests more 
of  its  GDP  in  R&D  than  the  rest  of  the  EU 
(3.6%  vs  the  EU  average  of  2.2%)  and  even 
the  US  (3.5%).  Commercial  R&D  spending  is 
particularly  high,  with  companies  investing  in 
new  products,  processes  and  services,  and  in 
manufacturing  where  54%  of  firms  innovate 
(see  Annex 4).  Innovation  output  by  SMEs  is 
EU  average (4). 
also  well  above 
Furthermore,  public  expenditure  on  R&D  as  a 
percentage of GDP is the fourth-highest in the 
EU (0.9% in 2024 vs EU average of 0.7%). At 
the  same  time,  there 
is  strong  regional 
variation,  with  high  expenditure  driven  by  a 
select few regions (see Annex 18). 

the 

Despite 
its  strengths,  Sweden  faces 
several  challenges  that  could  impact  its 
innovation  capacity.  Access  to  skilled  staff 
in  science,  technology,  and  engineering  is 
crucial  for  future  R&D  investment,  yet  almost 
a third of companies find it difficult to recruit 
R&D staff, including from abroad. The number 
of  new  graduates  in  science  and  engineering 
per  thousand  population 
in  2023) 
remains  below  the  EU  average  (16.8),  and 
engineering  studies  has  a  high  drop-out  rate. 
Increased  participation  and  interest  among 
young  people  in  STEM  education  is  key  to 
strengthening competitiveness and innovation, 
and  matching  skills  needs.  Additionally,  the 
percentage  of  public  expenditure  on  R&D 

(13.4 

cooperation 

financed by business (as a percentage of total 
public  R&D  expenditure)  has  been  declining 
since 2011 from 4.2% to 3.5% in 2023, below 
the  EU  average  of  7.5%.  Maintaining  strong 
to 
science-business 
innovation  and  competitiveness.  The  Swedish 
Research  and  Innovation  Bill  for  2025-2028 
includes  measures 
improve  strategic 
to 
recruitment  and  support  for  early  career 
researchers,  aiming 
the 
alignment  between  tertiary  education,  local 
labour markets, and innovation ecosystems. 

strengthen 

key 

to 

is 

A strong business environment 

Companies  in  Sweden  benefit  from  a 
favourable  business  environment 
(see 
Annex 5).  Private  investment  is  among  the 
highest in the EU, at 17% of GDP (in 2024). In 
particular,  investments  in  intangible  assets 
such  as  intellectual  property  products  have 
reached  7%  of  GDP,  the  highest  level  in  the 
EU.  Access  to  broadband,  which  in  remote 
areas  benefited  from  EU  funding  from  the 
Recovery  and  Resilience  Facility,  and  mobile 
infrastructure perform particularly well, adding 
to  the  country´s  attractiveness.  5G  coverage 
has  increased  from  90%  in  2023  to  99%  in 
2024  (compared  to  94%  in  the  EU).  Digital 
infrastructure  has  progressed  hand  in  hand 
with  the  provision  of  advanced  public  digital 
services (5).  Additionally, other factors such as 
a strong digital skills base (see Annex 13) and 
a  favourable  capital-taxation  system  (see 
Annex 3) are conducive to private investments. 

The  regulatory  burden  could  be  further 
eased.  Firms  are  increasingly  pointing  to 
labour  and  business  regulations  as  the  main 
long-term  investment  barriers  (see  Annex  5). 

(4)  European Innovation Scoreboard 2025. Country profile 

Sweden. 

(5)  European Commission, 2025, eGovernment Benchmark. 

7 

 
 
 
 
Graph 2.1: Labour productivity 

(1) Productivity level: GDP in the purchasing power standard 
per hour worked (index, EU-27=100); growth rates: annual 
growth of real GDP per hour worked. 
(2) The dashed line indicates the start of forecast values. 
Source: European Commission (spring 2026 forecast) 

declined 

by  more 

A  slowdown  in  total  factor  productivity 
growth  has  been  a  drag  on  Sweden’s 
productivity. From 2000 to 2024, total factor 
than 
productivity 
2 percentage  points  (see  Graph 2.2).  While 
Swedish businesses invest more than their EU 
counterparts  in  digital  technologies  such  as 
software,  data,  IT  networks,  and  R&D,  they 
invest  less  than  them  in  employee  training. 
Sweden outperforms much of the EU in human 
capital  and  innovation  indicators,  but  still 
faces challenges with falling attainment levels 
in  secondary  education  and  skills  shortages 
(see Annex 13). 

According  to  a  2025  EIB  survey (6),  58%  of 
Swedish  firms  perceive  business  regulations 
as  an  investment  obstacle.  Furthermore,  50% 
of  firms  surveyed  also  considered  that  labour 
regulations  acted  as  a  barrier  to  investment. 
Overall,  business  regulations  ranked  as  the 
third-highest  obstacle 
in 
Sweden  after  ´uncertainty  about  the  future´ 
and  ´availability  of  skilled  staff´.  Moreover, 
easing  administrative  requirements 
in  the 
implementation  of  posting  of  workers  rules 
could  reduce  regulatory  fragmentation  within 
the  single  market,  facilitate  cross-border 
mobility  and  foster  competitiveness,  without 
undermining workers’ protections. 

investment 

to 

A well-developed and mature banking and 
capital  market  offers  good  access  to 
finance. Sweden’s stock market capitalisation 
is third in the EU, amounting to 161% of GDP 
(compared to 68% for the EU), while  Swedish 
firms  account  for  90%  of  total 
listings. 
Swedish  households  held  financial  assets 
amounting  to  342%  of  GDP  in  2024,  well 
above  the  EU  average  of  212%.  Households 
have  a  high  participation  in  capital  markets 
thanks to fiscal incentives supporting a distinct 
investment  culture  with  high  financial  literacy 
(see Annex 6). 

Declining productivity 

Labour  productivity  in  Sweden  remains 
relatively high, but its relative advantage 
has  declined  over  time.  In  2025,  labour 
productivity,  calculated 
in  the  purchasing 
power  standard  as  GDP  per  hour  worked,  is 
projected  to  have  reached  109%  of  the  EU 
average, from above 120% in the early 2000s. 
(Graph  2.1).  ICT  branches  have  been  a  key 
driver  of  labour  productivity  growth  since 
2004,  supported  by  robust  investments  in 
digital and R&D intangible assets. 

(6)  European Investment Bank, 2025, EIB investment 

survey Sweden. 

8 

105107109111113115117119121123125-3-2-101234Index, EU=100% changeLabour productivity growth (y-o-y), SELabour productivity growth (y-o-y), EU-27Labour productivity growth (y-o-y), EA-20Labour productivity, SE (in PPS, EU=100, rhs)forecast (2) 
 
   
Graph 2.2: Total factor productivity (TFP) 

growth  in  the  business  sector,  while  in  recent 
years, the contribution from existing firms has 
dominated (8).  A  low  dynamism  could  indicate 
a less competitive business environment, thus 
suggesting scope for easing barriers to market 
entry and exit (see Annex 5). 

Addressing the fragmentation of 
policy outcomes in municipalities 

(1) The actual TFP growth (Ameco ‘ZVGDF’ dataset) is based 
on a Cobb-Douglas production function with labour volume in 
actual hours worked and the net capital stock with constant 
factor income shares. The TFP trend (Ameco ‘CVGDPF’ 
dataset) is the TFP contribution to potential growth according 
to the EU Commonly Agreed Methodology. 
(2) The dashed line indicates the start of forecast values. 
Source: Annual macro-economic (‘Ameco’) database of the 
European Commission's Directorate-General for Economic 
and Financial Affairs (based on European Commission spring 
2026 forecast) 

included 

Productivity 

Sweden’s 
Commission 
proposed  a  menu  of  reforms  to  lift 
productivity growth. In September 2025 the 
Productivity  Commission  published  its  report 
analysing  the  factors  affecting  productivity 
and  made  proposals  to  increase  productivity 
growth (7).  The 
several 
report 
proposals to boost productivity growth in both 
the  public  and  private  sectors,  spanning  from 
improving  the  functioning  of  the  housing 
to  optimising  public  procurement 
market 
processes, 
and 
healthcare.  Notably,  the  report  advocated 
(i) faster,  more 
permitting 
processes  to  reduce  the  regulatory  burden, 
(ii) simplified 
and 
(iii) reform of the rent-setting system. 

administration 

regulations, 

predictable 

building 

public 

Business  dynamism  has  slowed.  The 
business  cumulative  entry  and  exit  rate 
(business churn) for 2023 at 15% continued to 
be among the lowest in the EU (EU average of 
19%).  In  the  1990s,  entry  and  exit  of  firms 
drove  a  large  portion  of  total  productivity 

(7)  See Productivity Commission (2025), ´More 

opportunities for increased prosperity´ (‘Fler möjligheter 
till ökat välstånd’) 

role 
in 
Municipalities  play  a  key 
addressing  many  of 
country’s 
the 
challenges.  Sweden  has  290  municipalities, 
which  are  responsible  for  the  provision  of  a 
broad  range  of  public  services  such  as 
schooling  and  adult  education,  social  care, 
housing, 
environmental 
and 
in  charge  of 
protection.  They  are  also 
implementing  policies  set  at  governmental 
common  EU  policies (9). 
level, 
Ensuring  municipalities  have  the  necessary 
resources  and  incentives  in  place  to  fully 
implement  government  policy  will  be  key  to 
addressing many of Sweden’s challenges. 

planning, 

including 

policy 

outcomes, 
in 

Insufficient  resources  at  municipal  level 
and  financial  risks  can  lead  to  delays, 
fragmented 
and 
critical 
underinvestment 
infrastructure.  Funding  constraints  and 
unstable 
financing  could  hinder  climate 
adaptation  projects.  Municipalities  estimate 
that they  require an estimated SEK 2-3 billion 
annually  to  protect  local  infrastructure  from 
flooding  and  rising  sea  levels  (see  Annex 10). 
Shortages of teachers, nurses and other skilled 
workers limit municipalities’ capacity to deliver 
public  services  effectively.  Similarly,  weak 
coordination 
on 
complex permitting procedures can slow large-
scale infrastructure or industrial projects. 

between  municipalities 

To  address  these  challenges,  recent 
policy  and  legislative  changes  aim  to 

(8)  See Tang (2025), Tracing the Slowdown of Labour 
Productivity Growth - Sweden, IMF, SIP/2025/037  

(9)  (2025) Tillväxtverket, ´Who cares about us?´ (´Vem 

bryr sig om oss?´) 

9 

-4-3-2-101234% changeTrend TFP growth, SETrend TFP growth, EU-27Trend TFP growth, EA-20Actual TFP growth, SEforecast (2) 
   
 
 
to 

attract 

incentives 

in  2025, 

mandated 
att 
för 

inter-municipal  cooperation 
strengthen 
and  streamline  key  processes.  Recent 
changes  to  the  Housing  Provision  Act  require 
increased cooperation on housing matters (see 
the  Swedish 
Annex 16).  Also, 
Government 
the 
‘Accelerationskontor 
underlätta 
industrins  omställning’  committee  to  analyse 
and 
municipal 
accommodate major industrial establishments 
and  expansions (10)  (see  Annex 5).  Financial 
risks  for  municipalities  associated  with  major 
investments  might  require  sufficient  central 
(see  Annex 18). 
government  guarantees 
Ensuring  municipalities 
adequate 
have 
financial  support,  administrative  capacity  and 
is  therefore 
clear  governance  frameworks 
essential  to  avoid  implementation  bottlenecks 
and  ensure  that  national  policy  objectives 
(such  as  housing  supply  expansion,  green 
industrial  transitions  and  skills  development) 
can be effectively achieved at municipal level. 

(10)  Tilläggsdirektiv KN2025/01212 

10 

 
 
 
DECARBONISATION, ENERGY AFFORDABILITY AND 
SUSTAINABILITY 

the 
and 

In  2025,  the  Commission  recommended 
Sweden  to  ensure  the  achievement  of 
greenhouse  gas  emissions 
reduction 
targets, reduce reliance on fossil fuels by 
of 
accelerating 
renewables, 
and 
streamline  permitting  procedures.  Policy 
reversals  have  led  to  increasing  greenhouse 
to 
gas  emissions  and  challenges 
restricted  electricity  grid  capacity  and  lengthy 
permitting  procedures  for  the  deployment  of 
renewable energy remain – ultimately holding 
back Sweden’s competitiveness. 

deployment 
accelerate 

linked 

Closing policy gaps to ensure 
meeting climate targets 

to 

linked 

Challenges  in  achieving  climate  targets 
are 
increased  emissions, 
particularly  from  road  transport.  Sweden 
remains  off  track  to  meet  its  2030  emission 
reduction  target  under  the  Effort  Sharing 
Regulation. In 2024, the country’s greenhouse 
gas  emissions  increased,  chiefly  from  road 
transport  and  non-road  mobile  machinery,  in 
response  to  policy  measures.  Under  current 
policies, Sweden’s effort-sharing emissions are 
projected  to  be  above  its  target  in  2030  and 
the use of earlier unused emission allocations 
would not cover the gap (see Annex 8). 

The increase in greenhouse gas emissions 
reflects  a  policy  shift.  In  recent  years, 
Sweden  backtracked  on  its  green  policies  on 
several  measures,  particularly  within 
the 
transport  sector.  The  rise  in  emissions  is  the 
combined  impact  of  (i) a  significant  reduction 
of  fuel  blending  requirements,  lowering  the 
minimum percentage of biofuels in diesel and 
petrol  (from  30.5%  on  diesel  and  7.8%  on 
petrol to 6% in 2024, before raising it slightly 
to  10%  from  1 July  2025),  (ii) tax  cuts  and 

11 

(iii) extended  tax  exemptions  on  liquid  fuels. 
This  has  led  to  higher  fuel  consumption  and 
fuel  emissions  in  both  the  road  transport  and 
non-road  mobile  machinery  sectors 
(see 
Annex 8).  Some  steps  have  been  taken,  such 
as measures to support the uptake of electric 
vehicles  and  the 
implementation  of  the 
‘Climate  leap’  that  is  partly  funded  under  the 
Swedish recovery and resilience plan. However, 
without  additional  efforts,  Sweden  is  set  to 
miss its climate objectives. 

Sweden’s  carbon  removals  continue  to 
fall short of meeting the 2030 target for 
land  use,  land  use  change  and  forestry 
(LULUCF).  The  latest  projections  indicate  a 
gap  to  the  2030  LULUCF  target  of  nearly 
21 Mt CO2-eq,  the  highest  gap  of  all  EU 
countries.  The  decline  of  carbon  removals  in 
the  LULUCF  sector  has  primarily  been  driven 
by 
timber  and  bioenergy  harvesting,  a 
slowdown in forest growth and the increasing 
impact  of  climate-driven  stress 
factors. 
Furthermore,  ecosystems  protected  under  the 
EU  Nature  Directives  continue  to  be  under 
stress.  For  forest  habitats,  the  main  pressure 
is forestry followed by energy production (see 
Annex 10).  Further  policy  action  would  be 
needed  to address these challenges, including 
incentives for sustainable forest management. 

Improving grid capacity and 
permitting procedures to 
strengthen the energy system 

The  deployment  of  renewables  could  be 
accelerated.  Sweden  has  the  highest  share 
of  renewable  energy  in  its  gross  final  energy 
consumption  in  the  EU (11).  However,  there  is 

(11)  https://ec.europa.eu/eurostat/statistics-

explained/index.php?title=Renewable_energy_statistics 

 
 
 
to  speed  up 
including 

the  deployment  of 
scope 
renewables, 
the  expansion  and 
upgrade  of  energy  transmission  networks  in 
line  with 
country-specific 
the 
In  addition,  permitting 
recommendation. 
procedures  remain  lengthy  and  permitting 
approval reversals continue to restrict offshore 
and onshore wind energy projects. 

2025 

demand 

in  particular 

Limited  grid  capacity  and  geographical 
imbalances 
in  electricity  supply  and 
demand  are  still  major  challenges. 
from 
Electricity  generation, 
renewable  resources  such  as  hydropower,  is 
concentrated  in  the  northern  part  of  the 
country,  while 
and 
industrial 
household  consumption  are  highest  in  the 
south.  Capacity 
transmission, 
limits 
challenges  in  managing  rapid  switches  in 
primary power sources and associated network 
bottlenecks  hinder  efficient  grid  and  full 
renewable energy utilisation. Waiting times for 
new users to access the grid also remain long. 
While  Sweden  is  planning  to  significantly 
increase  investments  to  both  expand  and 
upgrade the electricity grid until 2030, further 
measures  would  be  beneficial  in  addressing 
permitting 
including 
bottlenecks, 
procedures (see Annex 9). 

for 

in 

and 

procedures 

streamlined 

Faster 
permitting 
procedures could support the deployment 
of  renewables  and  the  clean  industry 
transition.  Drawn-out 
and 
permitting barriers - not least due to extensive 
veto  rights  of  municipalities  -  hamper  the 
uptake  of  offshore  and  onshore  wind  energy 
projects.  Sweden  has  taken  some  steps  to 
address  these  challenges  (including  financial 
incentives  for  municipalities  hosting  projects), 
but progress remains to be seen (see Annex 9). 
industrial  environmental  permitting 
Long 
constrained  grid  access  and 
timelines, 
municipal  concerns  over  financial  risks  are 
large-scale 
also  creating  bottlenecks  for 
industrial 
(see 
Annex 8).  These  bottlenecks  risk  undermining 
Sweden’s 
competitiveness  and 
industrial 
transition to net-zero emissions. 

decarbonisation 

projects 

12 

 
SKILLS, QUALITY JOBS AND SOCIAL FAIRNESS 

socio-economic 

In  2025,  the  Commission  recommended 
that  Sweden  develop  the  skills  of  the 
labour  force,  particularly  those  from 
disadvantaged 
and 
migrant  backgrounds,  through  targeted 
policy  measures  and  resources  to  help 
them integrate the labour market. Several 
measures have been announced or adopted to 
increase  labour  market  participation  of  these 
vulnerable groups. However, the challenge has 
only  been  addressed  to  a  limited  extent  (see 
Annex 11 and Annex 13). 

High structural unemployment 
coupled with the strong labour 
market reflects persistent skills 
shortages 

A  high  labour  force  participation  rate  is 
coupled  with 
unemployment, 
high 
especially  for  certain  groups.  Sweden 
remains  one  of  the  EU’s  top  performers,  with 
an employment rate of 81.9% in 2024. Yet, it 
also  has  one  of  the  highest  unemployment 
rates  (8.4%  in  2024) (12).  In  recent  years, 
unemployment 
increasingly 
concentrated among people aged over 55, and 
people  with  disabilities (13).  In  2024,  Sweden 
had the highest unemployment rate in the EU 
for  people  born  outside  of  the  EU,  at  19.3%, 
representing  a  13.6 percentage  point  gap 
compared with people born in Sweden. 

been 

has 

Disadvantaged  groups  continue  to  face 
significantly  higher  risks  of  poverty  and 
status 
social 
significantly  influences  social  conditions,  with 
unemployed individuals at a much greater risk 

Employment 

exclusion. 

the 

of  poverty  and  social  exclusion  than  those  in 
employment (61.6% vs 9.0% in 2025). The risk 
is  particularly  pronounced  for  the  long-term 
unemployed, which represented approximately 
40%  of 
registered  as 
individuals 
in  2025 (14).  People  with  a 
unemployed 
migrant  background  are  also  particularly  at 
risk of poverty or social exclusion, with a rate 
of  35.5%  for  people  born  outside  the  EU  vs 
12.1%  for  those  born  in  Sweden.  In-work-
poverty  rates  are  also  significantly  more 
pronounced 
non-EU-born 
population  (see  Annex 12).  This  suggests  that 
people  born  outside  the  EU  also  struggle  to 
find  quality  employment  with  sufficient 
income levels. 

among 

the 

initiatives, 

employment 

Lower educational attainment and limited 
skills  also  reduce  employability  and  can 
increase  the  risk  of  poverty.  Educational 
focusing 
and 
specifically on the integration of these groups 
into the labour market, could positively impact 
the  labour  market  integration  and  the  social 
conditions  of  these  groups,  reducing  poverty 
and  dependence  on  benefits  (see  Annex 12). 
Such  measures  could  also  help  Sweden  to 
reach  its  2030  national  target  to  reduce  the 
number of people living in poverty by 15 000, 
in particular, as their number has increased by 
almost 100 000 since 2019. 

Efforts  to  integrate  migrants  into  the 
labour  market  faster  have  had  a  limited 
impact.  As  of  2026,  Swedish  for  Immigrants 
training has been reformed. Municipalities are 
obliged  to  create  action  plans  and  actively 
encourage  eligible  individuals  to  attend  these 
language  courses.  The  right  to  participate  will 
be limited to three years, which risks excluding 
some  individuals,  even  though  studies  can  be 
prolonged under certain conditions. In parallel, 
a  government  inquiry  is  examining  how  to 

(12)  European Economic Forecast Autumn 2025 

(13)  Arbetsförmedlingen - Årsredovisning 2025 

(14)  Arbetsförmedlingen - Årsredovisning 2025  

13 

 
 
 
 
are 

jobs 

concentrated, 

in 
occupations  that  are  reported  surplus 
others.  Northern  regions,  where  many  green 
industry 
have 
comparatively  lower  unemployment  rates  and 
higher  levels  of  job  vacancies  (see  Annex 11 
and Annex 19). Expanding infrastructure in the 
northern  regions  (with  particular  regard  to 
roads,  hospitals,  schools  and  creches)  could 
incentivise  labour  mobility,  but  is  subject  to 
high  uncertainties,  reflecting  political  and 
trade  developments,  and 
the  geopolitical 
situation.  On  the  other  hand,  in  the  south  of 
Sweden there is a high demand for healthcare 
professionals  such  as  doctors,  nurses,  and 
elderly  care  workers.  At  the  same  time,  there 
is a surplus of elderly care workers in adjacent 
regions (16). This suggests that there may be a 
potential  for  policies  that  strengthen  positive 
incentives and support mechanisms for labour 
mobility,  enabling  workers  to  relocate  to 
job  opportunities 
regions  where  available 
match  their  skills. 
In  other  sectors  and 
professions,  shortages  are  evident  across 
Sweden  with  no  surpluses (17),  for  instance, 
shortages  of  healthcare  professionals,  upper 
secondary  school  teachers,  and  people  to  fill 
advanced IT roles (including system developers 
and  IT  security  specialists)  and  education-
related  positions  in  areas  like  early  childhood 
education and care (ECEC). 

Vocational  education  continues  to  face 
challenges  in  adapting  to  labour  market 
needs.  Participation 
in  upper  secondary 
vocational  education  has  risen  slightly  but 
remains  below  the  EU  average.  Work-based 
vocational  education  and  training  (VET)  is 
close  to  EU  levels  and  above  the  EU  2025 
target.  However,  the  percentage  of  graduates 
working  in  jobs  that  actually  match  their 
training  has  been  declining,  with  more  VET 
graduates  employed  in  unrelated  occupations. 
(18).  Efforts  to  make  people  more  employable 
have  so  far  focused  on  upper  secondary 
through 
vocational  education,  particularly 

(16)  Labour Market Information: Sweden - EURES (EURopean 

Employment Services), 2025 

(17)  Labour Market Information: Sweden - EURES (EURopean 

Employment Services), 2025 

(18)  Statistics Sweden (SCB), 2025, Svårare att få arbete 

efter examen från yrkeshögskolan  

improve municipal adult education and how to 
ensure  that  students  gain  Swedish  language 
skills,  which  are  key  for  entering  the  labour 
funding  has  been 
market.  Furthermore, 
jobs  programme 
extended  for  the  entry 
(etableringsjobb)  that  supports  newly-arrived 
immigrants 
unemployed 
individuals  in  finding  work  (see  Annex 11). 
However,  the  programme  has  so  far  failed  to 
reach the target group(s), largely because the 
public  employment  service  has  only  been 
tasked  with 
informing  people  about  the 
programme,  but  not  with  actually  referring 
them for these jobs. 

long-term 

and 

financial 

attractiveness 

Reform  efforts  aim  to  get  more  people 
into  work  by  strengthening  financial 
incentives  associated  with  employment. 
The  reform  of  the  unemployment  insurance 
scheme  that  entered  into  force  in  October 
2025  and  a  reform  linking  social  benefits  to 
activation  requirements  that  is  planned  to 
enter  into  force  in  2027  seek  to  encourage  a 
quicker  return  to  work  by  increasing  the 
relative 
of 
employment  compared  with  unemployment 
to  financial 
(see  Annex 13). 
to  continue 
incentives, 
addressing  significant  gaps 
in  basic  and 
relevant  skills,  often  the  main  obstacle  to 
finding  a 
increase  the 
In  order  to 
transitions  from  unemployment  to  regular 
education, new legislation has come into force 
in  March  2026,  aiming  to 
improve  the 
exchange of information between the Swedish 
public  employment  service  and  municipalities 
in  relation  to  jobseekers  in  need  of  municipal 
adult education. 

In  addition 
is  still  vital 

job. 

it 

Labour  and  skills  shortages  remain  in 
some  sectors  and  regions.  While  labour 
shortages  have  slightly  eased  overall (15), 
sectors  such  as  healthcare,  IT  and  education 
professions  are  particularly  affected  by  skills 
shortages.  Mismatches  between  education, 
skills, and job demands are not only impacting 
competitiveness  but  are  also  behind  the 
relatively  high  structural  unemployment  (see 
Annex 11).  Several  regions  have  shortages  in 

(15)https://arbetsformedlingen.se/download/18.4a72895319
6f0d576164ba4/1750137784799/arbetsmarknadsutsi
kterna-varen-2025.pdf 

14 

 
 
 
labour  market  training  programmes  and  the 
adult education system (Komvux). Sweden has 
taken  further  steps  to  align  upper  secondary 
VET  education  with  labour  market  needs  and 
has  expanded  the  number  of  VET  places 
available (see Annex 13). 

improving  skills 
There 
is  scope  for 
structural 
matching  and  addressing 
barriers  for  groups  with  weaker  labour 
market  attachment.  Targeted 
training 
programmes  and  upskilling  measures  and 
the  design  of  skills 
intensified  use 
intelligence  can  help  address  these  gaps.  To 
this  end,  several  projects  funded  under  the 
ESF+,  led  by  the  public  employment  service 
and  local  municipalities  aim  to  improve  skills 
supply,  particularly  for  the  green  transition, 
and increase geographical mobility. 

in 

The education system does not 
sufficiently compensate for 
students’ backgrounds 

Sweden 

improve 

socio-economic 

In  2025,  the  Commission  recommended 
that 
educational 
performance,  including  of  students  from 
disadvantaged 
and 
migrant  backgrounds,  by  (i) addressing 
the  persistent  shortage  of  qualified 
teachers, (ii) ensuring equal access to the 
(iii) further 
schooling 
supporting  the  transition  of  students  to 
upper  secondary  school.  Since  then,  only 
limited progress has been achieved. Some new 
initiatives  have  been  launched,  one  of  them 
included in the Swedish recovery and resilience 
plan.  Several  other  measures  have  been 
proposed but not yet decided (see Annex 13). 

system 

and 

While  general  education  outcomes  are 
relatively  good,  outcomes  remain  highly 
dependent  on  students’  backgrounds. 
Shortages of qualified teachers persist and are 
higher in ECEC centres and schools with more 
children and students from disadvantaged and 
migrant backgrounds, hampering the provision 
of  the  support  necessary  to  bridge  gaps  in 
education  outcomes.  Unequal  access 
to 
schools  and  challenges  in  transition  to  upper 

secondary  school  and  continued  education 
also  persist.  Children  and  students  from 
disadvantaged  and  migrant  backgrounds  tend 
to be concentrated in certain ECEC centres and 
schools.  This  has  a  negative  impact  on  their 
education and possibly also a negative impact 
on their later career prospects. 

Teacher shortages remain a challenge for 
the  Swedish  education 
system  as 
indicated  in  the  2025  country-specific 
recommendation. Only 43% of staff in ECEC 
are  qualified  ECEC  teachers,  and  despite 
90.3%  of  ECEC  teachers  being  satisfied  with 
their  job,  40%  of  ECEC  staff  state  that  they 
plan  to  leave  the  profession  in  the  next  five 
years,  which  may  exacerbate  the  shortage 
further. Nearly 30% of teachers in schools are 
not qualified, though this percentage varies by 
geographical area, education level and service 
provider.  Swedish  teachers  have  a  higher 
workload and more administrative stress than 
average in the EU (19), which likely  makes the 
profession  less  attractive.  Teacher  studies 
suffer  from  high  dropout  rates  of  26-64%, 
depending  on  the  type  of  teacher  studies.  A 
national  professional  programme  for  ECEC 
teachers, teachers and principals which started 
in September 2025 might boost the profession 
in  the  future.  Shortages  of  teachers  harm 
education  outcomes,  skills  development  and 
ultimately competitiveness. 

to 

independent  schools  and 

The education challenges have a negative 
impact  on  the  development  of  an 
educated  and  skilled  work  force.  Unequal 
access 
the 
resulting  separation  of  children  and  students 
from disadvantaged and migrant backgrounds 
from their native-born peers negatively affects 
the  development  of their basic  skills,  which is 
a pre-requisite for entering the labour market 
later on and also impacts competitiveness. The 
high  percentage  of  students  who  fail  to 
successfully  transition  to  upper  secondary 
school  show  that  general  education  does  not 
sufficiently  fulfil  its  compensatory  function. 
This presents challenges for the labour market 
and  the  labour  force  as  a  higher  level  of 
education is needed to ensure employability. 

(19)  Data from TALIS 2024 survey. 

15 

 
 
KEY FINDINGS 

In  areas  covered  by  existing  country-
specific  recommendations,  Sweden  would 
benefit from: 

• 

• 

• 

favourable 

reforming  property  taxation  and 
of 
the 
mortgages  to  reduce  incentives  for 
debt  accumulation  and  strengthen 
affordability and resilience; 

taxation 

reforming  rental  regulations  to 
make  the  rental  market  fairer  and 
more flexible; 

facilitating  increased  residential 
construction,  in  particular  in  urban 
to 
areas,  by  addressing  barriers 
construction,  particularly  related  to 
planning and permitting; 

•  accelerating  permitting  processes 
and  simplifying  procedures 
to 
ensure  a  timely  implementation  of 
large-scale 
infrastructure  projects, 
particularly  for  renewables  and  clean 
industry; 

•  enhancing  efforts 

to  achieve 
emission 
targets, 
reductions 
particularly  those  stemming  from  the 
transport sector; 

• 

• 

facilitating  the  speedy  expansion 
and  modernisation 
the 
electricity grid for both transmission 
and  distribution,  as  well  as  clean 
flexibility  solutions,  to  ensure  future 
electricity needs are fully met; 

of 

targeting reforms in the education 
system and increasing the number 
of  qualified  teachers  to  ensure 
high-quality education for all students, 
thereby 
educational 
outcomes,  particularly  of  students 

improving 

16 

from  disadvantaged  socio-economic 
and 
and  migrant 
supporting 
of 
students  to  upper  secondary  school 
and further education; 

backgrounds, 

transitioning 

the 

• 

targeted 

implementing 
active 
labour  market policies, in  particular 
for  the  long-term  unemployed,  better 
to 
coordinating  vocational 
facilitate  skills  development,  and 
strengthening  incentives  and  support 
for  the  unemployed  to  find  work 
across the country; 

training 

In other areas, Sweden would benefit from: 

•  ensuring  municipalities  have  the 
resources, 
and 
implement 
in 

necessary 
administrative 
to 
incentives 
government  policies,  particularly 
northern sparsely-populated areas; 

capacity 
fully 

•  addressing the shortage of highly-
skilled  and  specialised  workforce 
in science, technology and engineering 
Sweden’s 
that 
existing  robust  science  base  and  R&D 
investments. 

undermine 

could 

• 

Increasing  carbon  removals  in  the 
land  use,  land  use  change  and 
forestry  sector  to  meet  targets, 
including  by  strengthening  incentives 
for sustainable forest management to 
enhance carbon retention. 

•  strengthening  economic  security, 
by  supporting  the  domestic  supply  of 
critical  raw  materials  throughout  the 
value chain 

 
 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

A1.  CSR implementation 

Fiscal 

A2.  Fiscal developments and debt sustainability 

A3.  Taxation 

Productivity 

A4. 

Innovation to business 

A5.  Single market and industry 

A6.  Savings, investment and access to finance 

A7.  Effective institutional framework 

Sustainability 

A8. 

Industry decarbonisation, circularity and climate mitigation 

A9.  Affordable energy transition 

A10.  Climate adaptation, preparedness and environment 

Fairness 

A11.  Labour market 

A12.  Social policies 

A13.  Education and skills 

A14.  Social scoreboard 

A15.  Health and health systems 

A16.  Housing 

Horizontal 

A17.  Sustainable development goals 

A18.  Competitive regions 

A19.  Transport 

LIST OF TABLES 

A1.1. 
A2.1. 
A2.2. 
A2.3. 
A3.1. 
A4.1. 

2025 CSR Implementation and Commission assessment 
Supplementary pension schemes - Scope for expansion 
Projected change in ageing-related expenditure in 2025-2040 and 2025-2070 
Fiscal governance database indicators and public accounting maturity 
Taxation Indicators 
Key innovation indicators 

19 

23 

27 

27 

31 

35 

35 

40 

48 

55 

60 

60 

67 

73 

79 

79 

83 

86 

90 

91 

95 

101 

101 

104 

109 

23 
29 
29 
30 
32 
39 

 
 
 
47 
48 
54 
56 
57 
66 
78 
90 
93 
105 
106 
110 

27 
27 
28 
31 
45 
49 
50 
51 
55 
56 
62 
67 
68 
71 
79 
83 
87 
91 
91 
96 
97 
99 
101 
104 

97 
104 
107 
110 

Single Market and Industry 
Savings and Investments Union summary diagnostic 
Financial sector indicators 
Sweden. Selected indicators on better regulation practices for primary legislation 
Digital Decade key performance indicators: availability of digital public services 
Key clean industry and climate mitigation indicators: Sweden 

A5.1. 
A6.1. 
A6.2. 
A7.1. 
A7.2. 
A8.1. 
A10.1.  Key Adaptation Indicators 
A14.1.  Social Scoreboard for Sweden 
A15.1.  Key health indicators 
A18.1.  Main development trends, challenges and the concentration of resources 
A18.2.  Key regional indicators (at NUTS 2 level) for Sweden 
A19.1.  ERTMS deployment in Sweden. 

LIST OF GRAPHS 

Composition of non-financial corporations' funding 
Capital markets and financial intermediaries 
Composition of households' financial assets 
Trust in justice, regional / local authorities and in government 

A2.1. 
Contribution to the change in the general government balance (% of GDP) 
A2.2. 
Public investment evolution and composition (% of GDP) 
A2.3. 
Primary spending evolution and compositional change 
A3.1. 
Tax revenue by economic function in 2024, SE (outer ring) and EU-27 (inner ring) 
A5.1.  Manufacturing industry production: total and selected sector, index (2021=100), 2015-2024 
A6.1. 
A6.2. 
A6.3. 
A7.1. 
A7.2.  Most time-consuming aspects of service delivery 
A8.1. 
A9.1. 
A9.2. 
A9.3. 
A11.1.  Employment rate by county of birth, Sweden 
A12.1.  At-risk-of-poverty or social exclusion rate by age group in Sweden 
A13.1.  Completion rate of teaching studies in Sweden 
A15.1.  Life expectancy at birth, years 
A15.2.  Treatable mortality 
A16.1.  House prices, rents and price-to-income evolution in SE and EU27 since 2005 
A16.2.  House supply indicators in SE since 2005 
A16.3.  Housing affordability selected indicators 
A17.1.  Progress towards the SDGs in Sweden 
A18.1.  Labour productivity growth (2013-2023) and labour productivity (2023), Sweden (NUTS 2 regions) 

Greenhouse gas emissions in the effort sharing sectors, 2005, 2023, and 2024 
Electricity and gas prices for household and non-household consumers, first half of 2025 
Low-carbon electricity generation vs. electricity wholesale prices, 2025 
Belgium’s installed renewable capacity vs electricity generation mix 

LIST OF MAPS 

A16.1.  Housing construction gap 
A18.1.  GDP per head compared with the EU average 
A18.2.  GDP per head (PPS), Sweden (NUTS 3 regions) 
A19.1.  TEN-T cross-border & national priority sections in Sweden. 

20 

 
 
 
 
 
 
ANNEX 1: CSR IMPLEMENTATION  

Table A1.1:  2025 CSR Implementation and Commission assessment 

(Continued on the next page) 

21 

Sweden faces challenges in a wide range of policy areas, as identified in the country-specific recommendations (CSRs).  Sweden  was recommended, among other things, to reinforce overall defence and security, reduce reliance on fossil fuels by accelerating the deployment of renewables, accelerate and streamline permitting procedures for deploying renewables, improve educational performance, improve the efficiency of the housing market, stimulate investment in residential construction to ease the most urgent shortages, remove structural obstacles to facilitate residential construction, address risks related to high household debt. The Commission has assessed the degree of implementation of the 2025 CSRs considering the policy action taken by Sweden to date*. To do so, the Commission has taken into account the information provided by Sweden in its Annual Progress Report as well as other information sources. This annex provides summary information on the policy actions taken or planned by Sweden for each CSR. More detailed information on these actions is included in the relevant chapters and other annexes of the report. *CSR 2 is not assessed in CeSaR. RRP implementation is monitored through the assessment of RRP payment requests and analysis of the bi-annual reporting on the achievement of the milestones and targets, to be reflected in the country reports. Progress with the cohesion policy is monitored in the context of the Cohesion Policy of the European Union. Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessment of progress  1.1 Reinforce overall defence and security spending and readiness while ensuring debt sustainability in line with the European Council conclusions of 6 March 2025.  • Total general government defence expenditure in 2026 is projected at 3.8% of GDP, corresponding to an increase of 1.8 ppt. compared to 2024.  • Total general government defence expenditure in 2027 is projected at 3.9% of GDP, corresponding to an increase of 1.9 ppt. compared to 2024.   Substantial progress 1.2 Adhere to the maximum growth rates of net expenditure recommended by the Council on 21 January 2025. • Annual and cumulated deviations in 2025 amounted to -0.9% of GDP and -1.1% of GDP, respectively. • Annual and cumulated deviations in 2026 projected at 1.0% of GDP and 0% of GDP, respectively.  Limited progress 3.1 Ensure the achievement of greenhouse gas emissions reduction targets by reducing, in particular emissions from road transport • A new climate bonus for low-income households for purchasing or leasing of electric cars. The ordinance for the climate bonus was adopted on 18 December 2025. It has come into force on the 18 March 2026.  • Klimatklivet (the Climate leap): This support scheme has been strengthened with an additional SEK 1.5 billion per year 2026-2028. The strengthening of the Climate leap is in the budget bill for 2026 as adopted by the Parliament in December 2025.  • The tax exemption for workplace charging has been made permanent to further facilitate the transition to a fossil-free vehicle fleet and promote commuting with electrical vehicles. The reform was announced in the Budget Bill for 2026, which was adopted by the Parliament in December 2025.  • The climate premium for electrical lorries has been prolonged for two years, now running until 2028. The prolongation was announced in the Budget Bill for 2026, which was adopted by the Parliament in December 2025. A change of the ordinance regulating the support scheme is underway.  No Progress 3.2 Reduce reliance on fossil fuels by accelerating the deployment of renewables, Kraftlyftet is an investment support scheme that aims to strengthen electricity security of supply and enable increased electricity use. The regulation  No Progress  
 
 
 
     
 
Table (continued) 

(Continued on the next page) 

22 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessment of progress  was decided on 11 December 2025 and entered into force on 13 January 2026. 3.3 including by expanding and upgrading energy transmission networks,   Limited Progress 3.4 and improving energy efficiency. Energy efficiency in small houses: approximately SEK 1.2 billion had been allocated between 2023-2025 for a grant for energy efficiency in single-family homes.  Some Progress 3.5 Accelerate and streamline permitting procedures for deploying renewables, particularly for offshore and onshore wind energy, and avoid permitting approval reversals  • A wind power package is being developed aimed at improving the conditions for expanding onshore and coastal wind power. The first step is to establish financial support for municipalities for 2025 and 2026 based on property taxes for wind power plants which was approved by Parliament in March. A scheme to compensate residents and communities has been implemented, with the aim of strengthening the local benefits and acceptance for new wind power.  • A new environmental assessment authority will be established on 1 July 2027.  Limited Progress 4.1 Improve educational performance, including of students from 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. • On 1 September 2025, the legislation for a national professional program for principals, teachers and Early Childhood Education and Care (ECEC) teachers entered into force. The program consists of a national structure for the development of the professional competences of principals, teachers and ECEC teachers and license to teach.  The amendments concerning a quiet study environment and safety in the class are proposed to enter into force on 1 August 2026 and the amendments on the teaching assignment on 1 July 2027. Other changes are proposed to enter into force on 1 July 2028. The measures should be viewed as one package. The package also includes a ten-year compulsory school, following the legislative amendments adopted by the Parliament on 18 June 2025. As a result, Sweden will, from the autumn of 2028, implement a ten-year compulsory school in which the preschool class will be replaced by a new Year 1.  Limited Progress 4.2 Develop the skills of the labour force, particularly those from disadvantaged socio-economic and migrant backgrounds, through targeted • Measures have been put in place targeting those with migrant backgrounds, including new rules for Swedish for immigrants (sfi) as from 2026, • Funds have been allocated for the prolongation of entry jobs aimed at the integration of the newly arrived immigrants and the long-term unemployed into Limited Progress  
 
 
     
 
Table (continued) 

(Continued on the next page) 

23 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessment of progress  policy measures and resources to improve their integration into the labour market. limiting the right to participate in sfi to three years to make it more coherent and effective and making it compulsory for the municipality to make an action plan and to reach out and motivate those entitled to sfi. Amendments to the Education Act went into effect on 1 January 2026.  the labour market. • In order to increase transitions from unemployment to regular education, new legislation has come into force in March 2026, aiming to improve the exchange of information between the Swedish Public Employment Service (PES) and municipalities in relation to jobseekers in need of municipal adult education.  5.1 Improve the efficiency of the housing market, including by introducing reforms in the rental market.  • Adaptations to rental-market regulation, including greater flexibility in presumption rents for newly built rental housing and a simplified, more predictable framework for block rentals, aimed at improving investment incentives and supporting rental-housing supply.  Planned – legislative amendments are proposed to enter into force on 1 July 2026 Limited Progress 5.2 Stimulate investment in residential construction to ease the most urgent shortages. Remove structural obstacles to facilitate residential construction.   Limited Progress 5.3 Address risks related to high household debt by gradually reducing the tax deductibility of mortgage interest payments or increasing recurrent property taxes, while developing appropriate tools to better assess and target policies.  The government did not follow a proposal to collect more detailed statistical data on household assets and liabilities to supporting calibrating measures. No Progress 5.4 Maintain macroprudential measures  • On 5 February 2026, the  the bill "Utveckling av makrotillsynsområdet" (Government Bill 2025/26:119) detailed changes in macroprudential rules that enterd into force on 1 April 2026.  Borrower-based macroprudential measures for housing loans were eased. Other macroprudential settings, including on exposures to commercial real estate, were renewed while the CCyB responsibility was shifted from the FSA to the Riksbank. Some Progress   
 
 
     
 
Table (continued) 

Source: Commission Assessment 

24 

    
 
   
 
FISCAL 
ANNEX 2: FISCAL DEVELOPMENTS AND DEBT SUSTAINABILITY 

Graph A2.1: Contribution to the change in the 
general government balance (% of GDP) 

Source: European Commission Spring 2026 forecast 

Bolstered  by  rising  defence  spending,  public 
investment as a share of GDP is projected to 
reach  6.2%  at  the  end  of  the  forecasting 
period,  which  is  higher  than  before  the 
COVID-19 pandemic.  

Graph A2.2: Public investment evolution and 
composition (% of GDP) 

in 

developments 

This annex discusses selected topics in public 
finance  and 
fiscal-
structural  country-specific  recommendations 
(CSRs)  addressed  to  Sweden  in  July  2025. 
These  CSRs  include  a  call  to  strengthen  overall 
defence spending and readiness and adhere to the 
rates  of  net  expenditure 
maximum  growth 
recommended  by  the  Council  of  the  European 
Union.  

On 21 January 2025, the Council adopted the 
Sweden’s 
Recommendation 
plan(20). 
medium-term 
Sweden's  plan  covers  the  period  2025–2028  and 
presents a fiscal path as well as a set of reforms 
and investments.  

endorsing 
fiscal-structural 

Developments in the government 
balance(21) 

Sweden’s  general  government  deficit  was 
1.53 of GDP and the government debt-to-GDP 
ratio  amounted  to  35.1%  of  GDP  at  the  end 
of  2025.  Based  on  the  Commission  Spring  2026 
Forecast,  Sweden’s  general  government  deficit  is 
projected to increase to 2.8% of GDP in 2026 and 
fall slightly to 2.5% of GDP in 2026. The forecast 
increase 
largely  driven  by 
expansionary fiscal policy, driven by a combination 
of  tax  cuts  and  expenditure  increases  against  a 
backdrop  of  relatively  modest  economic  growth, 
reducing  the  total  general  government  revenue 
ratio from 48.6% of GDP in 2025 to 47.5% of GDP 
in  2027.  Expenditure  is  expected  to  decline  over 
the  forecast  period  to  50.0%  of  GDP  in  2027, 
broadly the EU average. 

in  the  deficit 

is 

(20)  OJ C, C/2025/644, 10.2.2025, ELI: 

http://data.europa.eu/eli/C/2025/644/oj. 

(21)  Figures underpinning fiscal surveillance (net expenditure 
growth) are provided in the Fiscal Statistical Tables 
(SWD(2026)200) providing background data relevant for the 
assessment of the budgetary policies of the Member States. 

Source: European Commission Spring 2026 Forecast 

The  type  of  expenditure  that  has  a  greater 
impact  on  GDP  has  increased  over  the  last 
three  decades  (see  Graph  A2.3a).  Zooming  in 
on  the  composition  of  spending,  social  protection 
accounts for the largest share of total expenditure 
(38%),  followed  by  health,  general  public  services 
and education, each above 10% of total spending. 
increased 
Public  expenditure  on  defence  has 
significantly  since  2019,  reflecting  recent  security 
developments.  (see  Graph  A2.3b).  The  share  of 
expenditure  on  housing,  health,  public  order, 

25 

-3.00-2.00-1.000.001.002.003.004.002021202220232024202520262027RevenueExpenditureChange in budget balance% of GDP0.01.02.03.04.05.06.07.0201920202021202220232024202520262027Other nationally-financedRRF grants and other EU fundsDefence 
 
 
 
   
 
   
 
 
transport and interest has risen more modestly. By 
contrast,  spending  on  education  and  R&D  has 
declined.  This  trend  deserves  attention,  as  these 
spending  categories  are  generally  considered 
growth-friendly.  

Graph A2.3: Primary spending evolution and 
compositional change 

Source: Eurostat 
Note: Based on economic literature, the categories considered 
to have the higher growth impact include education, R&D, 
health, transport and communication (See Barbiero and 
Cournede (2013), Gemmel et al. (2016), Lupu et al. (2018), 
Cepparulo and Mourre (2020) and OECD (2025)).  

Sweden has relatively high tax revenues as a 
share  of  GDP  and  relies  heavily  on  labour 
taxes.  In  2024  Sweden’s  total  tax  revenues  as  a 
percentage  of  GDP  (including  compulsory  social 
contributions) amounted to 41.6%, compared with 
the  EU  average  of  39.9%.  Total  tax  revenues  are 
projected  to  remain  broadly  stable  at  41.3%  of 
GDP in 2026 and 41.47 of GDP in 2026 according 
to  the  Commission’s  Autumn  2025  Forecast  (22). 
The  tax  mix  in  Sweden  relies  heavily  on  labour 
taxation, 
taxation,  while 
considered 
is 
underused. In addition, tax expenditures related to 
housing  tend  to  increase  inequality  as  mortgage 
likely  to  benefit 
is  more 
interest  tax  relief 

recurrent  housing 

less  detrimental 

to  growth, 

households  on  higher  income  deciles  (see  Annex 
3).  

The costs of ageing 

Total  ageing-related  spending  in  Sweden  is 
projected to decline by about 0.5 percentage 
points (pps) of GDP by 2040 but increase by 
around 0.5 pps by 2070 (see Table A2.2). This 
slight increase in the long term reflects a projected 
drop  in  pension  spending,  combined  with  an 
expected  rise  in  long-term  care  and  healthcare 
expenditure.  Total  ageing-related  spending  would 
still be below the EU average. 

Public pension spending as a share of GDP is 
projected  to  decline  somewhat  over  the 
coming  decades.  In  the  medium  to  long  term, 
public  pension  outlays  would  hover  around  7.5% 
of  GDP,  compared  with  an  EU  average  of  about 
12% in 2070.  

Supplementary  pension  schemes  can  make 
the  pension  system  more  resilient  by 
diversifying  retirement  income  sources.  In 
Sweden,  the  uptake  of  these  supplementary 
schemes remains significant. At the end of 2024, 
private pension assets amounted to around 116% 
in  supplementary 
of  GDP  and  participation 
schemes covered around 99% of the working-age 
population(23).  This  coincides  with  declining 
medium-term  pressures  on  public  pension 
the 
spending  and  a  projected  decline 
replacement  rate  by  0.2 pps  between  2025  and 
2040 (Tables A2.2 and A2.3)(24). 

in 

(23)  Source: OECD Pension Market in Focus 2025. The highest 

participation rate in at least one supplementary pension plan 
is reported.  

(22)  Data retrieved from the AMECO database (https://economy-

(24)  The (gross) replacement rate refers, depending on data 

finance.ec.europa.eu/economic-research-and-
databases/economic-databases/ameco-database_en). 

availability, to both public and private pensions. It is based 
on projections from the 2024 Ageing Report.  

26 

1015202540455055200720082009201020112012201320142015201620172018201920202021202220232024a) Evolution (% of GDP)Primary expenditureSpending with higher impact on GDP (rhs)-2.00-1.50-1.00-0.500.000.501.001.502.00SocialprotectionEducationOther economicGeneralservicesCultureEnvironmentR&DCommunicationHealthHousingTransportPublicorderInterestspendingDefenceb) Compositional change 2024-2019 (% total spending)  
  
 
 
Table A2.1:  Supplementary pension schemes - Scope for expansion 

Source: European Commission. 

Table A2.2:  Projected change in ageing-related expenditure in 2025-2040 and 2025-2070 

Source: 2024 Ageing Report (EC/EPC). 

Public healthcare expenditure is projected to 
be  7.1%  of  GDP  in  2025  (above  the  EU 
average of 6.6%) and is expected to increase 
by  0.2  pps  between  now  and  2040  and  by  a 
further 0.4 pps between 2040 and 2070.  

Public  expenditure  on  long-term  care  is 
projected to be 3.2% of GDP in 2025 (above 
the  EU  average  of  1.7%)  and  is  expected  to 
increase by 0.5 pps of GDP between now and 
2040 and by a further 0.7 pps between 2040 
and 2070. 

National fiscal framework 

net 

lending; 

balanced 

government 

government 

The  fiscal  policy  framework  comprises  four 
budgetary  policy  targets:  a  target  for 
general 
a 
benchmark  for  government  debt  (so  called 
debt  anchor);  an  expenditure  ceiling;  and  a 
local 
budget 
requirement.  Following  a  planned,  recurring 
review, the Swedish national fiscal framework was 
modified on 1 January 2026. Part of the changes 
were 
transpose  new  EU-level 
legislation. Starting 1 January 2027, the so-called 
surplus target (general government net lending on 
average  over  the  business  cycle)  which  hitherto 
has  been  0.33%  of  GDP,  will  be  replaced  by  a 
target of 0% of GDP (a so-called balance target). 

introduced 

to 

is 

for 

the  first 

temporary 

Moreover, the modified framework allows for 
a 
defence 
deviation 
expenditure  and  support  to  Ukraine  during 
the  period  2026–  2034.  The 
framework 
stipulates  that  the  target  for  general  government 
net lending is to be reached by 2035 at the latest. 
that  certain  current 
This 
expenditure  categories  are  allowed  to  deviate 
from  the  target  in  advance  and  for  a  prolonged 
period.  Another  development  which  represents  a 
departure  from  the  fiscal  policy  tradition  of 
introduction  of  a 
previous  decades, 
mechanism 
of 
financing 
investments  in  nuclear  energy,  with  potential 
significant implications for future fiscal space. 

is 
the 
government 

time 

for 

the 

assessment 

The  Swedish  Fiscal  Policy  Council  (SFPC) 
(Finanspolitiska  rådet)  was  established  in 
2007  and  has  a  relatively  narrow  mandate 
regarding  compulsory  tasks.  It  focuses  on 
monitoring  compliance  with  the  fiscal  framework. 
government’s 
of 
Its 
macroeconomic  forecasts,  on  the  basis  of  which 
the  annual  budget is  based,  is  not published  until 
February the  following  year,  after  the  budget  has 
already been adopted, which means that it cannot 
be  taken  into  account  during  the  actual  budget 
work  in  government  and  parliament  during  the 
autumn.  Board  members’  mandates  are  shorter 
than  the  electoral  cycle,  possibly  making  it  more 
difficult to build up institutional memory and name 
recognition.  It  maintains  a  small  secretariat  staff 
of five experts. The right to access to information 

27 

Assets in 2024 (% GDP)Participation in 2024 (% working-age population)SE115.8-0.299.4SEEU32.4-2.855.9EUGross replacement rate at retirement: (pps change 2025-2040) SE23.9-0.70.20.5-0.4-0.423.5SEEU24.30.50.30.4-0.30.925.2EUSE23.9-0.70.61.2-0.60.624.5SEEU24.30.20.60.8-0.31.325.6EUageing-related expenditure change in 2025-2040 (pps GDP) due to:ageing-related expenditure pensionshealthcarelong-term careeducationtotalageing-related expenditure change in 2025-2070 (pps GDP) due to:ageing-related expenditure pensionshealthcarelong-term careeducationtotal 
 
 
     
 
 
      
 
Table A2.3:  Fiscal governance database indicators and public accounting maturity 

(1) "The Country Fiscal Rule Strength Index (C-FRSI) shows the strength of national fiscal rules aggregated at the country level 
based on: i) the legal base; ii) how binding the rule is; iii) monitoring bodies; iv) correction mechanisms; and v) resilience to shocks. 
The Medium-Term Budgetary Framework Index (MTBFI) shows the strength of the national MTBF based on: i) coverage of the 
targets/ceilings included in the national medium-term fiscal plans; ii) connectedness between these targets/ceilings and the 
annual budgets; iii) involvement of the national parliament in the preparation of the plans; iv) involvement of independent fiscal 
institutions in their preparation; and v) their level of detail. A higher score is associated with higher rule and MTBF strength. 
The score for public accounting reflects the degree of maturity in relation to the International Public Sector Accounting Standards 
(IPSAS). Countries with an accounting maturity of 70% or more in relation to IPSAS are deemed to apply accrual accounting. For 
more information, see the report on public accounting in the EU (COM(2025)746 and accompanying Staff Working Document 
SWD(2025)396)." 
Source: Fiscal Governance Database, European Commission 

has  so  far  been  based  on  informal  contacts  with 
ministries.  The  SFPC  keeps  a  rather  low  media 
profile,  publishing  one  main  report  per  year, 
occasionally  complemented  by  a  special  study.  It 
has  no  explicit  communication  strategy,  reports 
limited  social  media  presence,  and  has  no  staff 
specialised  in  communication.  Its  interaction  with 
parliament is relatively limited. 

not 

the 

has 

faced 

Sweden 
fiscal 
consolidation pressures that have driven the 
reviews 
institutionalisation  of  spending 
elsewhere.  Spending  oversight  occurs  in  the 
context  of  the  government’s  expenditure  analysis 
and  work  of  the  SFPC  to  ensure  compliance  with 
the expenditure ceilings. The institutional potential 
to develop spending reviews is not yet met by the 
need and desire to introduce such tools. 

climate-specific  and  environment-specific  impacts 
of  all  budgetary,  regulatory  and  tax  policy 
measures.  Led  by  the  Ministry  of  Finance’s  green 
budgeting  unit,  2025  saw  stronger  collaboration 
across institutions, including a new working group 
on budget measures harmful to climate goals and 
greater attention to regions and municipalities.   

Sweden systematically uses green budgeting 
ex ante assessments. The country assesses the 
cost-effectiveness  and  broader  effects  of  its 
including  budgetary 
climate-relevant  policies, 
measures, in  line  with  a manual  that  has  been  in 
use since December 2024. A climate report in the 
annual  budget  bill  tracks  GHG  emissions,  newly 
adopted policies with an impact on GHG emissions 
and  gives  transparency  on  gaps  to  national 
climate targets. 

into 

assessments 

Sweden  incorporates  ex  ante  environmental 
impact 
budgetary 
policymaking  and  requires  line  ministries  to 
analyse  each  budgetary  proposal  from  an 
environmental  and  climate  perspective.  The 
annual  budget bill contains a "climate accounting" 
annex. 

into 

Sweden  has  one  of  the  most  comprehensive 
national  frameworks  for  integrating  green 
budgeting 
its  budgetary  decision-
making.  Sweden  has  developed  a  range  of 
instruments  to  support  the  implementation  of 
green  budgeting,  including  impact  assessments 
and  green  spending  reviews.  Activities  cover  the 

28 

2024SwedenEU AverageCountry Fiscal Rule Strength Index (C-FRSI)15.7114.81Medium-Term Budgetary Framework Index (MTBFI)0.800.722025 Public accounting maturity of general government85%65% 
 
 
 
 
 
 
 
 
  
 
ANNEX 3: TAXATION 

This  annex  provides  an 
indicator-based 
overview  of  Sweden’s  tax  system.  It  includes 
information  on  the  tax  mix,  on  competitiveness 
and fairness aspects of the tax system, and on tax 
collection and compliance. In the area of taxation, 
the  2025  country-specific  recommendations  for 
Sweden  highlighted  challenges  in  the  taxation  of 
housing  which  include  low  recurrent  property 
taxation  and  mortgage  interest  payments  which 
are  fully  deductible  in  Sweden.  No  significant 
policy reforms have been introduced by Sweden to 
address the property taxation recommendations.  

Tax  revenues  as  a  percentage  of  GDP  are 
comparatively  high  but  have  declined  in 
recent  years.  Tax  revenues  were  41.4%  of  GDP 
in  2024  compared  with  an  EU-average  of  39.4% 
(25).  The  tax  mix  relies  heavily  on  labour  taxation, 
at 57.2% of total revenue in 2024, compared with 
an EU-average of 51.5%, while capital taxes were 
at  16%  of  total  revenue  (21.6%  in  the  EU;  see 
Graph  A3.1).  Revenues  from  property  taxation 
were  low  at  the  equivalent  of  1.0%  of  GDP  in 
2024 
(EU-average  1.8%),  as  were  recurrent 
property taxes. 

Sweden  has  decided  to  temporarily  apply  a 
reduced  VAT  rate on  foodstuffs from  1 April 
2026 until 31 December 2027. The rate will be 
reduced  from  12%  to  6%  during  that  period.  The 
purpose  of  the  measure 
is  to  support  the 
households’  economy.  The  measure  is  estimated 
to reduce tax revenues by SEK 37.19 billion for the 
entire period (26). 

program. 

assessment 

Sweden  does  not  have  a  comprehensive  tax 
expenditure 
A 
government  agency  has  been  commissioned  to 
map  and  evaluate  tax  expenditures,  but  these 
assessments  relate  only  to  business  support  and 
the value it generates (27) and not personal income 
tax  reliefs. Unlike  most  Member  States, mortgage 
interest  costs  are  fully  deductible  in  Sweden.  For 
2024,  interest  deductions  for  households  (which 
mainly  relate  to  mortgage  interest)  were  at 
SEK 61 billion  (close  to  1%  of  GDP),  up  from 

(25)  Preliminary Eurostat data point to a tax-to-GDP ratio of 

41.1% in 2025 

(26)  Government bill (Regeringens proposition) 2025/26:55.  

(27)  European Commission Mind the Gap report - Sweden 

29 

SEK 41 billion, i.e. an increase of close to 50% (28). 
Tax  expenditures  related  to  housing  tend  to 
increase inequality as mortgage interest tax relief 
are  more  likely  to  benefit  households  on  higher 
income deciles (29). Although there is capital gains 
tax  in  Sweden  on  the  sale  of  property,  this  can 
normally be deferred through the purchase of new 
property. 

Graph A3.1: Tax revenue by economic function in 
2024, SE (outer ring) and EU-27 (inner ring) 

Source: Taxation Trends Data, DG TAXUD 

system 

capital-taxation 

Sweden’s 
is 
conducive to private investment. The statutory 
rate  of  corporate  income  tax  (CIT)  in  Sweden  is 
20.6%,  while  the  effective  CIT  rate  in  2024  was 
19.3%  (EU-average  of  19.1%).  Compared  with 
other  EU  countries,  Sweden  relies  less  on  tax 
incentives  to  promote  investment  and  more  on 
financial 
loans  and 
guarantees.  Sweden  has 
implemented  a  tax 
incentive to stimulate R&D activities, which directly 
lowers monthly labour costs which can accumulate 
to  significant  sums  over  time  (source:  GTED 
database).  Sweden  ranks  eleventh  out  of  the  27 
EU countries in the Tax Complexity Index, where a 
higher rank means lower tax complexity. 

instruments 

such  as 

Capital  gains  related  to  the  sale  or  transfer 
of  business  holdings  benefit  from  wide 
exemptions.  Capital  gains  derived  from  the  sale 
of  shares, including the  right  to  sell  shares  in  the 
future  (and  capital  gains  from  other  securities  in 
resident  and  non-resident  companies),  are  not 

(28)  See Rekordnota för ränteavdrag: 61 miljarder – män med 

hög lön får mest | SVT Nyheter [Record SEK 61 billion credit 
note for interest deduction – high earners benefit most]  

(29)  Sweden considers mortgage interest to be a tax deduction 
and not a tax expenditure. Accordingly, it is not included in 
their yearly Tax Expenditures report. 

51.526.821.657.426.716.0Taxes on labourTaxes on consumptionTaxes on capital 
 
 
      
 
 
 
Table A3.1:  Taxation Indicators 

(1) Forward-looking effective tax rate (KPMG). 
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average. 
(**) Forecast value for 2024. EU-27 refers to the median value. For more data on tax revenues as well as the methodology 
applied, see the Data on Taxation Trends webpage. 
Source: European Commission, OECD, ISORA. 

subject to tax provided they constitute a business 
holding.  Furthermore, 
there  are  no  wealth, 
inheritance, or gift taxes in Sweden. 

Sweden’s ISK investeringssparkonto is one of 
the  most  successful  savings  accounts  for 
retail  investors  in  the  EU (30).  This  contributes 
to  a  dynamic  equity  market:  Sweden  has  a  total 
market  capitalisation  equal  to  161%  of  GDP  (end 
of  Q2-2025)  –  more  than  double  the  EU-27 
average  of  68%  (31).  The  investeringssparkonto 
benefits  from  a  favourable  tax  treatment:  assets 
in  the  account  are  taxed  at  0.888%  per  year, 
compared  with  other  financial  investments  in 
Sweden  where  capital  gains  are  taxed  at  30%. 
Since  1 January  2025,  up 
to  SEK 150 000 
(EUR 13 950)  can  be  invested  in  the  account  tax-
free.  This  amount  has  been  doubled  as  of  2026. 
By the end of 2024, Swedish households’ financial 
assets  amounted  to  342%  of  GDP  (EU-average 
212%  of  GDP).  As  of  2023,  listed  and  unlisted 
shares  accounted  for  36%  of  household  financial 
assets in Sweden, compared to just 26% in the EU.  

(30)  Commission Staff Working Document accompanying the 

Commission Recommendation on Increasing the Availability 
of Savings and Investment Accounts with Simplified and 
Advantageous Tax Treatment 

(31)  CEPS report - Learning from Sweden; a blueprint for building 

resilient European Capital Markets 

Sweden has a high tax wedge at all levels of 
income,  in  particular  at  the  lowest  and 
highest  earnings  levels,  compared  with  the 
EU  average (32).  The  tax  wedge  of  low-income 
earners  at  50%  of  the  average  income  (38.5%  in 
2025)  is  particularly  high  compared  to  the  EU 
average (31.6%; see Table A3.1 and Graph A3.1).  

SE has introduced labour tax reforms mainly 
targeting  full-time  workers  with  low  and 
medium incomes. The 2025 budget included tax 
cuts  on  labour  and  for  pensioners  by  increasing 
both the ordinary earned income tax credit and the 
basic  tax  credit  to  support  disposable  income  for 
full-time  workers.  This  fits  with  a  longer-standing 
trend of untargeted income tax reductions. 

(32)  The tax wedge is an indicator of the tax burden on labour 
that can be assessed at various levels of earnings. It is 
defined as the sum of personal income taxes, employee and 
employer social-security contributions, as well as other 
mandatory contributions, expressed as a percentage of total 
labour costs (composed of the gross wage, and employer 
contributions). Tax wedge data in the 2026 country reports 
are calculated by the Joint Research Centre of the European 
Commission and based on the EUROMOD model, while in the 
past country reports they were based on the OECD tax and 
benefit model. While the underlying methodology is very 
similar, differences in the assumptions can lead to different 
results between both models. 

30 

2019202220232024202520192022202320242025Tax structureTotal taxes (including compulsory actual social contributions) (% of GDP)43.142.941.741.441.139.939.739.039.4Taxes on labour (% of GDP)25.024.023.823.720.620.119.920.3of which, social security contributions (SSC, % of GDP)2.82.72.72.713.012.712.713.0Taxes on consumption (% of GDP)12.012.211.711.011.210.910.510.6of which, value added taxes (VAT, % of GDP)9.29.59.08.77.17.47.17.1Taxes on capital (% of GDP)6.06.76.26.68.18.78.58.5Personal income taxes (PIT, % of GDP)14.614.213.613.99.69.49.39.6Corporate income taxes (CIT, % of GDP)3.23.63.43.52.63.23.23.1Total property taxes (% of GDP)1.11.11.01.02.22.11.91.8Recurrent taxes on immovable property (% of GDP)0.70.70.60.61.21.00.90.9Environmental taxes (% of GDP)2.11.92.01.62.62.12.12.1Effective carbon rate in EUR per tonne of CO2 equivalentsnana89.7nanana84.8naTax wedge at 50% of average wage (single person) (*)38.837.537.436.938.532.431.631.531.531.6Tax wedge at 100% of average wage (single person) (*)42.442.241.741.042.640.139.739.939.940.0Corporate income tax - effective average tax rates (1) (*)20.119.319.319.320.019.219.019.3Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)9.89.28.88.07.88.07.97.8Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)0.20.70.9na31.832.630.7naVAT gap (% of VAT total tax liability, VTTL) (**)1.53.55.37.710.57.38.2naProgressivity & fairnessTax administration & complianceBy tax baseSome tax typesEU-27Sweden 
 
 
 
      
 
The  Commission  service  JRC  has  assessed 
that the 2025 labour tax reforms will have a 
minimal  impact  on  the  tax  wedge  of  low-
income earners.   It is estimated that at 50% of 
the average wage, the decrease in the tax wedge 
ranges  from  0.19 percentage  points  (pps)  for 
single  workers  with  no  children  to  0.38 pps  for 
two-earner  couples  with  2  children.  There  is  a 
bigger  decrease  in  the  tax  wedge  as  income 
increases.  For  example,  two  earners  with  two 
children  at  100%  of  the  average  wage  benefit 
from  a  0.45 pps  decrease  in  the  tax  wedge. 
Typically,  a  targeted  reform  like  tax  credits  could 
better  alleviate  a  high  tax  wedge  for  low-income 
groups.  The  Fiscal  Policy  Council  assessed  these 
measures to be costly, with only a marginal impact 
on  employment  and  on  balance  with  a  negative 
impact on the fiscal balance (33). 

Relatively  high  labour  taxation  in  Sweden  is 
coupled  with  a  relatively  high  redistributive 
capacity  of  the  system.  The  Swedish  tax  and 
benefit system reduced inequality as measured by 
the Gini coefficient (34) by 8.0 percentage points in 
2024.  This  reduction  in  income  inequality  was 
somewhat  greater 
the  EU-average  of 
than 
7.8 percentage  points  but  it  shows  a  diminishing 
trend over recent years (see Table A3.1) mirroring 
degressive fixed property and capital taxation. 

However, 

There  has  been  a  lack  of  a  systematic 
approach  in  Sweden  when  evaluating  tax 
expenditures (TEs). 
tax 
measures are proposed, the budgetary effects are 
presented in an accompanying impact assessment. 
Foregone  tax  revenues  due  to  expenditures  were 
3.8%  of  GDP  in  2020(35).  While  Sweden  provides 
regular  and  detailed  reporting  of  TEs,  it  has  only 

when 

(33)  Finanspolitiska Rådet (Swedish Fiscal Policy Council), Svensk 
Finanspolitik 2026. Given high deadweight losses, the 
Council estimates the average cost of a job created at 
SEK 2.8 million (around EUR 260 000). 

(34)  The Gini coefficient measures the extent to which the 

distribution of income within a country deviates from a 
perfectly equal distribution. A coefficient of 0 expresses 
perfect equality where everyone has the same income, while 
a coefficient of 100 expresses full inequality where only one 
person has all the income. 

(35)  Source: data from GTED database. Sweden reported that it 
does not normally aggregate tax expenditures due to a lack 
of a meaningful interpretation of such a measure. In 
addition, the Swedish tax expenditure report includes a 
separate section (1.2.6) discussing why tax expenditures 
should not be used as a basis for country comparisons. 

recently  implemented  an  evaluation  of  these  TEs. 
Such  an  evaluation  would  help  ensure  the 
effectiveness and efficiency of tax expenditures as 
well as simplifying the taxation system. 

and 

(0.5%), 

publishes 

income  tax 

Unlike  most  Member  States,  Sweden 
regularly  measures 
a 
comprehensive  range  of  tax  gaps.  These 
labour 
include  corporate 
taxation  (0.4%),  capital  gains  tax  (8.6%),  value 
added tax (3.4%), and excise duties (4.4%) (36). The 
results  of 
the 
these  assessments 
compliance  risk  strategy  of  Sweden.  Based  on  a 
methodology  prepared  by  the  Joint  Research 
Centre, the CIT gap in Sweden was at 3.5% of CIT 
revenues  collected  in  2015,  the  fourth  lowest  of 
23 Member States assessed (37). 

inform 

estimated 

gap  was 

compliance 

Sweden  performs  relatively  well  on  VAT 
administration.  In  2023,  Sweden  collected  a 
total  of  EUR 48 132 million  in  VAT  revenue.  The 
VAT 
at 
EUR 2 712 million,  equivalent  to  5.3%  of  the  VAT 
total  tax  liability,  representing  an  increase  of 
1.8 percentage points compared to 2022. Between 
2019 and 2023 the VAT compliance gap increased 
from 1.5% to 5.3% (as shown in the figure). With 
an EU VAT compliance gap of approximately 9.5%, 
Sweden  is  ranked  sixth  among  the  EU  countries. 
The  actionable  VAT  policy  gap  stood  at  20.6%  in 
2023,  consisting  of  a  VAT  rate  gap  of  8.2%,  a 
national policy-driven VAT exemption gap of 9.9%, 
and an EU policy-mandated VAT exemption gap of 
2.6%. 

to 

is  still  scope 

increase  VAT 
There 
compliance  further,  but  Sweden’s  audit 
system  incorporates  several  good  practices. 
Sweden  could  review  its  provisions  on  legal 
verification  of  VAT  registrations  for  registering 
taxpayers for VAT purposes. It does, however, have 
a good practice of cross-checking the information 
held  in  the  VAT  registration  database  against 
third-party  information  sources  (such  as  other 
government  registries)  to  improve  the  integrity 
and  accuracy  of  its  database.  Sweden  is  among 

(36)  Swedish tax gap reports 2022 (corporate income tax) and 

2020 (labour taxation, capital gains, VAT and excise duties). 
Tax gap estimates are based on the proportion of final tax 
due. See also European Commission, Directorate-General for 
Taxation and Customs Union, Mind the gap - 2025 report.  

(37)  European Commission Report (JRC) : The Corporate Income 
Tax Gap, A European approach to measuring losses in 
corporate tax revenues 

31 

 
 
 
the  EU  countries 
that  gathered  additional 
information for the mini one-stop shop for VAT. It 
has  also  set  up  a  way  to  automatically  remove 
entities from this one-stop  shop  if they no longer 
meet  the  requirements.  Sweden  does  not  use 
collection  targets  but  relies  on  estimates  of  VAT 
revenue.  It  is  performing  well  on  maintaining  a 
flexible IT subsystem to manage and prioritise VAT 
arrears. 

32 

 
PRODUCTIVITY 
ANNEX 4: INNOVATION TO BUSINESS  

Sweden  is  an  EU  leader  in  research  and 
innovation, but maintaining global leadership 
requires  continued  investment  in  R&D  and 
talent. The country plays an important role in the 
development of advanced digital technologies and 
infrastructure, with firms gradually increasing their 
technologies.  The  2025 
adoption  of  digital 
European Innovation Scoreboard ranks Sweden as 
the most innovative country in the European Union 
with an innovation performance of 138.1% of the 
EU average (38). This strong performance is driven 
by  the  highest  R&D  intensity  in  the  EU  (3.56%  in 
2024),  with  an  increasing  trend  and  particularly 
driven  by  high  business  R&D  expenditure,  as  well 
innovation  and 
as  strong  dissemination  of 
favourable 
innovative 
(39).  To  achieve  enhanced 
entrepreneurship 
research  excellence,  strengthening  its  translation 
into  the  economy,  and  ensuring  an  adequate 
supply of highly skilled staff in science, technology 
and  engineering,  timely  implementation  of  the 
Swedish R&I Bill (2025–2028) would be beneficial. 

conditions 

for 

Excellent science 

Sweden has a strong public science base, but 
efforts  are  needed  to  sustain  performance 
and reflect it in scientific impact.  The science 
system  builds  on  a  well-established  network  of 
public  research  institutions  and  is  supported  by 
numerous R&I funding programmes (40). Sweden’s 
public expenditure on R&D as a percentage of GDP 
is the fourth highest in the EU (0.94% in 2024 vs 
EU  average  of  0.72%)  but  has  stagnated  over 
recent  years.  The  high 
level  of  public  R&D 
investment  has  resulted  in  a  high  number  of 
scientific publications (per inhabitant) as well as a 
large  proportion  of  researchers  in  the  population 

(38)  European Innovation Scoreboard 2025 

(39)  Swedish Productivity Commission, SOU 2025:96 (Fler 

möjligheter till ökat välstånd) 

(40)  Research Barometer 2025: 

https://www.vr.se/analys/rapporter/vara-rapporter/2025-10-
09-forskningsbarometern-2025.html; Sweden’s Academic 
Landscape: Higher Education and Research Explained 2025; 
https://www.uka.se/swedish-higher-education-authority/our-
results/swedens-academic-landscape-higher-education-and-
research-explained 

(41). Nonetheless, the scientific impact of research 
outputs,  as  measured  by  the  proportion  of 
scientific publications within the top 10% of most-
cited  publications  worldwide  as  a  percentage  of 
total publications has slightly decreased over time 
(from  13.56%  in  2012  to  12.5%  in  2022). 
Although  this  is  still  well  above  the  EU  average 
(9.44%),  Sweden  ranks  only  eleventh  in  terms  of 
citation  impact  in  the  OECD.  While  this  also 
(42),  Sweden’s 
reflects  broader  global  shifts 
research  base  could  benefit  from  strategic 
alignment, shared priorities and clear direction (43) 
- objectives which it is envisaged that the Swedish 
Research  & 
Innovation  Bill  2025-2028  will 
address. 

a 

steady 

envisages 

The  Swedish  Research  and  Innovation  Bill 
2025-2028 
and 
significant  increase  in  the  research  budget. 
The bill includes an additional  amount of SEK 1.5 
billion implemented in  2025  and  strong  increases 
for  2026  and  the  following  years  (44).  Direct 
to  higher  education 
research  appropriations 
institutions increases (45) under a refined allocation 
model  designed  to  promote  competitive  funding 
and further strengthening the focus on excellence. 
The  ongoing  excellence  centres  programme, 
enabling researchers to operate at the forefront of 
various  scientific 
received  additional 
fields, 
funding,  and  a  new  initiative  on  breakthrough 
research at the highest international level is being 
developed by the Swedish Research Council, which 
has also been tasked with developing a new career 

(41)  Sweden has the third-largest proportion of researchers in the 
population in the OECD as well as a very high proportion of 
researchers in the corporate sector (73%), only exceeded by 
South Korea, the United States and Japan. As regards the 
number of scientific publications per inhabitant, Sweden 
ranks sixth in the OECD; Swedish Research Barometer 2025. 

(42)  Sweden’s slight statistical decrease in citation impact is also 

due to other countries’ increase in citation impact, in 
particular from China. Sweden has lost ground in technical 
areas: engineering, materials science and information and 
communication technologies; The Swedish Research 
Barometer 2025, Vetenskapsrådet. 

(43)  OECD (2023): Public research funding in Sweden 

https://www.oecd.org/en/publications/public-research-
funding-in-sweden_9eb9a85b-en.html. 

(44)  The R&I Bill foresees an increase from SEK 1.5 billion in 

2025 to SEK 2.5 billion in 2026, SEK 4.0 billion in 2027, and 
to SEK 6.5 billion in 2028. 

(45)  By SEK 377 million in 2025, set to rise to SEK 1.6 billion by 

2028. 

33 

 
 
 
 
 
 
 
support  grant  to  attract  talented  early  career 
researchers at the associate senior lecturer level.  

Business innovation  

Sweden  is  home  to  a  thriving  high-tech 
innovation ecosystem, underpinned by strong 
business  R&D  expenditure.  The  business  R&D 
intensity has steadily increased during the last ten 
years  and  stood  at  2.61%  in  2024,  which  is  the 
highest in the EU and comes close to the level of 
international competitors such as the USA (2.7% in 
2023).  This  is  the  result  of  investments  by 
innovative SMEs and by internationally competitive 
and  innovative  large  companies.  According  to  the 
2025  EU  Industrial  R&D  Investment  Scoreboard, 
Sweden  shows  above-average  R&D  investment 
growth,  driven  by  major  firms  and  a  stable, 
diversified  ecosystem  with  particular  strengths  in 
the  automotive  sector.  Sweden’s 
ICT  and 
innovative  strength 
in  the  high 
proportion of companies investing in new products, 
processes,  or  services  (40%  vs  an  EU  average  of 
32%), particularly in manufacturing, where 54% of 
firms innovate (46). This is complemented by a high 
number  of  patent  applications  per  billion  GDP 
(6.05 in 2022 vs 2.81 EU average), despite a slight 
decline since 2018.  

is  reflected 

Swedish  SMEs  show  a  strong  innovation 
performance.  SMEs  are  central  to  Sweden’s 
strong  innovation  performance.  Sweden  has  the 
highest  percentage  of  SMEs  (28.3%)  among  the 
top 800 R&D investors in the EU (47) and relevant 
indicators  measuring  innovation  output  in  SMEs 
(e.g.  SMEs 
introducing  product  and  process 
innovation)  rank  Sweden  well  above  the  EU 
(48).  However,  business  enterprise 
average 
expenditure  on  R&D  by  SMEs  as  a  percentage  of 
GDP  (0.43%  in  2023)(49)  is  slightly  below  EU 
average.  Total  public  sector  support  for  business 
R&D  expenditure  as  a  percentage  of  GDP  has 
remained relatively modest in EU comparison, but 
the 2024 budget set out measures to improve the 
use and transparency of public funding, including a 

(46)  EIB Investment Survey 2025 

(47)  EU Industrial R&D Investment Scoreboard 2025 

(48)  European Innovation Scoreboard 2025. Country profile 

Sweden. 

(49)  Eurostat 

government-wide  system  for  data  sharing  with 
businesses  (50).  Moreover,  to  further  support  R&D 
activity 
in  the  private  sector  more  broadly, 
including  in  SMEs,  Sweden  has  evaluated  the 
current  R&D  tax  incentives.  The  related  report  is 
under consideration within the Government offices 
(51). 

to 

strong 

is  key 

Maintaining 
science-business 
innovation  and 
cooperation 
competitiveness.  The  situation  on  science-
business  collaboration  in  Sweden  suggests  a 
nuanced  picture.  The  proportion  of  public 
expenditure  on  R&D  financed  by  the  business 
enterprise  sector  as  a  percentage  of  total  public 
expenditure  on  R&D  has  declined  since  2011  (to 
3.52%  in  2023),  despite  positive  developments in 
the  two  preceding  years  and  Sweden  remains 
(7.51%).(52)  However, 
below  the  EU  average 
Sweden performs well on the proportion of public-
private  scientific  co-publications  as  a  percentage 
of the total number of publications (12% in 2024), 
well  above  the  EU  average  (7.62%).(53)  Sweden’s 
strong scientific performance has not in all sectors 
been fully translated into technological leadership 
in  key  strategic  technologies  such  as  MedTech, 
synthetic 
and 
virtual/augmented  reality,  while  patent  analysis 
points  to  declining  competitiveness  in  areas  such 
as  robotics  and  smart  grids.  (54)  The  potential  for 
European 
remains 
underutilised,  despite  Sweden’s  strong  scientific 
collaboration networks (55). Designed to involve the 
private sector to bridge the gap between research 
and 
at 
commercialisation, 
capacity, 
strengthening  Sweden's 
competitiveness  and  technological  independence 

semiconductors, 

collaboration 

innovative 

biology, 

patent 

aimed 

and 

(50)  OECD, 2025, STIP Compass – Country dashboard. 

(51)  SOU 2025:3 ’Skatteincitament för forskning och utveckling. 
En översyn av FoU-avdraget och expertskattereglerna‘; 
https://www.regeringen.se/rattsliga-dokument/statens-
offentliga-utredningar/2025/01/sou-20253/ 

(52)  Eurostat 

(53)  Science Metrix (Scopus) 

(54)  See for instance: IVA, Sweden’s Competitiveness and 
Investment Priorities, 2025; https://www.ceps.eu/ceps-
publications/swedens-competitiveness-and-investment-
priorities-in-key-strategic-technologies/ 

(55)  84% of Swedish academic-corporate co-publications are 
with international partners, which reflects the key role of 
international collaboration in Swedish science; Elsevier: 
Sweden as a Science Nation; 
https://www.elsevier.com/academic-and-research-
leader/science-nation 

34 

 
 
 
in strategically important technology areas, a new 
programme  is  being  developed  by  the  Swedish 
Research  Council  and  the  Swedish  Innovation 
Agency  (Vinnova)  for  clusters  of  excellence  in 
groundbreaking technologies. 

of 

cloud 

Similarly, 

artificial 

intelligence 
adoption 

With  35.04%,  Sweden  performed  in  2025 
well above the EU average of 19.95% on the 
by 
uptake 
businesses. 
by 
businesses remained well above the EU average of 
46.69%  at  67.59%,  while  the  country  was  below 
the  EU  average  of  39.85%  on  the  use  of  data 
analytics  at  38.64%.  In  February  2026  Sweden 
presented an AI strategy and accompanying action 
plan 
further  adoption  and 
development of artificial intelligence.(56) 

to  support 

the 

Entrepreneurial dynamism  

Sweden  has  a  dynamic  startup  ecosystem, 
supported  by  a  growing  level  of  venture 
capital. The country has a strong pipeline of more 
than  2 200  startups  specifically  in  high-growth 
sectors  like  climate  tech,  deep  tech  and  life 
sciences. It is among the top 10 countries globally 
by  number  of  unicorns,  and  first  per  capita  in 
Europe (57). This development has been driven by a 
highly  developed  capital  market  (see  Annex  5). 
Sweden is home to an above-EU-average level of 
venture capital as a percentage of GDP (0.12% vs 
0.06%  in  2024)  which  has  tripled  since  2017  but 
nevertheless  remains  significantly  below  that  of 
the  US,  with  a  particularly  pronounced  gap  for 
later-stage  venture  capital.  However,  Sweden  has 
a  high  proportion  of  venture  capital  investment 
going  into  late  stage  (58)  (60%  in  2020-2024). 
International  venture  capital  investors  are  being 
attracted  by  an  entrepreneurial  business  culture 
and  government-backed  financial  support  for 
early-stage  companies  (e.g.  Industrifonden,  Almi 
Invest).  In  addition,  Sweden  is  actively  supporting 
incubator  and 
its  startup  ecosystem  through 

innovation  environments  across 

startup support programmes, such as the Swedish 
national  incubator  programme,  which  supports 
regional 
the 
country  and  promotes  innovation  and  business 
development by giving startup support (59). Further 
improvements  in  innovation  procurement  could 
boost  start-up  growth  in  strategic  technologies 
and 
strategic 
autonomy (60). 

enhancing 

sensitive 

sectors, 

Access to skilled staff in science, technology 
and engineering is essential to ensure future 
investment  in  R&D  in  Sweden.  In  Sweden’s 
most R&D-intensive companies, the availability of 
skilled  staff  remains  the  most  important  factor 
when  companies  choose  a  location  for  their  R&D 
activities.  Although  the  recruitment  situation  has 
slightly improved over the last two years, almost a 
third  of  companies  still  consider  it  difficult  to 
recruit R&D staff. The number of new graduates in 
science  and  engineering  per  thousand  population 
(13.42  in  2023)  remains  below  the  EU  average 
(16.82), even though enrolment in STEM is higher 
than  the  EU  average  (see  Annex  13).  National 
from 
statistics  show  a  high  dropout 
engineering 
high 
studies. 
unemployment rate, in 2024 there was a shortage 
estimated at 4 700 IT-architects, 2 900 engineers 
and  technicians  and  2  100  civil  engineers. 
in  STEM 
Increased  participation  and 
education  among  young  people 
to 
strengthening competitiveness and innovation, and 
matching  skills  needs.  However,  national  sources 
show  a  slow  decrease  in  students  in  upper 
secondary 
Stronger 
alignment between tertiary education, local labour 
markets  and  innovation  ecosystems  would  help 
retain  graduates  (61).  To  become  better  able  to 
recruit the best researchers for excellent research, 
the  new  Swedish  Research  and  Innovation  Bill 
2025-2028 
incentives  for 
strategic  recruitment,  with  the  focus  on  associate 
senior lecturers. This includes a new career support 
grant to attract talented early-career researchers. 

programmes. 

rate 
the 

improved 

includes 

interest 

Despite 

is  key 

science 

(56)  Annual Report of the Digital Decade Policy Programme 

(59)  https://www.sisp.se/en/ 

(57)  State of the Swedish Tech Ecosystem, dealroom.co, May 

(60)  European Commission: Country Profile Sweden – 

2025. 

(58)  Sweden‘s proportion of late-stage VC funding is almost as 
high as in the US Bay Area 62%) and higher than in other 
European countries, such as Germany (48%), UK (43%) or 
France (39%). 

Benchmarking of national policy frameworks for innovation 
procurement.  

(61)  OECD Economic Surveys: Sweden 2025 June 2025 Volume 
2025/13; European Innovation Scoreboard 2025 Country 
profile Sweden 

35 

 
 
 
 
entrepreneurship.  Their  company  programme 
provides upper-secondary school students with the 
opportunity  to  start  and  run  a  business during  an 
academic  year.  Students  experience  firsthand  the 
entire life cycle of a business from recognising an 
unfulfilled  market  need,  writing  a  business  plan, 
setting  up  their  company,  raising  capital  to 
produce/develop the product,  marketing  and  sales 
of  the  product  and  finally  liquidating  operations 
and paying out any dividends. 

school 

Sweden  has  a  strategy  for  entrepreneurship 
education, and entrepreneurship is present in 
primary  and  secondary education.  It  is  one  of 
three EU Member States with a top-level strategy 
fully dedicated to entrepreneurship education, with 
the  primary 
focus  of  developing  students’ 
entrepreneurship  competences  (62).  The  strategy 
covers primary and secondary  education, with the 
goal  of  fostering  an  entrepreneurial  mindset  and 
skills  across  the  education  spectrum.  Sweden 
refers  to  entrepreneurship  when  defining  the 
fundamental  values  and  mission  of  the  school. 
Entrepreneurship  is  represented  both  as  cross-
curricular  approach  and  in  specific  subjects.  The 
entrepreneurship  subject  in  Sweden  can  either 
concentrate  specifically  on  entrepreneurship,  or 
also  link  it  to  economics  and  business  (only 
without  the  other  subject  in  its  name).  It  is 
compulsory 
for 
in  upper-secondary 
students  specialising  in  economics,  and  optional 
in  most  European  countries, 
for  others.  As 
entrepreneurship  education 
is  not  explicitly 
mentioned  in  the  teacher competence  framework. 
There  are  references  to  training  opportunities  in 
entrepreneurship  education  for  teachers,  with 
specifications  on  learning  objectives.  The  digital 
course ‘Entrepreneurship in education’ for teachers 
in compulsory education aims to help participants 
define  the  concept  of  entrepreneurial  learning, 
compare 
and 
entrepreneurship and identify differences between 
entrepreneurial and traditional learning. Sweden is 
one  of  the  countries  with  specific  guidance  for  a 
whole-school approach in teaching in primary and 
general  secondary  education.  There  are  no 
practical  entrepreneurial  experiences  offered  in 
primary  and  general  lower-secondary  education, 
and  they  are  offered  only  as  extracurricular 
activities in upper secondary education (63). Junior 
Achievement Sweden (64) is the largest programme 
for  entrepreneurship  in  schools  and  is  available 
throughout  the  country.  They  have  been  active  in 
Sweden  for  over  40  years  and  trained  more  than 
560 000  upper  secondary  school  students  in 

entrepreneurial 

learning 

(62)  In line with the Council Recommendation on key 

competences for lifelong learning 

(63)  European Commission / EACEA / Eurydice, 2025, 

Entrepreneurship education at school in Europe – 2025. 
Eurydice Report. 

(64)  A non-profit organisation working to promote 

entrepreneurship among Swedish students and to facilitate 
relationships between industry and the Swedish school 
system. Junior Achievement Sweden is part of the global 
organisation Junior Achievement Worldwide. 

36 

 
 
Table A4.1:  Key innovation indicators 

(1) EU average for the last available year or the year with the largest number of country data. 
* break in series 
Source: Eurostat, OECD, DG JRC, Science Metrix (Scopus database), Invest Europe, European Innovation Scoreboard 

37 

R&D intensity (gross domestic expenditure on R&D as % of GDP)3.19*3.243.513.503.643.562.243.44Public expenditure on R&D as % of GDP1.000.980.96*0.920.930.94:0.720.64Scientific publications of the country within the top 10% most-cited publications worldwide as % of total publications of the country 13.0112.8312.1212.50:::9.4412.31Researchers (FTEs) employed by public sector (Gov+HEI) per thousand active population3.9*4.3*4.34.34.74.8:4.3:International co-publications as % of total number of publications53.3960.0666.8867.867.9168.31:57.24:Business enterprise expenditure on R&D (BERD) as % of GDP2.19*2.262.542.582.70*2.61:1.492.69Business enterprise expenditure on R&D (BERD) performed by SMEs as % of GDP:0.5::0.43*::0.470.30Researchers employed by business per thousand active population6.40*9.0010.9014.8015.20*15.00:5.9:Patent applications filed under the Patent Cooperation Treaty per billion GDP (in PPS €)7.687.156.886.05:::2.812.20Employment share of high-growth enterprises measured in employment (%):::1.170.89::0.87:SMEs with at least a basic level of digital intensity% SMEs (EU Digital Decade target by 2030: 90%)::::79.91:86.4771.39:Data analytics adoption% enterprises (EU Digital Decade target by 2030: 75%)::::34.96:38.6439.85:Cloud adoption% enterprises (EU Digital Decade target by 2030: 75%)::::66.00:67.5946.69:Artificial intelligence adoption % enterprises (EU Digital Decade target by 2030: 75%)::::10.3725.0935.0419.95:Public-private scientific co-publications as % of total number of publications11.0110.9411.5212.2412.2412.03:7.62:Public expenditure on R&D financed by business enterprises (national) as % of GDP:0.03::0.03::0.060.02Total public sector support for BERD as % of GDP::::018*::0.21:R&D tax incentives: foregone revenues as % of GDP00.010.030.040.04:0.10:BERD financed by the public sector (national and abroad) as % of GDP ::::0.14*::0.11:Venture capital (market statistics) as % of GDP (calculated as a 3-year moving average)0.080.050.090.1600.1400.12:0.06:Seed stage funding share (% of GDP)0000.010.010.01:0.01:Start-up stage funding share (% of GDP)0.040.020.060.070.060.06:0.03:Later stage funding share (as % of GDP)0.040.030.030.080.080.05:0.03:New graduates in science & engineering per thousand population aged 25-3411.7013.9012.9413.8313.42::16.8:Graduates in the field of computing per thousand population aged 25-341.562.182.744.214.33::3.84:Innovative talentR&D investment & researchers employed in businessesInnovation outputsDigitalisation of businessesAcademia-business collaboration Public support for business innovationFinancing innovationScience and innovative ecosystemsSweden2010201520202022202320242025EU average (1)USHeadline indicator 
 
 
  
 
ANNEX 5: SINGLE MARKET AND INDUSTRY 

Swedish  companies  benefit  from  a  growth-
invest 
conducive  business  environment, 
heavily  in  R&D  and  have  demonstrated  a 
high  degree  of  resilience.  At  the  same  time, 
obstacles  and  challenges  for  businesses  remain, 
including  skills  mismatches  and  labour  shortages, 
administrative  burden  and  geopolitical  challenges. 
These  weigh  more  heavily  on  smaller  firms, 
limiting  their  ability  to  scale  up  and  fully  benefit 
from  investment  and  structural  change.  As  a 
result,  there  is  a  productivity  gap  between  large 
and  smaller  firms.  Additionally  labour  productivity 
growth  has  stagnated  despite  strong  investment 
and ongoing economic transformation. 

Business dynamics 

to  about  7%.  This 

Business  dynamism  has  slowed.  The  business 
cumulative entry and exit rate (business churn) (65) 
for 2023 (about 15%) continued to be among the 
lowest in the EU with an average of 19% (66). Both 
business  birth  rate  and  business  death  rate 
remained  fairly  stable,  with  the  death  rate 
increasing  slightly 
low 
dynamism  indicates  a  less  competitive  business 
the  creative 
environment,  a  weakening  of 
destruction  process  and  conservation  of  market 
power.  This  process  undermines  innovation,  and 
allocative efficiency (67). The services sectors with 
high  business  birth  rates  since  2021  were  the 
administrative  and  support  services,  financial  and 
insurance  activities  as  well  as  transportation  and 
storage. In 2022 and 2023, the energy sector and 
construction  had  the  highest  business  birth  rates. 
Mining  and  manufacturing  sectors  registered  the 
lowest  entry  rates,  as  well  as  property  services. 
There is scope for easing barriers to market entry 
and  exit,  exploring  ways  to  enhance  R&D  and 
facilitating the adoption of new technologies. 

small 

Sweden’s  economy  displays  a  substantial 
proportion  of 
to  medium-sized 
enterprises  (SMEs),  yet  most  employment 
and  production  is  concentrated within larger 
firms.  This  firm  size  distribution  has  remained 
relatively  stable,  with  small  firms  constituting 

(65)  Eurostat: the business churn rate is the sum of the business 

birth rate and the business death rate. 

(66)  Eurostat, business demography. 

(67)  OECD, (2025). 

38 

approximately  70%  of  the  manufacturing  sector, 
although  70%  of  employment  and  production 
occurs  within  the  largest  firms.  Conversely,  the 
services  sector  exhibits  a  lower  concentration  of 
production  and  employment  in  large  firms,  with 
than 
less 
production 
employment,  recording  shares  of  35%  and  45%, 
respectively. Productivity within manufacturing for 
large  firms  has  increased,  while  stagnation  is 
evident  amongst  smaller  firms.  However,  in  the 
services  sector,  productivity  in  real  terms  has 
declined across all firm sizes (68). 

concentrated 

being 

is  widening 

The  technology  gap  between  most  and 
median  productive  firms 
in 
manufacturing  and  shrinking  in  the  services 
in  manufacturing 
sector.  The  widening  gap 
indicates  fewer  spillovers  from  highly  productive 
firms  and  therefore  a  slowdown  in  technology 
diffusion.  In  the  services  sector,  the  narrowing 
technology gap tends to be attributed to declining 
productivity  among  firms  at  the  productivity 
frontier. Policies could  aim to enhance technology 
transfer  and  foster  productivity  spillovers  from 
leading  firms  to  smaller  enterprises  and  promote 
investment in innovation within the services sector 
to support productivity at the frontier level (69). 

and 

investment 

specifically 
Private 
intangible  investment  rates  are  among  the 
highest  within  the  EU.  As  a  share  of  16.9%  of 
GDP  in  2025  the  business  investment  rate  is 
higher  than  in  peer  countries  such  as  Finland 
(12.7%)  and  Denmark  (14.7%).  Structurally,  the 
largest  share  is  related  to  construction,  and  here 
‘other  buildings  and  structures’.  While  investment 
in  machinery  and  equipment  is  the  second  most 
important  investment  area  in  terms  of  volume 
(7.5%  of  GDP),  investment  in  intangible  assets, 
such as ‘intellectual property products’, specifically 
in  knowledge-intensive  industries,  such  as  ICT, 
high-tech  manufacturing  and  wholesale  trade 
services,  expanded  recently  at  a  high  rate  and 
reached 7.3% of GDP in 2024, the highest level in 
the  EU.  Investments  in  intangible  assets  were 
growing  at  a  faster  rate  compared  with  tangible 
assets.  According  to  a  recent  analysis  by  Maican 
investments  across 
these 
and  Orth 
to  boosting 
different 

(2025), 
sectors  are 

crucial 

(68)  Xin Tang. Tracing the Slowdown of Labor Productivity Growth. 
IMF Selected Issues Paper (SIP 2025/037). Washington DC. 
International Monetary Fund. 

(69)  Xin Tang. (2025). 

 
 
 
 
 
 
productivity and productivity growth, in both small 
and  large  firms.  According  to  the  Productivity 
Commission (70),  the  Swedish  Intellectual  Property 
Office (PRV) is playing an important role. It is one 
of 25 global agencies authorised to conduct news 
for 
reviews 
international  patent  applications  across  160 
countries  and  ensures  high-quality  evaluations  in 
diverse  technology  areas.  This  status  enables 
Swedish  companies  to  obtain  patents  locally, 
securing  internationally  recognised  examinations, 
while receiving guidance in Swedish. 

assessments 

preliminary 

and 

Swedish firms  face  weak  overall  investment 
expectations  for  2025,  yet  construction  and 
innovation  spending  remain  comparatively 
resilient and optimistic. Although the perceived 
investment  gap  is  broadly  in  line  with  the  EU 
average,  with  only  14%  of  firms  reporting 
underinvestment  over  the  past  three  years  (EU 
average:  12%),  24%  of  manufacturing  firms 
claimed  too  little  investment  over  the  last  three 
years  to  ensure  future  success.  Despite  this, 
investment expectations for 2025 have dropped to 
their lowest level in five years with a net balance 
of just 4%. Construction firms stand out, with 34% 
expecting  to  increase  investment,  while  firms  in 
services  (-10%)  and  manufacturing  (4%)  show 
firms  are 
much  weaker  outlooks.  Swedish 
pessimistic 
climate, 
political/regulatory 
specifically 
remain  more 
environment.  However, 
optimistic  about  their  own  business  prospects. 
Investment  priorities  are  evenly  split  between 
expansion and replacement. Innovation investment 
is  growing,  with  18%  directed  towards  new 
products/services,  up  from  13%  previously  and 
above the EU average (71). 

about 
about 

economic 

they 

the 

the 

geopolitical 
continued 
Considering 
uncertainties, foreign direct investment (FDI) 
in  Sweden  decreased  considerably  but 
remains  above  the  10-year  average  (2015-
2024).  Total  FDI  flows  to  Sweden  declined  by 
24% in 2024, while the total stock of FDI reached 
about  70%  of  GDP.  An  increasingly  high  share  of 
foreign-owned  assets  exists  within  the  services 
sector  (67%),  with  these  investments  mainly 
focused  on  finance  and  insurance,  trade  and 

(70)  Report of the Productivity Commission 2025. 

(71)  European Investment Bank, 2025, EIB investment survey 

Sweden. 

transport  as  well  as  business  services.  The 
manufacturing sector accounts for 33% of foreign 
assets  with  an  important  share  in  chemicals  and 
pharmaceuticals  (72).  European  companies  located 
in  Luxembourg,  the  Nordic  countries  and  the 
Netherlands are the main investors in Sweden (73). 

Business environment 

the  main 

Uncertainty  about  the  future,  availability  of 
skilled  staff  and  business  regulations  are 
highlighted  by  firms  as  main 
long-term 
investment  obstacles.  According  to  the  EIB 
(74), 
long-term 
Investment  Survey 
obstacles to investment reported by Swedish firms 
in 2025 were uncertainty about the future due to 
geopolitical  tensions  and  weak  economic  outlook 
(82%, 2024: 78%), the availability of skilled staff 
(79%, 2024: 78%), and business regulation (58%, 
2024:  41%)  (75).  Compared  with  2024,  firms  are 
increasingly  pointing  to 
labour  and  business 
regulations  as  the  main  barriers  to  long-term 
investment.  While  labour  regulations  are  a  more 
important  issue  for  firms  in  the  construction  and 
services sectors, manufacturing firms tend to flag 
business regulations as obstacles. Across multiple 
surveys  by  Företagarna  Sverige  (76)  and  feedback 
by  the  Confederation  of  Swedish  Enterprises  (77), 
administrative  burden 
ranked 
among  the  top  three  barriers  for  entrepreneurs. 
Respondents  flagged  that  they  spend  about  eight 
hours  on  average  per  week  on  compliance  and 
reporting  work  (outside  of  internal  administrative 
tasks  such  as  payroll  and  invoicing).  Lengthy 
approval  processes  hinder 
the  scale-up  of 
companies  as  well  as  high  costs  related  to:  (i) 
contributions,  (ii)  sick  leave,  (iii)  energy  and  (iv) 
crime  (theft,  fraud,  vandalism,  security-related 
expenses). Additionally, when asked which reforms 
they  considered  most  urgent  in  order  to  enable 
more  companies  to  grow  and  hire  (with  a 
maximum  of  three  response  options),  the  second 

is  consistently 

(72)  https://www.business-sweden.com/insights/global-

analysis/fdi-overview/. 

(73)  Statistics Sweden. 

(74)  European Investment Bank, 2025, EIB investment survey 

Sweden. 

(75)  European Investment Bank, 2025, EIB investment survey. 
(76)  Swedish employer organisation. 

(77)  Confederation of Swedish Enterprise as Svenskt Näringsliv. 

39 

 
 
 
most  common  answer  was  ‘reduced  regulatory 
burden for businesses’. 

Access  to  finance  is  not  a  major  issue  in 
Sweden,  albeit  with  some  exceptions.  Fewer 
companies  consider  access  to  finance  to  be  an 
obstacle to investment than the average within the 
EU  (36%  vs  EU  average  of  45%).  However,  the 
share of finance-constrained companies in Sweden 
increased in 2025 from 7% to 11% (78). There are 
also  regional  disparities  in  access  to  finance  (see 
Annex  18).  Despite  abundant  start-up  financing, 
steps  could  be  taken  to  strengthen  scale-up 
financing  and  financing  for  large-scale  industrial 
projects. The Confederation of Swedish Enterprises 
reported  that  specifically  women  and  immigrant 
founders  experience  greater  difficulties  accessing 
bank  loans  with  higher  rejection  rates  and  higher 
interest  rate  costs.  Although  venture  capital  is 
available  and  used  at  a  high  scale  in  Sweden,  it 
tends to be restricted to specific sectors (tech, life 
sciences, and industry) and regions (Stockholm and 
to  some  extent  Gothenburg  and  Malmö).  (See 
Annex 4 and Annex 6.) 

Late  payments  from  business  partners 
continue  to  hinder  businesses  to  some 
extent. The payment gap for business-to-business 
(B2B) payments increased to 18.15 days in 2025, 
higher  than  the  EU  average  of  17.44  days.  In 
2024,  45%  of  companies  in  Sweden  indicated 
issues  caused  by  late  payments  (79).  In  particular, 
big  companies  seem  to  pay  late  (80),  with  about 
28% of invoices received by large companies from 
suppliers being paid late (81). However, the trend is 
(G2B) 
positive 
payments,  with  2025  marking  a  significant 
improvement  and  above-EU-average performance 
in  the  G2B  payment  gap.  Despite  this,  there  are 
indications  of  payment-behaviour  issues  within 
municipalities,  with  the  construction  sector  being 
affected  particularly  negatively  (82).  In  general, 
Swedish  firms  respect  freedom  of  contract  and 
agree on specific payment deadlines. 

government-to-business 

for 

The  trends for  fixed and  mobile  connectivity 
are  promising.  Sweden  allocated  a  substantial 

(78)  EIB Investment Survey 2025: Sweden overview. 

(79)  Payment observatory report 2025. 

(80)  Stakeholder feedback. 

(81)  Payment observatory report 2025. 

(82)  Stakeholder feedback. 

40 

part  of  its  recovery  and  resilience  plan  to  fixed 
broadband  connectivity.  It  is  on  track  to  roll  out 
fibre  across  the  country  to  improve  broadband 
connectivity;  however,  the  remaining  buildings, 
typically  in  sparsely  populated  areas,  will  be 
increasingly  costly  to  connect.  Households  with 
access  to  the  internet  at  home  increased  from 
94.87% in 2023 to 95.43% in 2024. Fibre-to-the-
premises (FTTP) coverage increased from 83.9% in 
2023  to  85.6%  in  2024,  which  is  significantly 
above the EU average of 69.2%. Access to a VHCN 
(very  high-capacity  network) 
increased  from 
88.46%  in  2023  to  89.74%  in  2024.  As  regards 
mobile  connectivity,  Sweden  has  made  significant 
progress  over  the  last  years  and  has  assigned  all 
spectrum  for  5G.  The  overall  5G  coverage  in 
Sweden  increased  from  90.3%  in  2023  to  98.6% 
in 2024, which is above the EU average of 94.4%. 
The  5G  coverage 
in  the  3.4-3.8  GHz  band 
increased  from  64.5%  in  2023  to  74%  in  2024, 
which  is  above  the  EU  average  of  67.7%  (83). 
Sweden  is  on  track  to  reach  the  100%  coverage 
Digital Decade target for 5G before 2030. 

Single Market and barriers 

Sweden’s  trade  integration  into  the  Single 
Market  remains  moderate,  and  there 
is 
integration potential. With a share of 19.6% of 
GDP intra-EU trade in goods is significantly higher 
than  the  intra-EU  trade  in  services  (10.3%),  and 
both  close  to  the  EU  averages  in  2025.  In  the 
Eurobarometer Survey 559, 72% of Swedish SMEs 
(70% of EU SMEs) reported that they were mainly 
operating  in  Sweden  (84).  According  to  a  survey 
conducted  by  the  Confederation  of  Swedish 
Enterprises (85) a greater proportion of companies 
report  that  EU  membership  has  a  more  positive 
impact on trade in goods than on trade in services, 
where  barriers  and  complex  national  regulations 
still  hamper  trade  (86).  Within  the  Single  Market, 
Sweden’s most important trading partners include 
Germany,  Denmark  and  the  Netherlands.  The  US, 
important  trading 
UK  and  Norway  are  also 

(83)  2024 and 2025 Digital Decade reports. 

(84)  Flash Eurobarometer 559 (2025). Startups, scaleups and 

entrepreneurship. 

(85)  Svenskt Näringsliv. 

(86)  European Commission (2026). The 2025 Annual Single 
Market and Competitiveness Report, COM(2026) 46. 

 
 
 
partners (87). At the same time, empirical research 
has  shown  that  trade  is  one  important  driver  of 
business  productivity  via  innovation,  knowledge 
networks,  enhanced  competition  and  investment 
(88).  Strengthening  access  to  the  Single  Market  to 
foster  interaction  between  trade  and  innovation 
seems  important  for  Sweden  as  a  small  open 
economy. 

to 

Digital public services and e-government are 
advanced,  which  is  also  beneficial  for  doing 
cross-border  business.  Sweden  continues  to 
lead  in  digitalisation  and  aims  to  improve  its 
digital public services and promotes the use of AI. 
According 
the  e-government  benchmark 
analysis (89) Sweden scores high on the availability 
of  services  to  both  national  and  cross-national 
users, with 98 points (EU: 86 points) and 83 points 
(EU:  76  points)  respectively.  This  implies  that 
online 
for 
nation/cross-border users is available and that this 
service can be completed. (See also Annex 7.) 

information 

service 

about 

a 

EU  average  (44.5  months).  Regarding  SOLVIT 
cases,  Sweden  improved  its  performance  and 
solved  65.9%  of  cases  (up  from  54.1%  in  2024) 
but  this  is  still  lower  than  the  EU  average  of 
84.6%.  

Compliance  of  products  circulating  in  the 
Single  Market  (91)  is  key  to  ensuring  a  level-
playing  field  for  law-abiding  companies  and  the 
safety  of  consumers.  In  Sweden,  the  number  of 
market  surveillance  investigations  has  increased 
compared with 2019. In 2025, national authorities 
reported in the EU system for market surveillance 
(ICSMS)  a  total  of  252.6  investigations  per  one 
million  inhabitants,  which  is  higher  than  the  EU 
median  of  136.2.  The  number  of  notifications 
remains limited in absolute terms, which may also 
be 
IT  national 
the 
interoperability 
ICSMS  system.  The 
upcoming  revision  of  the  Market  Surveillance 
fully 
Regulation  will  upgrade 
interoperable EU digital platform. 

insufficient 

result  of 

ICSMS 

to  a 

the 

to 

(90). 

infringement  proceedings 

Sweden’s  performance  in  transposing  Single 
Market  directives  and  handling  infringement 
proceedings  is  slightly  decreasing,  and  the 
duration  of 
is 
In  2025,  Sweden’s 
relatively  high 
transposition  deficit  stands  at  0.9%,  lower  than 
both  the  EU  average  of  1.1%  and  the  1%  target 
set by the EU Council, but up from 0.4% in 2024. 
This  suggests  that  Sweden  is  still  efficient  in 
transposing  Single  Market  directives 
its 
national law, demonstrating its commitment to EU 
rules.  Sweden’s  performance  is  also  reflected  in 
the  average  delay  in  transposing  directives  (6 
months, less than the EU average of 9.7 months), 
and  the  rate  of  incorrect  transpositions  (1.1%)  is 
equal  to  the  EU  average.  In  December  2025, 
Sweden  had  20  pending  infringement  procedures, 
a  significantly  lower  number  compared  with  the 
EU  average  of  25,  with  a  focus  on  taxation  and 
financial  services.  However,  Sweden  has  the 
infringement 
highest  average  duration 
proceedings (61.5 months), which is well above the 

into 

of 

Sweden’s  National  Standardisation  Bodies 
(NSBs)  have  the  capacity  to  lead  in  AI, 
quantum,  and  other  emerging  fields  within 
EU standardisation. This would also support the 
efficient  functioning  of  the  Single  Market.(92) 
Strengthened capacities, attractiveness for experts 
and  resources  would  ensure  timely,  high-quality 
standards  by  the  NSBs.  Sweden  would  benefit 
from  further  support  to  gain  ground  in  strategic 
tech domains. 

face 

firms 

fewer 

regulation 

the  PMR 

Swedish 
regulatory 
obstacles to entry and expansion. According to 
(PMR) 
the  OECD  product  market 
indicators,  Sweden’s  regulatory  framework 
is 
in  almost  all  the  areas 
competition-friendly 
indicators.  However, 
covered  by 
improvements  can  be  still  made  in the  regulatory 
framework  in the  e-communications,  air  transport 
and  natural  gas  sectors.  Professional  services  are 
also  less  strictly  regulated  than  in  the  average 
OECD economy, except for estate agents (93). This 
is partially explained by the fact that estate agents 
manage  the  conveyancing  process  in  Sweden,  a 

(87)  https://wits.worldbank.org/. 

(88)  Maican and Orth (2025). 

(89)  European Commission, 2025, eGovernment Benchmark. 

(90)  These are related to the ‘Terrible Ten’ outlined in the Single 
Market Strategy, COM(2025) 500, 21.5.2025, https://single-
market-economy.ec.europa.eu/publications/single-market-
our-european-home-market-uncertain-world_en 

(91)  Part of the barriers highlighted in the Single market 

strategy (‘Terrible Ten’) and the 2026 Annual Single Market 
and Competitiveness Report. 

(92)  This is related to the ‘Terrible Ten’, outlined in the Single 

Market Strategy. 

(93)  Sweden_PMR country note.pdf. 

41 

 
 
 
is 

system 

task  typically  handled  by  notaries  or  lawyers  in 
other  countries. While  Sweden  is  on  par  with  the 
OECD  average 
in  the  OECD  Services  Trade 
Restrictiveness  Index,  this  index  slightly  increased 
in  2025,  indicating  a  slightly  more  restrictive 
regulatory environment for services (94). Sweden's 
public  procurement 
largely 
performing  well,  but  SMEs  in  particular  are 
encountering  difficulties.  Over  the  last  10 
years,  public  procurement  expenditure  has  been 
increasing  gradually  and  reached  about  17%  of 
GDP and 34% of total government expenditure in 
2024  (95).  The  share  of  direct  awards  is,  at  2%, 
relatively  low,  while  in  2025  single  bids  reached 
23.3%  (down  from  27%  in  2024)(96).  This  shows 
that  the  performance  of  competition  could  be 
that 
improved.  Business  associations  claim 
barriers, 
and 
tenders 
administrative  requirements,  make  it  difficult  for 
SMEs  in  particular  to  participate.  Dividing  tenders 
into  lots  would  improve  accessibility  for  SMEs. 
Additionally,  the  government  has  tasked  the 
Agency for Financial and Public Management with 
proposing  a  national  procurement  database  and 
transparency, 
analytical 
efficiency,  and  competition  while  countering 
corruption and irregularities. 

complex 

function 

improve 

such 

as 

to 

in 

Businesses’  views  on  corruption  risks  in 
public  procurement  are  above  the  EU 
average.  In  Sweden,  57%  of  companies  (EU 
average: 58%)  consider tailor-made  specifications 
for  particular  companies  in  public  procurement 
(EU  average:  51%) 
procedures,  and  49% 
involvement  of  bidders 
the  design  of 
specifications, to  be  a  ‘very’  or  ‘fairly  widespread’ 
practice.  Among  companies  that  have  experience 
of  and  have  participated  in  a  public  procurement 
procedure,  32% 
that  corruption  has 
prevented them from winning a public tender or a 
public  procurement  contract 
(EU 
average: 25%) (97). 64% of companies perceive the 
level  of  independence  of  the  public  procurement 
review  bodies  (administrative  courts)  to  be  ‘very’ 
or  ‘fairly  good’  when  these  bodies  are  reviewing 
public  procurement  cases  (98).  Public  procurement 

in  practice 

think 

(94)  OECD STRI Sweden 

(95)  OECD. Government at a glance indicators, 2025 edition. 

(96)  Commission calculation based on TED data, accessible at 

PPDS. 

(97)  Flash Eurobarometer 557, p. 133. 

(98)  Justice Scoreboard (2025), p. 53; Flash Eurobarometer 555. 

42 

is  being  addressed 

remains  one  of  the  main  corruption  risk  areas, 
in  the  new  Anti-
which 
Corruption  Plan  and  by  the  committee  of  inquiry 
focused  on  criminal 
law  reforms  related  to 
corruption  (99).  Addressing  the  possible  infiltration 
of organised crime actors in the public service is a 
major  strategic  priority  for  the  government,  as 
local authorities are particularly vulnerable due to 
their  smaller  scale,  despite  still  managing  large 
amounts of funds (100). Legislation was introduced 
to this effect and further analyses are ongoing to 
identify the extent of the risk (101). 

procedures, 

fragmented 

Sweden’s 
e-procurement 
landscape  and  data  quality  issues  highlight 
the need for interoperable systems, common 
standards  and  stronger  data  governance. 
Given  Sweden’s  decentralised  e-procurement 
landscape,  with two  to  five  separate  procurement 
services in  operation  (102),  economic  operators 
must  use  several  systems  to  access  all  public 
procurement 
creating complexity 
and barriers  to  participation.  This  fragmentation 
underscores 
introducing 
need 
interoperability and common standards. The once-
only  principle  is  only  partially  implemented  at 
national level (see Annex 7), and buyers across the 
EU still lack digital access to relevant evidence. In 
addition, while some monitoring exists, there is no 
public procurement data strategy on the objectives 
and management of public procurement processes 
(103). 
system 
the 
public 
would benefit from a 
procurement 
analysis 
data 
service within  the  government to  support  data-
driven oversight of the procurement life cycle. 

Therefore, 

dedicated 

collection 

Swedish 

and 

the 

for 

Industry and economic security 

Sweden established a new national industrial 
in  2025,  aimed  at  ensuring  a 
strategy 

(99)  Rule of Law Report - Country Chapter Sweden (2025). 

(100) Rule of Law Report- Country Chapter Sweden (2025). 

(101) Rule of Law Report- Country Chapter Sweden (2025). 

(102) As reported in the e-procurement matrix. 

(103) European Court of Auditors, Special Report 28/2023: Public 
Procurement in the EU. Less competition for contracts 
awarded for works, goods and services in the 10 years up to 
2021, 2023.  

 
 
 
for 

and 

resilience 

conditions 

innovation, 

framework 

competitive, 
leading  and 
technologically 
climate-aligned industrial sector. This strategy 
has four key areas for action focusing on research 
and 
supply 
preparedness, risk sharing and funding, and lastly 
industry. 
basic 
Importantly  for  businesses,  this  strategy  sets 
objectives  on  better  investment  conditions  for 
technologies,  and 
commercialisation  of  new 
ensuring  favourable  framework  conditions  for 
businesses,  especially  in  terms  of  secure  and 
fossil-free  electricity  supply,  simplification  and 
faster  permitting  processes,  infrastructure  and 
skilled 
in 
particular  are  currently  lengthy  and  costly,  since 
companies  need  to  hire  consultants  to  complete 
this 
forms 
constitutes an additional administrative barrier for 
investment.  Sweden’s  innovation  agency  Vinnova, 
for 
large-scale 
technologies.  The 
investments 
investment  will  be  scaled  up  over  time  and,  in 
2028,  Vinnova  will  distribute  over  half  a  billion 
SEK per year. 

(104).  Permitting  procedures 

correctly.  Especially 

is  also  managing 

for  SMEs 

instance, 

strategic 

labour 

in 

industrial 

sector  and 

their  gross  value  added 

The 
specifically 
manufacturing are important for the Swedish 
(GVA) 
economy, 
corresponding  to  16.2%  and  13%  of  the  GDP  in 
2024  (105).  Manufacturing  in  Sweden  returned  to 
growth  in  GVA  in  2024,  but  production  volumes 
fell  slightly.  Despite  Sweden’s  very  low  electricity 
prices  (in  2024  0.071  vs  EU  0.146),  Sweden’s 
energy-intensive industries were hit by the shocks 
of  2022  and  production  in  wood  products,  basic 
metals  and  non-metallic  minerals,  for  example, 
has  declined  significantly  since  2021  (see  Graph 
A5.1). In chemicals, most of Sweden’s value added 
comes  from  the  pharmaceutical  industry  and  the 
whole  sector  is  heavily  dependent  on  exports, 
which  were  hit  by  the  2022  crisis.  The  chemicals 
sector 
lower 
profitability  and  decreased  production  volumes, 
in  key  markets  and 
driven  by  challenges 
competition  from  Asia  (106).  Sweden  also  has  a 
prominent  automotive 
is  a 
significant  employer  in  the  southern  regions  of 

in  Sweden  continues 

industry,  which 

to  face 

Sweden  (107).  After  a  production  decline  in  2022, 
the  value  added  in  the  motor  vehicles  sector 
expanded in 2023. 

Graph A5.1: Manufacturing industry production: 
total and selected sector, index (2021=100), 
2015-2024 

Source: Eurostat 

Sweden’s  construction  sector  has  had  weak 
activity in the past years. Construction activity 
has  been  particularly  affected  by  a  slump  in 
housing  construction,  mirroring  high-interest  rate 
sensitivity 
(see  Annex  16).  Non-residential 
construction  has  held  up  better  but  is  also 
affected  by industrial  decline.  All  Swedish  regions 
were  listed  as  struggling  to  cope  with the  decline 
largely 
of  the  construction 
explained  by 
the  widespread  prevalence  of 
variable-rate mortgages (108). Sweden has a 2025 
CSR  (country-specific  recommendation)  (5)  on 
improving  the  efficiency  of  the  housing  market 
and supporting residential construction (see Annex 
16). 

industry.  This 

is 

are 

industries 

electrifying. 
Sweden’s 
Increasing the supply of clean energy is crucial as 
industry’s  electricity  demand 
is  projected  to 
increase  significantly  in  the  short  and  medium 
term.  Sweden  announced  several  measures  on 
increasing  the  clean  energy  supply  in  its  new 

(104) Sveriges industristrategi: för en teknikledande och 

konkurrenskraftig industri i en ny omvärld - Regeringen.se. 

(105) Eurostat: [nama_10_a10] 

(107) Mapping the impact of industrial decline, European 

Commission 2025. 

(108) Mapping the impact of industrial decline, European 

(106) IKEM - IKEM Business Tendency Survey. 

Commission 2025. 

43 

75808590951001051102015201620172018201920202021202220232024ManufacturingManufacture of wood and of products of wood and cork, except furniture;manufacture of articles of straw and plaiting materialsManufacture of paper and paper productsManufacture of chemicals and chemical productsManufacture of rubber and plastic productsManufacture of other non-metallic mineral productsManufacture of basic metals 
 
     
 
photovoltaics  and  wind 
components  hinder 
industry  and  the  limited  availability  of  skilled 
workers  in  science,  technology  and  engineering 
remains  a  bottleneck  for  investment.  In  2025, 
Sweden  has  taken  several  measures  to  attract 
more  people  to  the  STEM  fields.  In  battery 
technologies, 
of  Northvolt 
the  bankruptcy 
continues  to  significantly  impact  on  production 
capacity. 
the 
government  has  announced  measures  to  support 
battery research and innovation (112). 

industrial  strategy 

its  new 

In 

Material import dependency is relatively low. 
With  an  overall  share  of  25.7%,  material  import 
dependency  is  among  the  lowest  in  the  EU. 
Dependency is relatively low in biomass and non-
metallic minerals, but the lowest across Europe in 
metal  ores.  Sweden  leads  in  iron,  lead  and  zinc 
extraction  within  the  EU.  The  Mining  Contribution 
Index  of  the  International  Council  on  Mining  and 
Metals  (ICMM),  which  ranks  countries  by  the 
importance  of  mining  to  their  economy,  ranks 
Sweden  59th  out  of  110  countries,  the  second  EU 
Member  State  after  Finland,  which  is  ranked  53rd 
(113).  Sweden  plays  an  important  role  in  the  EU’s 
supply  of  critical  raw  materials.  Three  projects  in 
Sweden  were  selected  as strategic  projects  under 
the Critical Raw Material Act. One of these projects 
focuses  on  recycling,  one  on  the  rare  earth 
elements  for  magnets  and  one  on  graphite 
extraction (114). The Swedish government considers 
it  essential  to  achieve  resource-efficient  and 
circular  use  of  Sweden’s  mineral  resources  and 
aims  to  improve  the  conditions  for  the  Swedish 
mining sector. Sweden could also make better use 
of its resources generally, as the circular material 
use  rate  is  10.4%,  which  is  lower  than  the  EU 
average of 12.2%. 

include 

there  are  currently 

industrial  strategy.  These 
improving 
flexibility  and  efficiency  for  permitting  processes. 
For  example, 
legislative 
proposals  under  discussion  for  the  establishment 
of  a  new  authority  for  environmental  permitting 
(109).  Sweden  has  a  2025  CSR  (3)  on  accelerating 
permitting  procedures  for  deploying  renewables 
and  avoiding  permitting  approval  reversals  (see 
Annex 9). 

Sweden  is  taking  steps  to  support  industrial 
decarbonisation  and  net-zero  industries.  In 
2025,  the  Swedish  government  mandated  the 
committee  ‘Accelerationskontor  för  att  underlätta 
industrins  omställning’ 
to  analyse  municipal 
incentives  to  attract  and  accommodate  major 
industrial establishments and expansions (110). This 
is  building  on  the  work  of  the  Green  Acceleration 
Office established in 2024 (see Annex 7). In 2025, 
Industriklivet  was  also 
the  support  scheme 
leaps 
reinforced 
towards net-zero. 

to  accelerate 

technological 

Industry  Act  (NZIA). 

Sweden  is  a  significant  global  manufacturer 
of  net-zero  technologies  (111).  The  country  has 
progressed  effectively  in  implementing  the  Net-
Zero 
It  has  successfully 
designated  a  single  point  of  contact,  which  is 
for  streamlining  communication  and 
crucial 
coordination  among  stakeholders.  Furthermore, 
Sweden  has  established  a  national  contact  point, 
geologiska 
Tillväxtverket 
undersökning 
to  process  applications, 
facilitating  the  advancement  of  net-zero  strategic 
projects.  Four  confirmed  strategic  projects  reflect 
the  country's  proactive  approach  to  advancing 
initiatives  that  align  with  net-zero  goals.  These 
projects  focus  on  battery  and  electricity  grid 
technologies  as  well  as  energy-intensive  industry 
(EII) decarbonisation. 

and 
(SGU), 

Sveriges 

Sweden is considered a competitive exporter 
in net-zero technologies, notably in heat pump, 
turbine,  battery,  grid  and 
geothermal,  wind 
sustainable 
However, 
dependencies  on  non-EU  countries  for  solar 

technologies. 

biogas 

(109) Sveriges industristrategi: för en teknikledande och 

konkurrenskraftig industri i en ny omvärld - Regeringen.se.  

(112) Sveriges industristrategi: för en teknikledande och 

(110) tilläggsdirektiv KN2025/01212. 

(111) European Commission: Directorate-General for Energy. 2025. 
The net-zero manufacturing industry landscape across the 
Member States. The net-zero manufacturing industry 
landscape across the Member States - Energy. 

konkurrenskraftig industri i en ny omvärld - Regeringen.se. 

(113) ICMM Mining Contribution Index 7th edition 2025: This index 
shows the importance of the mining sector’s contribution to 
the domestic economy. 

(114) Selected strategic projects under CRMA. 

44 

 
 
 
Table A5.1:  Single Market and Industry 

Source: (1) Eurostat, (2) EIB Investment Survey, (3) EIF SME Access to Finance Index, (4) Intrum Payment Report, (5) SAFE survey, 
(6) OECD, (7) data up to 2024: Single Market and Competitiveness Scoreboard, 2025: Commission calculation based on TED data, 
accessible at the Public Procurement Data Space (PPDS) (*) the value represented here under EU average is the median, (8) Single 
Market and Competitiveness Scoreboard, (9) European Commission calculations. 

45 

POLICY AREA20212022202320242025EU-27 average112.9107.6105.7107.4107.7100.016.417.017.117.016.912.65.15.15.45.55.93.9Business environment and simplification9.210.09.99.110.034.00.410.450.300.17-0.430.830.720.620.71-0.1915.412.316.016.718.217.413.413.414.917.912.513.6from private entities in the previous or current quarter---38.537.547.1from public entities in the previous or current quarter---13.412.515.926.030.231.030.629.940.70.0450.0450.0470.0470.0480.05010131127232711122620.70.50.40.9111.10.80.81.11.170.5968.36954.165.984.61820191920250.06120.09990.07860.07010.07120.146236.335.133.8--32.762.566.366.462.8-25.223.924.424.625.7-22.49.512.110.110.4-12.2SwedenINDICATOR NAMEBusiness environment and investmentProductivity and investmentLabour productivity (GDP per hour worked in PPP terms), % of EU271Business investment (share of GDP)1Public investment (share of GDP)1Impact of regulation on long-term investment, % of firms reporting business regulation as a major obstacle2SME liquidityEIF Access to Finance for SMEs index - loans3EIF Access to Finance for SMEs index - equity3Late paymentsPayment gap - corporates B2B, difference in days between offered and actual payment4Payment gap - public sector, difference in days between offered and actual payment4Share of SMEs experiencing late payments, %5Industry and economic securitySingle Market IntegrationEU trade integration, average(intra-EU imports + intra EU exports)/GDP, %1EEA Services Trade Restrictiveness index6Public procurementSingle bids, % of total contractors7*Direct awards, % of negotiated procedures7*ComplianceTransposition deficit, % of all directives not transposed8Conformity deficit, % of all directives transposed incorrectly8SOLVIT, resolution rate per country, %8Number of pending infringement proceedings8Energy-intensive industriesElectricity prices for non-household consumers1Electrification (electricity as a share of total energy consumption in industry)1Share of energy from renewable sources (renewable energy generation as a share of overall energy consumption)1Critical raw materialsMaterial import dependency, %1Circular material use rate1Operational cleantech manufacturing capacity in 20259 - Solar PV (c: cell, w: wafer, M:module), GW0.125 (m) - Electrolyzer, GW- - Heat pump assembly 0.888 - Battery, GW21.0 
 
     
 
ANNEX 6: SAVINGS, INVESTMENT AND ACCESS TO FINANCE 

Table A6.1:  Savings and Investments Union summary diagnostic 

Source:  OECD (pensions), Eurostat (households' financial wealth), FISMA CMU dashboard (VC and PE), national sources (capital 
taxation). End-2024. 

than 

financing 

intra-group 

Banks  and  non-financial  corporations  have  good 
access  to  financing.  While,  on  average,  Swedish 
companies are more indebted than their EU peers, 
they rely relatively moderately on bank finance to 
fund their activities. Almost three quarters of  NFC 
funding  is  in  bonds  and  equity.  Moreover,  to  fund 
their  investments,  Swedish  NFCs  rely  more  on 
internal  or 
their 
European peers. Sweden leads the EU  in terms of 
SME  public  equity  financing  and  also  consistently 
ranks first by number of IPOs. Thanks to their large 
and  mostly  automatic  investments  in  pension 
funds,  Swedish  households  have  a  high 
participation  in  domestic  capital  markets.  Relative 
to  GDP,  household  investments  in  insurance  and 
pension  fund,  are  almost  more  than  twice  the  EU 
average.  The  banking  sector  is  well  capitalised  as 
gauged  by  risk-weighted  measures,  with  ample 
liquidity  and  excellent  profitability.  However, 
Swedish banks have a high dependence on market 
funding  to  finance  some  of  their  mortgages, 
mainly  through  covered  bonds.  The  dynamics  of 
bank  lending  in  Sweden  is  driven  by  mortgage 
loans to households, which account for almost two 
loans.  Non-bank  financial 
thirds  of  all  bank 
intermediation  is  growing,  and  non-bank  entities 
are  managing  assets  to  an  amount  almost  as 
large as that of the entire Swedish banking sector. 
Moreover, the institutional investor base in Sweden 
is  highly  exposed  to  the  domestic  equity markets. 
Within  the  EU,  Sweden  is  a  leading  country  for 
private  equity  and  venture  capital  investment.  
Along with the active public markets, this provides 
Swedish  companies  access  to  a  diversity  of 
domestic  equity  funding  throughout  the  corporate 
lifecycle. 

Business landscape and company 
funding 

Sweden has a diversified economy with large 
multinational 
corporations  alongside  a 
thriving  ecosystem  of  small  and  medium-
sized  enterprises  (SMEs)  and  high-growth 
start-ups,  particularly  in  tech  and  fintech. 
The  Swedish  business  landscape  is  characterised 
by  a  strong  presence  of  SMEs  that  account  for 
99.8%  of  all  businesses.  While  the  SME  sector  is 
highly innovative, large, knowledge-intensive firms 
play  a  significantly  larger  role  in  the  Swedish 
economy  compared  with  the  EU  average  (see 
Annex  5  for  more  details).  This  has  concrete 
implications for the corporate sector’s demand for 
funding. 

Non-financial  corporations  (NFCs)  in  Sweden 
actively  use  capital  markets  funding.  Almost 
three  quarters  of  NFC  funding  is  in  bonds  and 
equity,  including  unlisted  shares,  which  are  often 
traded  through  specialised  platforms,  and  other 
equity instruments (Graph A6.1). Over 2021-2024, 
the  three-year  average  of  NFC  bond  and  equity 
issuance  (both  listed  and  unlisted  shares)  as  a 
percentage  of  total  NFC  financing  was  the  third 
highest  rate  in  the  EU  (62.5%),  after  Ireland  and 
Luxembourg,  and  above  the  EU  average  of 
50% (115).  More  specifically,  at  the  end  of  2024, 
listed  shares  and  bonds  represented  32%  of  all 
funding  sources  for  Swedish  firms,  vs  an  EU 
average  of  just  above  23%,  while  bank  finance 

(115) CMU Dashboard. 

46 

Main featuresRelative EU positioningAssets at 149.1% of GDP (32.3% in the EU)10-year real return of 3.4 (1.4% in the EU)The very high pension assets yield a high real return.EUR 180 472 per capita (EUR 85 098 in the EU)o/w 8.3% in listed shares and bonds (7.6% in the EU)o/w 11.1% in investment funds (11.0% in the EU)o/w 6.3% in life insurance (13.4% in the EU)o/w 33.3% in  pension claims (13.6% in the EU)A very high share of households' very high financial assets is invested in equity and in capital markets.VC at 0.115% of GDP (0.064% in the EU)PE at 1.180% of GDP (0.487% in the EU)Very high venture capital and very high private equity investments.30% flat tax on most capital income (dividends, interest, and capital gains) for residentsN/A1-34-1011-1718-2425-27Colours indicate the country's relative ranking based on five groups, ranging from the three best to the three worst performers. The relative ranking as regards an SIU diagnostic topic derives from a consistent cross-country comparison, the starting point of which is the average of the underlying main features.TopicAsset-backed pension schemesHouseholds' financial assetsVenture capital (VC)Private equity (PE)Capital taxation 
 
 
 
  
 
 
through loans constituted 23% of funding sources, 
somewhat  less  than  the  EU  average  of  27%. 
Nevertheless,  in  terms  of  percentage  of  GDP, 
banks  in  Sweden  are  higher  lenders  to  NFCs  than 
the EU average, as  overall levels  of NFC funding 
in Sweden are substantially higher than in the EU, 
equivalent 
to  412%  and  226%  of  GDP, 
respectively, at the end of 2024 (Graph A6.1).  

Swedish businesses depend more on internal 
or intra-group financing than their EU peers. 
Sweden  has  the  lowest  reliance  on  external 
finance in the EU (116): only 22% of all firms use it, 
versus  an  EU  average  of  42%,  according  to  the 
2025  EIB  Investment  Survey.  Also,  only  12%  of 
Swedish  firms’  investment  needs  are  covered  by 
external funding, compared with an EU average of 
25%  (117),  which  is  also  confirmed  by  the  high 
aggregate  reliance  on  unlisted  equity,  at  29%  of 
the total, compared with 24.5% for the EU (Graph 
A6.1). 

Graph A6.1: Composition of non-financial 
corporations' funding 

Source: Eurostat. End-2024 

Sweden  has  a  high  number  of  initial  public 
offerings (IPOs), 90% of which take place on 
SME growth markets. In the 2025 SAFE survey, 
59% of SMEs indicated that they used equity (118), 

(116) External  finance  refers  to  funding  sources  for  investment 
that  originate  from outside  the  firm,  as  opposed  to internal 
funds  (retained  earnings  or  cash).  Its  main  components 
include  bank  loans,  other  bank  finance  (e.g.  credit  lines), 
market-based 
(bonds  &  equity),  government 
finance 
grant/subsidies, leasing. 

(117) For further details, see the 2025 EIB Investment Survey. 

(118) Equity  capital  includes  listed  and  unlisted  shares  or  other 
forms  of  equity  provided  by  the  owners  themselves  or  by 
external  investors,  including  venture  capital  or  business 
angels. 

compared  with  an  EU  average  of  14% (119). 
Sweden has a high number of publicly listed small 
companies and is second only to Finland in terms 
of  capital  raised  as  a  percentage  of  GDP. 
Supporting  factors  that  facilitate  the 
listing 
process  include  a  strong  start-up  ecosystem, 
supportive 
retail-investor 
participation.  Sweden  also  consistently  ranks  first 
in  the  EU  for  the  number  of  IPOs.  On  a  cross-
border  consolidated  basis,  i.e.  including  foreign 
operations,  half  of  Swedish  banks’  corporate 
balance  sheets  are  exposed  to  SMEs  (vs  40%  on 
average for the EU). 

regulation 

and 

Size and structure of the financial 
sector 

is 

concentrated 

large, 
The  Swedish  banking  system 
relatively 
closely 
and 
interlinked  with  foreign  actors  and  markets. 
Having  peaked  at  313%  in  2020,  the  size  of  the 
banking sector as a proportion of GDP declined to 
just  above  276%  at  the  end  of  Q3-2025  (Graph 
A6.2),  still  above the  EU  average  of  246.1%.  This 
places  the  Swedish  banking  sector  among  the 
biggest in relative size in the EU. The three major 
Handelsbanken, 
Swedish 
Skandinaviska  Enskilda  Banken 
(SEB),  and 
Swedbank) and the two branch banks of systemic 
importance  (Nordea  and  Danske  Bank)  often  also 
have  their  own  insurance  and  fund  management 
companies,  ensuring  they  offer  a  full  range  of 
financial services.  

(Svenska 

banks 

Non-bank financial intermediation is growing 
and  the  amount  of  assets  held  by  pension 
insurance  companies  nearly 
funds  and 
matches  that  of  the  entire  Swedish  banking 
sector.  The  insurance  sector  is  large  with  an 
assets-to-GDP  ratio  of  around  71.1%  compared 
with  an  EU  average  of  53.3%,  while  the  total 
assets  of  the  pension  funds  sector  equate  to 
roughly  one  and  a  half  times  the  Swedish  GDP. 
According to Riksbank data, the total assets of the 
almost 
Swedish 
quadrupled  in  size  since  2012,  coming  close  to 
100% of GDP. 

investment 

sector 

fund 

(119) Data  and  surveys  -  SAFE  -  European  Commission,  2025, 

Results by country, T27.  

47 

050100150200250300350400450SEEU% of GDPLoansTrade credit and advancesBondsListed sharesUnlisted sharesOther equity 
   
 
 
for 

relative 

principally 

capitalisation 

Sweden’s capital markets are well developed, 
and  are  larger,  more  liquid,  mature  and 
deeper than elsewhere in the EU. The Swedish 
stock  market  is  currently  the  third  largest  EU 
to  GDP 
market  by 
(equivalent to just over 167% of GDP versus an EU 
average  of  70%  of  GDP  as  of  the  end  of  32-
2025). The largest exchange in Sweden is Nasdaq 
Stockholm, which operates two markets: the Main 
Market and First North (120). The Main Market is the 
flagship  market  in  the  Nordic  region  and  is 
intended 
well-established 
companies. First North, which is Nasdaq Stockholm 
AB’s junior market, is a multilateral trading facility 
(MTF)  that  normally  suits  small,  young  or  growth 
companies  and  is  often  the  first  step  towards 
listing  on  the  Main  Market.  As  of  the  Q2-2025, 
Nasdaq  Stockholm  had  a  total  of  729  listed 
companies.  Another  exchange  is  Nordic  Growth 
Market  (NGM),  which  is  aimed  primarily  at  small 
and medium-sized Nordic growth companies. NGM 
has a junior marketplace equivalent to First North, 
named  Nordic  SME.  There 
third 
marketplace  for  equities  in  Sweden,  Spotlight 
Stock  Market,  which  is  an  MTF  operated  by  ATS 
Finans  AB.  Most  publicly  listed  companies  in 
Sweden are listed on a growth market, functioning 
as  a  stepping  stone  to  the  regulated  market. 
Swedish  firms  account  for  over  90%  of  total 
listings,  with  the  remaining  listings  being  from 
companies in other Nordic or EU countries. 

is  also  a 

The  domestic  bond  market  is  dominated  by 
the  debt  of  monetary  financial  institutions 
(MFIs),  notably  through  the 
issuance  of 
covered  bonds.  The  relative  amount  of  debt 
securities  issued  by  MFIs  in  Sweden,  at  slightly 
more  than  81%  of  GDP,  is  four  times  the  size  of 
debt  securities  issued  by  the  government,  and 
more than twice the EU average of just over 36.% 
of  GDP,  while  bonds  issued  by  companies  equate 
to  24%  of  GDP,  which  is  the  largest  corporate 
bond segment in the EU, where the average figure 
is  just  under  11%  of  GDP  (Graph  A5.2).  The 
number of issuers has increased manifold over the 
last  decade  and,  in  parallel,  the  average  size  of 
both 
decreased 
issues 
substantially.  

issuers 

and 

has 

(120) The  Nasdaq  Stockholm  Stock  Exchange  belongs  to  the 
Nasdaq group, which in the EU operates other trading venues 
in  Lithuania,  Estonia  and  Latvia,  as  well  as  in  Finland  and 
Denmark. 

48 

Graph A6.2: Capital markets and financial 
intermediaries 

Source: ECB, EIOPA, OECD, AMECO. End-2024. 

Households’ participation in capital 
markets 

Swedish households have a high participation 
in  capital  markets  thanks  to  their  large  and 
often  automatic  investments  in  insurance 
and pension funds. As of end-2024, households’ 
aggregate  financial  assets  equalled  nearly  342% 
of  GDP,  well  above  the  EU  average  of  212% 
(Graph  A6.3).  The  largest  component  of  these 
assets  consists  of  collective  savings,  namely 
premium  and  occupational  pensions  (see  infra), 
which households cannot access in the short term. 
Insurance savings in Sweden are also high from an 
international  perspective.  Swedish  households’ 
investments  in  insurance  and  pension  funds  as  a 
proportion  of  GDP  are  more  than  twice  the  EU 
average  (137%  vs  59%  of  GDP).  Together,  they 
account  for  40%  of  households’  financial  assets, 
compared  with  an  EU  average  of  22.5%  (Graph 
A6.3).  Assets 
investment  funds  are  also 
sizeable,  representing  some  11%  of  the  total, 
compared with 9% for the EU on average. Another 
significant  share  of  18%,  roughly  twice  the  EU 
average,  consists  of  ‘other  equity’,  covering  all 
forms  of  equity  other  than  listed  and  unlisted 
shares.  In  addition  to  indirect  ownership  through 
funds,  households  own  about  8%  of 
the 
outstanding  volume  in  listed  equities  outright.  At 
the  end  of  2024,  Swedish  households  held  only 
12.6%  of  their  financial  wealth  in  cash  and  bank 
deposits, in contrast with an EU average of 26%. 

in 

Non-financial corporationsFinancial corporationsNon-financial corporationsMFIsInsurance  and pension fundsOther financialsGovernmentMFIsPension fundsInsurance corporations050100150200250300   Listed equity               Bonds                        Assets by sector% of GDP 
 
   
Graph A6.3: Composition of households' financial 
assets 

Source: Eurostat. End-2024. 

in 

Measures to scale up retail investment have 
been  combined  with  structural  reforms  of 
pensions  and  retirement  schemes,  which 
mutually  nurtured  one  another.  The  high 
household  participation 
capital  markets 
observed  in  Sweden  is  not  only  backed  by  a 
mature  capital  market,  but  also  by  a  remarkable 
investment  culture.  Long-standing  consistent 
policies  have  driven  this: a  pension  system  where 
capitalisation  has  a  major  role  following  a  series 
of reforms dating  back  to  the  late  1990s).  The 
core  objective  of  the  reforms  was  to  provide 
adequate  retirement  income  for  the  Swedish 
public,  but  the  reforms  also  boosted  capital 
markets  thanks  to  the  premium  pension  (121)  and 
to Sweden's occupational pension sector becoming 
a  prominent  institutional  investor  (see  infra).  The 
premium  pension  allowed  participants  to  account 
for the higher returns in the capital markets and to 
customise  a  portion  of  their  pension  according  to 
their risk preferences. In 2012, Sweden introduced 
an  individual  savings  and  investment  account 
Investingsparkskonto (ISK),  which  is  exempt  from 
reporting holdings or capital gains tax, but subject 
to a low flat tax on the account’s market value up 
to  a  threshold  value  which  has  been  increased 
twice recently (122). Currently, over one third of the 

(121) The  premium  pension,  which  is  part  of  the  Swedish  state 
pension  for  those 
is  a  mandatory  defined 
contribution  system  where  every  year,  2.5%  of  the 
pensionable income goes into a pension fund of the pension 
holder’s choice, or into the state fund. 

in  work, 

(122) From  2025,  ISKs  are  exempted  from  capital  gains  taxes on 
amounts  up  to  SEK 150 000  in  2025  and  SEK 300 000  in 
2026.  On  the  other  hand,  the  tax  rate  for  ISK/capital 
insurance increased to 1.065% in 2026, up from 0.888% in 
2025. 

49 

population  uses  an  ISK  for  savings.  Drawing  on 
the  European  Commission 
this  experience, 
introduced a blueprint on Savings and Investment 
Accounts (SIAs), in the form of a Recommendation 
to  Member  States  in  September  2025.   Lastly, 
such  as  Aktiespararna  begin 
organisations 
financial  education  early,  teaching  children  the 
principles  of  stock  ownership.  These  policies  have 
contributed  to  a  well-developed  culture  of  stock 
market engagement and high financial literacy, as 
also  shown  by  the  2024  Eurobarometer  survey 
(34% of the Swedish population have a high level 
of financial literacy, 47% a medium level, and the 
remaining 19% a low level).  

The banking sector: resilience and 
financing of the economy 

Most  performance  indicators  of  Sweden’s 
banking sector are among the best in the EU, 
so its lending capacity is not constrained. The 
sector’s  resilience  is  underpinned  by  strong  risk-
weighted  capitalisation  and  asset-quality  metrics, 
with a capital adequacy ratio of 22.8% at the end 
of Q3-2025, above the EU average of 20.2% (see 
Table A6.2). This ratio comes with a relatively high 
level of high-quality loss-absorption capital, as the 
CET1 ratio amounted to 19.3%, well above the EU 
average of 16.8%.  Given the high weight of fixed 
property  in  bank  balance  sheets,  unweighted  own 
funds  ratios  rank  relatively  lower.  The  return  on 
equity  reached  11.4%  at  the  end  of  Q3-2025 
(against  an  EU  average  of  9.6%).  This  primarily 
reflects  rising  net-interest 
income.  The  non-
performing loans ratio is among the lowest in the 
EU  (1.1%  as  of  end  Q3-2025).  According  to  the 
EBA  Risk  Dashboard,  the  liquidity  coverage  ratio 
stood  at  166.7%  at  the  end  of  Q3-2025,  just 
above the EU average.  

The exposure of bank balance sheets to real 
estate is high. Around three quarters of financial 
institutions’ lending portfolio in Sweden is linked to 
the  real  estate  market  through  mortgages  and 
commercial  real  estate  companies,  which  remain 
highly  leveraged  and  pose  a  risk.  This  risk  is 
further amplified by the high sensitivity to interest 
rate shocks of households and corporates owing to 
their  high  indebtedness  coupled  with  the  short 
maturity  of  real  estate  loans,  which  for  housing 
loans  is  heavily  skewed  to  3  months  refinancing. 
Banks’  exposures  to  the  commercial  real  estate 

02004000100200SEEUSEEUper capita (000 EUR) (lhs)% of GDP (rhs)Other equityUnlisted sharesListed sharesBondsInvestment fundsInsurance and pension fundsCurrency and depositsHH Debt (liability) 
   
 
sector  constitute  over  half  of  the  corporate  loan 
book.  Banks  partly  finance  mortgages  by  issuing 
covered bonds backed by mortgages. The value of 
the outstanding amount of covered bonds relative 
to  bank  loans  amounts  to  32%  in  Sweden,  only 
exceeded by Denmark with a ratio of 85% (vs an 
EU  average  of  18%).  The  largest  holders  of  the 
outstanding  bonds  are  foreign  parties,  Swedish 
investment  funds  and  insurance  and  pension 
institutions. 

loans 

Swedish  households  and  companies  face 
exceptionally high debt levels compared with 
their  EU  peers,  despite  a  recently  dampened 
credit  growth.  Bank 
to  households 
amounted to 77% of GDP in 2024 versus 45% for 
the EA on average, while loans to NFCs constituted 
45%  of  GDP  (compared  with  29%  for  the  EU; 
Table  A6.2).  The  ratio  of  consumer  credit  to 
households  stayed  relatively  stable  and  reached 
4.9%  of  GDP  as  of  end  April  2025.  Household 
sentiment continues to be weak. Households have 
been  more  restrictive  in  their  consumption  and 
maintained  a  high  saving  rate  in  recent  years 
probably  partly  in  response  to  changes  in  debt 
service.  Price  developments  and  turnover  on  the 
housing  market  have  been  weak  in  recent  years, 
which  has  contributed  to  low  debt  growth  among 
households. They did, however, start showing signs 
of  picking  up  in  early  2026  on  the  back  of  more 
lenient macroprudential borrower-based settings. 

the 

limit  for 

The  Swedish  government’s  more 
lenient 
borrower-based  macroprudential  measures 
for  mortgages  have  taken  effect  from 
1 April 2026. Borrower-based measures are now 
regulated  by  law  instead  of  via  public  authority 
regulations.  The  loan-to-value  limit  has  also  been 
transferred to the new law, with easier thresholds. 
loan-to-value  ratio  when 
The 
purchasing  a  home  has  been  raised  from  85  to 
90%,  whereas  the  limit  for  extending  existing 
loans will be reduced to 80%, the latter aimed at 
dampening  the  link  between  credit  and  any 
into 
mortgage 
consumption.  The  previously  existing 
loan-to-
income limits have been scrapped.  These changes 
in  regulation,  offering  more  expansive  lending 
regulations,  are  set  to  make  households  even 
more  vulnerable  to  interest  rate  shocks  and  real 
estate price declines in the future and are likely to 
partly counteract any positive effects for first-time 
buyers (through a self-perpetuating spiral between 
housing  prices  and  household  debt).  In  line  with 
this  the  Swedish  FSA  expects  the  relaxation  of 

equity  withdrawal 

flowing 

macroprudential  measures 
to 
reignite  credit 
(123).  Separate 
growth  and  price  pressures 
legislation  effective  as  of  2026  is  aimed  at 
addressing  rising  household  debt  by  phasing  out 
the  tax  deductibility  of  interest  payments  for 
unsecured consumer loans, however only those not 
used  to  finance  the  purchase  of  a  house,  boat  or 
car. In  2025,  the  Swedish  FSA  extended  risk-
weight floors for mortgages to 30 December 2027 
to  ensure  banks  maintain  adequate  capital  for 
their exposure to potential housing-related risks.  

Role of non-bank financial 
intermediaries 

The  transformation  from  defined  benefit  to 
defined  contribution  models  across  pension 
systems has significantly deepened Sweden’s 
capital  markets,  creating  a  stable  and 
consistent  flow  of  long-term  investment 
capital. Sweden implemented major state pension 
reforms  in  1999,  shifting  from  a  defined  benefit 
system  to  a  mixed  system  combining  a  pay-as-
you-go  defined  contribution  scheme  and  a  fully 
funded  scheme,  both  of  which  are  income-based. 
The  reform  opened  up  the  possibility  of  private 
fund  managers  handling  individual  contributors 
within  a  public  framework,  where  the  public 
authority (Swedish Pensions Agency)  both collects 
contributions  and  pays  out  the  pensions.  These 
funds  are  some  of  Sweden’s  largest  institutional 
investors  and  are  active  in  both  domestic  and 
international  financial  markets,  thus  creating  a 
direct  link  between  public  pensions  and  capital 
markets.  Sweden’s  pension  system  also  relies 
heavily  on  semi-mandatory  occupational  pensions 
that  cover  over  90%  of  employees,  effectively 
acting as an automatic enrolment system through 
collective 
these 
occupational  pensions  have  shifted  from  defined 
benefit to defined contribution schemes, which has 
increased  the  individual’s  exposure  to  capital 
markets through mutual funds and other financial 
products.  In  addition  to  public  and  occupational 
pensions,  individuals  can  voluntarily  save  within 
products,  such  as  endowment  insurance  or  a 
savings  and  investment  account  (ISK),  further 
increasing household exposure to capital markets. 

agreements.  Over 

time, 

(123) FI  Analysis  51:  A  model  for  households’  housing  choices; 

Stability in the Financial System (2025:2).  

50 

 
 
in  one  place.  Owned  by 

“MinPension.se”  is  the  Swedish  digital  service  for 
tracking  all  pension  types  (national,  occupational, 
and  private) 
the 
government and pension companies, it covers 98% 
of  total  pension  capital.  It  provides  individual 
savers  with  a  clear  view  of  their  accrued  savings 
and  projected  retirement  income,  while  it  also 
to  monitor  pension 
enables 
adequacy  and  sustainability. Pension 
tracking 
systems  and  national  dashboards  are  part  of  the 
European  Commission  Communication  of  20 
November  2025,  in  line  with  the  Savings  and 
Investments Union (SIU) strategy.  

the  authorities 

Sweden’s  robust  domestic  investor  base, 
including pension funds, insurance companies 
and  private  investors,  plays  a  key  role  in 
fundraising.  The  institutional  investor  base  in 
Sweden  is  both  sizeable  and  uniquely  exposed  to 
the  domestic  equity  markets.  At  the  end  of  Q3-
2025,  Swedish  insurance  (at  74,6%  of  GDP)  and 
pension  funds  (at  149%  of  GDP)  had  financial 
assets  exceeding  more  than  two  times  Sweden's 
GDP  (Graph  A6.2).  Both  the  public  and  the  even 
larger  occupational  pension  fund  sector  allocate 
more  than  half  (vs  EU  average  of  27%)  of  their 
aggregate  portfolio  to  equities,  as  does  the 
insurance  sector.  Debt  securities  purchased  by 
insurance  companies  are  mainly  bonds  issued  by 
foreign  borrowers,  but  also  government  bonds 
(mostly  domestic)  and  bonds  issued  by  Swedish 
institutions.  They  also 
banks  and  mortgage 
increasingly  invest  in  corporate  bonds,  as  bond 
financing  is  a  commonplace  and  integral  part  of 
Swedish  companies’  financing  strategies.  Asset 
management  is  an  important  segment  of  the 
financial  sector  in  Sweden,  alongside  insurance 
companies  and  pension  funds.  At  the  end  of  Q2-
2025,  Swedish  funds  had  an  aggregate  market 
value larger than Sweden’s GDP and above the EU 
average  of  95%.  The  Swedish  investment  fund 
market  is  mature  and  diverse,  with  over  80%  of 
fund assets being managed locally. Swedish fund-
based  saving  plays  a  vital  role  in  household 
pension 
financial 
systems, 
and 
underscoring 
into  the  broader 
integration 
economy.  

planning 
its 

Venture capital ecosystem 

The  Swedish  PE  market  is  the  largest  and 
most developed in the EU, compared with the 

51 

size  of  the  economy.  The  buyout  market  is 
especially  large  compared  with  that  of  other  EU 
countries; it includes some of the largest and most 
specialised  private  equity  (PE)  firms  in  the  EU. 
According  to  the  Capital  Markets  Union  (CMU) 
dashboard,  PE,  including  venture  capital  (VC), 
investments in  Sweden  equated  to  1.12%  of GDP 
on  average  annually  over  2022-2024  (vs  an  EU 
average  of  0.5%),  partly  steered  by  government 
measures.  Significantly,  there  is  a  strong  link 
between  the  private  and  public  equity  markets: 
uniquely among peer countries, the most common 
way  for  PE  firms  to  divest  their  holdings  of 
Swedish  companies  in  recent  years  has  been  to 
take them public. 

PE  firms  in  Sweden  are  major  international 
players  in  terms  of  how  they  are  financed 
and the portfolio companies they invest in. A 
substantial  proportion  of  total  fundraising  comes 
investors. 
from  foreign,  mainly  non-European, 
Uniquely among EU peer countries (but in line with 
the  United  Kingdom),  large  international  pension 
funds  have  been  the  single  largest 
investor 
(approximately  one  third  of  capital 
category 
raised)  in  Swedish  PE  funds  over  the  past  years. 
Swedish  pension  funds  only  allocate  a  small 
portion  of  total  asset  to  PE  (124).  Sweden  is  also 
one of the few net exporters of PE flows in Europe. 

Sweden  is  a  leading  fintech  hub,  attracting 
significant  VC  investments  and  numerous 
innovative  start-ups.  According  to  the  CMU 
Dashboard, Sweden is among the best performers 
in  the  EU  in  annual  VC  investments  relative  to 
GDP,  with  0.12%  on  average  over  2022-2024 
(versus  an  EU  average  of  0.06%  over  the  same 
period).  Swedish  fintech  firms  mostly  operate  in 
payments, credit provision and infrastructure, with 
other  business  models  being  difficult  to  label. 
Many  fintech  companies  offer  payment  and 
money  transfer  services  and  are  starting  to 
compete  with  banks  in  niche  segments.  The 
payments  segment  is  currently  the  largest  of  the 
Swedish  fintech  segments,  with  a  broad  range  of 
both  start-ups  and  mature  fintech  businesses. 
Despite  Sweden  being  a  top  producer  of  unicorns 
(start-ups  valued  over  USD 1  billion)  per  capita, 

(124) Swedish  pension  funds  are  authorised  to  invest  in  unlisted 
assets through VC companies. One of the six main funds in 
the  Swedish  public  pension  system,  AP6,  is  focused  entirely 
on  private  equity  investments.  Riksbanken  (2024),  Private 
equity: a growing market in transition. 

 
 
Table A6.2:  Financial sector indicators 

Annualised data. Credit growth and the ECB pension funds EU data refer to the EA average. 
PE and VC, % of GDP is calculated on a 3-year moving average. 
Source: ECB, ESTAT, OECD, CMU Dashboard, AMECO. 

the  small  size  of  the  domestic  market  makes 
scaling  to  the  next  level  difficult,  prompting 
companies to  look  to  the US  or  other  major  hubs 
for  growth  and  valuation.  They  move  their 
headquarters,  list  on  foreign  stock  exchanges, 
merge or expand abroad.  

52 

20182019202020212022202320242025-Q3EUTotal assets of MFIs, % of GDP275.6280.7313.4280.6297.2296.1274.1276.6246.1Common equity Tier 1 ratio17.017.719.219.218.919.019.019.316.8Total capital adequacy ratio20.721.622.322.222.022.222.622.820.2Overall NPL ratio, % of all loans1.01.11.01.00.81.01.11.11.9NPL ratio, loans to NFCs0.91.11.00.60.40.50.60.63.5NPL ratio, loans to HHs1.41.51.41.71.51.82.02.02.1Return on equity ratio112.210.98.410.09.813.112.611.49.6Loans to NFCs, % of GDP48.047.250.347.348.249.645.945.729.3Loans to HHs, % of GDP83.984.992.486.580.582.777.877.143.6NFC credit growth rate, %6.13.64.07.012.01.80.44.42.5HH credit growth rate, %5.55.15.66.8-0.5-0.11.72.72.6Stock market capitalisation, % of GDP--180.4223.6142.7170.0165.4167.069.9Initial public offerings, % of GDP0.252.091.286.290.100.000.00-0.06Market funding ratio62.263.363.062.961.461.562.5-49.7Private equity, % of GDP0.5590.7190.8061.0401.1751.1781.179-0.487Venture capital, % of GDP0.0590.0670.0900.1240.1560.1410.115-0.064Financial literacy, composite index-----53.5--45.5Bonds, % of HHs' financial assets0.90.70.60.40.50.50.5-2.8Listed shares, % of HHs' financial assets6.77.38.09.57.88.27.9-4.8Investment funds, % of HHs' financial assets8.99.89.610.29.610.511.1-11.0Insurance/pension funds, % of HHs' financial assets37.337.536.536.336.938.140.0-27.8Total assets of insurers, % of GDP63.370.977.882.859.770.469.5-53.9Pension assets, bn EUR---829.4717.7744.7832.1-5813.8Pension assets, % of GDP---155.3131.1139.1149.1-32.310y real return average of pension assets, %-----3.93.4-1.4Pension funds assets, ECB (% of GDP)---------1-34-1011-1718-2425-27Colours indicate performance ranking among the 27 EU Member States.Banking sectorNon-banking sector 
  
 
 
 
     
 
ANNEX 7: EFFECTIVE INSTITUTIONAL FRAMEWORK 

institutional  framework 

An  effective 
is 
essential  for  competitiveness.  This  requires 
public  trust  built  on  integrity,  quality  legislation, 
regulatory  simplification  and  efficient  services  for 
people and businesses. 

Public trust 

Graph A7.1: Trust in justice, regional / local 
authorities and in government 

(1) EU-27 since 2019; EU-28 before 
Source: European Commission, Standard Eurobarometer 
surveys. 

Sweden  continues  to  enjoy  high  trust  in  its 
institutions  (Graph  A7.1).  The  level  of  trust  is 
highest  in  the  justice  system  (83%),  followed  by 
regional  and  local  authorities  (70%).  Trust  in 
central  government  (41%)  has  not  yet  fully 
recovered from the decrease in 2022, considering 
the  COVID-19  pandemic,  but  the  trend  indicates 
that  trust  is  gradually  stabilising  and  increasing. 
Both  businesses  and  the  general  public  retain 
confidence in the public administration’s ability to 
handle their data securely and responsibly(125). 

Quality of lawmaking 

Sweden  has  established  strong  frameworks 
for  evaluating  legislative  impacts  but  could 
align  better  with  best  practices  to  ensure 
implementation and transparency (Table A7.1). 
It  employs  robust  methods  for  developing  new 

AI 

an 

for 

the 

shows 

reviews 

launched 

the  proposal 

(Regelrådet),  which 

regulations.  The  regulatory  rules  were  updated  in 
2024,  with  the  aim  of  improving  the  quality  of 
impact  assessments(126).  Legislators  are  required 
to  assess  as  early  as  possible  the  costs  and 
benefits  of 
state, 
municipalities,  regions,  companies  and individuals. 
The  Swedish  Agency  for  Financial  and  Public 
Management 
assistant 
(Konsekvenshjälpen)  to  help  civil  servants  with 
the  administrative 
reduce 
assessments  and 
burden. However, analysis by the Better Regulation 
Council 
impact 
government 
assessment, 
committees  tasked  with  preparing  regulatory 
proposals  need  additional  support(127).  Moreover, 
there  is  no  formal  requirement  for  legislators  to 
impacts 
specify  methodologies  for  evaluating 
after  enforcement.  Additionally,  better  regulation 
is  undermined  by  the  absence  of  a  body  for 
overseeing  ex  post  evaluations.  Following  the 
adoption  of  the  new  rules,  a  review  of  their 
effectiveness 
in  2026.  Sweden's 
approach  to  stakeholder  engagement  involves 
publishing  feedback  on  proposals  through  a 
central  government  portal(128),  but  there  is  no 
requirement 
responses,  adversely 
affecting transparency. 

is  expected 

to  publish 

that 

the 

is 

taking 

measures 

for 
Sweden 
administrative  simplification.  A  simplification 
council  (Förenklingsrådet)(129),  set  up  in  2024  as 
an entity within the Swedish Agency for Economic 
(Tillväxtverket),  collects 
and  Regional  Growth 
simplification proposals directly from stakeholders 
and assesses whether they could be considered by 
to  promote 
government.  The  council  aims 
streamlining  of  regulatory  and  administrative 
processes  to  support  growth  and  investment. 
also 
Furthermore, 
an 
Sweden 
(Implementeringsrådet) 
implementation  council 
tasked  with  scrutinising 
impact  of  EU 
legislation  on  Swedish  firms  with  a  view  to 
improving  competitiveness  and  avoiding  undue 
complexity  in  transposition  (see  also  Annex  5). 
Both  these  two  new  bodies,  however,  have  an 
advisory  roles  and  do  not  have  legal  power  to 
overturn,  override,  or  nullify  decisions  made  by 
local governments or government agencies.  

the 

set 

up 

(126) Statskontoret, Impact assessment. 

(127) Regelrådet, 2025, Årsrapport 2025, p.20-21.  

(125) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

(128) Regeringskansliet, Remisser. 

(129) Förenklingsrådet. 

53 

00.10.20.30.40.50.60.70.80.9AutumnSpringAutumnSpringSpringAutumnWinterSummerWinterSpringWinterSummerAutumnSpringAutumnSpringAutumnSpring202520242023202220212020201920182017Justice,  legal system EU-27Justice,  legal system SERegional or local public authorities EU-27Regional or local public authorities SEGovernment  EU-27Government  SE 
 
       
 
 
 
Table A7.1:  Sweden. Selected indicators on better regulation practices for primary legislation 

Source: OECD, 2025, Regulatory Policy Outlook 2025 and Better Regulation across the European Union 2025. 

Public service delivery and 
digitalisation 

Graph A7.2: Most time-consuming aspects of 
service delivery 

Source: European Commission, 2026, Flash Eurobarometer 
surveys 567 and 568 on satisfaction with administrative 
services. 

the  EU  average 

Sweden  has  made  good  progress 
in 
digitalising  its  public  services  but  faces 
challenges on  user-friendliness.  Most  Swedish 
people  (71%)  and  companies  (54%)  are  satisfied 
with  public  administrative  services,  performing 
(Sweden:  45%;  EU: 
above 
high 
comparatively 
42%). Despite 
satisfaction rates, there is potential for converting 
the  neutral  section  of  people 
(21%)  and 
companies (31%) to satisfied. Over half of people 
describe public administration as playing a central 
role  in  their  life  (63%)  and  37%  describe  it  as 
being  close  to  people.  Between  2023  and  2025, 
the  percentage  of  people  who  consider  public 

these 

administration  fast  and  effective  increased  (+17 
percentage  points)(130).  Despite  this,  over  half  of 
people say that making digital services more user-
friendly  would  improve  their  interactions  with 
public administrations. 69% report that they would 
be  more  likely  to  use  digital  services  if  the 
interfaces  were  simpler  and  had  fewer  sections, 
with 66% noting that the availability of quick help 
would  also  encourage  use.  67%  of  companies 
describe  having  experienced  no  negative  impact 
from  their  interaction  with  public  administration 
services(131).  However,  businesses  flag  several 
aspects  as  time-consuming,  including  collecting 
identifying 
and  submitting  application  forms, 
services and processing times (Graph A7.2). 

Availability  of  digital  public  services  for 
people  and  businesses  is  above  the  EU 
average,  although  the  score  has  fallen  (132) 
compared  to  last  year  (Table  A7.2).  Sweden 
also  has  one  of  the  highest  percentages  of  e-
government  users  in  the  EU  (97%)(133).  79%  of 
people  and  82%  of  businesses  say  digital  public 
services  reduce  the  time  and  effort  needed  to 
obtain  services,  reflecting  high  uptake  among 
people.  For  businesses,  however,  uptake  remains 

(130) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

(131) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

(132) The decrease is primarily based on the cross-border service 

dimension.  

(133) European Commission, 2025, Digital Decade 2025: Country 

reports. 

54 

0%10%20%30%40%50%Time forresponsesServiceidentificationDocumentspreparationLegislationandobligationsTime forresponsesDocumentspreparationPeopleBusinessesEUTools for smart legislation: Share of possible impacts assessed for all primary laws when developing legislation 1Regulators are required to identify and quantify the benefits of a new primary law1Regulators are required to identify and assess the impacts of alternative non-regulatory options1Tools for effective implementation: when developing laws, regulators are required to:Assess the level of compliance0Identify and assess potential enforcement mechanisms0Specify the methodology of measuring progress in achieving the law's goals0Oversight of better regulation: There is an external  body responsible for reviewing the quality of RIAs and of ex post evacuations 1There are publicly available assessments of the effectiveness of RIA in modifying regulatory proposals 0There are reports on the level of compliance by government department with the requirements of RIA0There are indicators on the percentage of ex post evaluations that comply with guidelines0The effectiveness of ex post evaluations in improving the regulatory stock has been assessed in the last five years0 
   
 
 
     
 
Table A7.2:  Digital Decade key performance indicators: availability of digital public services 

(1) Digital Decade target by 2030: 100. (2) Publishing year, data were collected in the previous year 
Source: European Commission, State of the Digital Decade report 2025 

more  limited,  despite  the  recognised  usefulness: 
32%  say  that  they  rarely  or  never  use  digital 
services,  and  only  50%  use  them  regularly  or 
always.  53%  of  people  say  that  the  public 
administration  does  not  ask  for  personal  data 
repeatedly  –  the  highest  score  among  the  EU-27, 
the 
pointing 
to  good  data 
administration.  However,  44%  say 
the 
administration  does  repeatedly  ask  for  data, 
indicating  that  there  is  still  scope  for  progress  in 
the area(134). 

reuse  within 
that 

A  new  digitalisation  strategy  aims  to  make 
digital  services  simpler  and  more  user-
friendly.  The  government  has  tasked  the  Agency 
for  Digital  Government  with  exploring  two  key 
initiatives  under  this  strategy:  creating  a  single 
digital  gateway  where  people  and  businesses  can 
manage 
contact  with  multiple  government 
agencies  in  one  place  and  setting  up  a  digital 
identity wallet(135). 

Technical  deployment  of  electronic  health 
records  is  stagnating,  remaining  below  the 
EU  average  (Table  A7.2).  Despite  this,  the 
proportion  of  Swedish  people  accessing  their 
personal  health  records  online  is  above  the  EU 
average (see Annex 15), and Sweden is improving 
health  data  interoperability.  In  2025,  the  Swedish 
eHealth  Agency  proposed  regulatory  changes  to 
create a secure national health data infrastructure, 
with  mandatory  data  sharing,  strong  data 
protection  and  clear  oversight,  aligned  with  the 
European  Health  Data  Space  and  aimed  at 
improving  healthcare  delivery(136).  The  blueprint 

(134) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

(135) Regeringskansliet, 2025, Myndigheternas digitala tjänster 

ska bli enklare att använda. 

(136) E-hälsomyndigheten, 2025, Genomförandet av en nationell 

digital infrastruktur för hälso-och sjukvård och EHDS 
primäranvändning.  

for  the  national  digital  health  data  infrastructure 
was  created  through  a  public  inquiry  in  2026(137). 
Sweden  can  build  on  this  ongoing  momentum  to 
address  administrative,  technical  and  regulatory 
challenges, to ensure wider availability and access 
to electronic health records. 

The  current  eID  solutions  in  Sweden  are 
delivered  by  private  providers.  However,  in 
2025,  the  Swedish  government  tasked  the  Police 
Authority,  together  with  the  Swedish  Agency  for 
Digital  Government,  to  develop  and  issue  a  state 
eID(138),  with 
to  be 
operational  by  November  2026,  as  mandated  by 
EU law(139). 

the  service  expected 

Sweden  is  among  Europe's  more  digitally 
advanced  countries  but  faces  challenges  in 
developing a coherent digital permit system. 
The country's 290 autonomous municipalities each 
operate  independent  building  permit  workflows, 
with no national digital building permit platform in 
place.  For  large-scale  projects,  it  can  take  up  to 
four years on average to obtain an environmental 
permit,  factoring  in  appeals,  with  wind  power 
approvals  often 
longer. 
Between  January  2025  and  February  2026,  the 
government  launched  a  building  permit  reform 
and  proposed  a  new  consolidated  environmental 
permit authority, indicating that Sweden is striving 
for deregulation and digitalisation while navigating 
structural fragmentation. 

significantly 

taking 

Sweden  is  technically  ready  to  enable  the 
cross-border 
of data 
and documents  between  authorities  through 

exchange 

(137) Regeringskansliet, 2026, En nationell digital infrastruktur i 

hälso- och sjukvården. 

(138) Regeringskansliet, 2025, Regeringen ger Polismyndigheten i 

uppdrag att utfärda statlig e-legitimation.  

(139) Article 3 a (1) in the regulation (EU) No 910/2014. 

55 

EU-272023202420252025889386828896908670787883Digital public services for citizens (0 to 100)Digital public services for businesses (0 to 100)Access to electronic health records (0 to 100)Sweden 
 
 
 
 
   
 
for 

to  search 

longer  have 

the  EU  once-only  technical  system  (140). When 
services become accessible, people and businesses 
will  no 
their 
data, download  and upload documents  manually 
across  e-government  portals  in different  Member 
States.  Sweden  still  needs  to identify the  types 
of documents  and data  needed  for  exchange 
through the system and explore ways to shift from 
to  structured  data 
submitting  unstructured 
formats.  It  would  be  also  useful  for  Sweden  to 
connect  authorities  to  the  once-only  technical 
system, foster 
exchanges 
and encourage  cooperation  between  related EU-
wide projects. 

cross-border 

Civil service 

The  capacity  of  the  Swedish  civil  service  is 
high  but  there  are  long-term  challenges  in 
maintaining  staffing  and  skills.  Approximately 
half  of  Swedish  civil  servants  participates  in 
education and training, well above the EU average 
of 19% and furthermore, the highest proportion in 
the  EU(141).  The  share  of  Swedish  civil  servants 
that  have  post-secondary  education 
is  75%, 
exceeding  the  EU  average  of  55%(142).  With  a 
strong  focus  on  training,  a  high  percentage  of 
educated  civil  servants,  and  one  in  five  Swedish 
people 
administration 
appealing(143),  the  sector's  capacity  is  deemed 
substantial.  Sweden  has  the  largest  share  of  ICT 
graduates  in  the  EU  and  a  high  share  of  ICT 
specialists in total  employment. However, Sweden 
faces challenges in maintaining the current growth 
rates  in  ICT  specialists  in  public  administration, 
with  increasing  demand  for  a  digitally  skilled 
workforce(144). 

considering 

public 

The average age of Swedish civil servants is 
lower than the EU average. More than 60% of 
the  public  administration  workforce  is  under  50 
years  of  age,  a  figure  which  has  remained  stable 
since  2021(145).  Sweden  is  performing  well  in 
gender  parity,  with  53%  of  women  in  senior 
administrative positions, which is above the EU-27 
average (48%)(146). 

Integrity 

view 

Perceived  corruption  as  a  barrier  to  doing 
business  and 
reported  experiences  are 
extremely  low,  indicating  that  corruption 
risks  are  limited  in  practice.  In  Sweden,  few 
companies 
corruption  as  widespread 
(Sweden:  45%;  EU:  63%)  or  cite  overly  close 
business–politics  links  as  a  driver  for  corruption 
(Sweden:  56%;  EU  average:  76%).  Only  16%  of 
companies  report  corruption  as  a  problem  when 
doing  business,  well  below  the  EU  average  of 
35%(147).  Public  procurement  remains  one  of  the 
main  corruption 
is  being 
addressed 
the  new  anti-corruption  plan. 
Addressing  the  possible  infiltration  of  organised 
crime  actors  in  the  public  service  continues  to  be 
one  of  the  main  strategic  priorities  of  the 
government(148) (see also Annex 5). No companies 
report  being  asked  or  expected  to  offer  gifts  or 
services  or 
extra  payments 
procurement  (EU:  10%),  while  51%  believe  those 
caught  bribing  senior  officials  are  appropriately 
punished–well  above  the  EU  average  of  33%(149), 
pointing  to  both  low  corruption  exposure  and 
effective enforcement. 

risk  areas,  which 

for  permits, 

in 

(140) European Commission, Once-Only Technical System 

Acceleratormeter, Ec.europa.eu. 

(141) European Commission, Eurostat, 2026, European Union 
Labour Force Survey, Participation rate of employees in 
education and training (last 4 weeks) by NACE Rev. 2 activity 
(2008-2026). 

(145) European Commission, Eurostat, 2026, European Union 

Labour Force Survey, Employed persons by economic activity 
(NACE Rev. 2) (2008-2026). 

(146) European Institute for Gender Equality, 2025, Indicator: 

National administrations: top two tiers of administrators by 
function of government. 

(142) European Commission, Eurostat, 2026, European Union 

Labour Force Survey, Employees by educational attainment 
level and NACE Rev. 2 activity (2008-2026). 

(147) European Commission, 2025, Flash Eurobarometer survey 
557 on businesses’ attitudes towards corruption in the EU 
and selected enlargement countries. 

(143) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

(144) European Commission, 2025, Digital Decade 2025: Country 

reports. 

(148) European Commission, 2025, Rule of Law Report, pp. 11-12. 

(149) European Commission, 2025, Flash Eurobarometer survey 
557 on businesses’ attitudes towards corruption in the EU 
and selected enlargement countries. 

56 

 
 
 
to 

improve 

judgments  for  the  general  public(152).  More  could 
be  done  to  ensure  access  to  the  courts  of  first 
searchability  of 
instance, 
judgments  by 
the 
in 
documents.  Sweden  significantly 
lags  behind 
regarding  arrangements  for  producing  machine-
readable judicial decisions(153). 

the 
including  metadata 

steps 

taken 

limited 

Sweden  has 
to 
strengthen  its  corruption  prevention  and 
detection framework. An all-party committee 
of inquiry recommended introducing lobbying 
rules, including a transparency register. There 
are still no rules on how to engage with lobbyists 
and  on  disclosure  of  lobbying  contacts,  as  also 
noted  by  the  Group  of  States  against  Corruption 
(GRECO).  In  particular,  the  all-party  committee 
recommended  introducing  a  transparency  register 
where  lobbyists  would  need  to  register  their 
contacts at political level three times per year. The 
government is expected to examine the report and 
announce a possible follow-up(150). 

Investigating  and  prosecuting  corruption 
continues  to  achieve  results,  although  law 
enforcement  authorities  are  concerned  by 
possible  underreporting  of  corruption  cases. 
The Prosecution Authority and the Police Authority 
consider  that  they  have  a  sufficient  level  of 
resources,  although  issues  over  the  staffing  and 
performance  of  the  Police  Authority’s  intelligence 
unit  in  corruption  cases  remain.  These  authorities 
continue to have good cooperation  in general  and 
achieve results in the fight against corruption. The 
police  assumes  that 
the  actual  number  of 
corruption  cases  is  underreported,  citing  a  lack  of 
incentive  to  report  such  conduct,  for  example  at 
local level or in the private sector(151). 

Justice 

The 
justice  system  performs  efficiently 
overall. The time taken to reach a decision in civil 
and  commercial  cases  at first instance  courts  fell 
from 157 days in 2023 to 150 days in 2024. The 
estimated time  to  resolve  administrative  cases  at 
first  instance  courts  in  2023  was  short,  81  days 
(compared  to  83  in  2023).  The  quality  of  the 
justice  system  is  good.  Although  Sweden  has  a 
high level of digitalisation in its justice system, at 
the same time, it lags behind in digital solutions to 
initiate  and  follow proceedings in  civil/commercial 
cases. Also, the country ranks at the bottom in the 
in  terms  of  online  access  to  published 
EU 

(150) European Commission, 2025, Rule of Law Report. 

(151) European Commission, 2025, Rule of Law Report. 

(152) Figure 47 'Online access to published judgments by the 

general public’, 2025 EU Justice Scoreboard. 

(153) For  a  more  detailed  analysis  of  the  performance  of  the 
justice system in Sweden, see the upcoming 2026 EU Justice 
Scoreboard and the 2025 Rule of Law Report. 

57 

 
 
 
SUSTAINABILITY 
ANNEX 8: INDUSTRY DECARBONISATION, CIRCULARITY AND CLIMATE MITIGATION 

In 

Sweden  faces  challenges  in  meeting  its 
climate  objectives  and  in  its  clean  industry 
transition. 
particular,  greenhouse  gas 
emissions  from  road  transport  have  risen  sharply 
on  the  back  of  policy  backtracking  as  policy 
changes have increased greenhouse gas emissions 
from  fuel  use  and  consumption.  This  has  put 
Sweden at risk of not complying with its emission 
limits  under  the  Effort  Sharing  Regulation.  In 
2025,  Sweden 
country-specific 
received  a 
recommendation  to  ensure  the  achievement  of 
greenhouse  gas  emission  reduction  targets  by 
reducing, 
in  particular,  emissions  from  road 
transport, a year later, that the gap to the targets 
has  widened (154).  The  transition  to  a  sustainable 
industry  is  lagging  too,  as  the  country's  circular 
economy  indicators  continue  to  be  below  the  EU 
average. There is a need for investment in circular 
economy  initiatives  and  improvements  in  waste 
management. Challenges remain in air pollution, in 
particular from ammonia, and in water pollution by 
industry. 

Industry decarbonisation 

Greenhouse gas emissions from industry 

Sweden’s  industry  Emissions  have  fallen  by 
31  percent  since 1990, driven  primarily  by  fuel 
switching,  energy  efficiency  improvements,  and 
reduced  production  volumes  in  the  iron  and  steel 
industry  during  the  2010s (155).  The  bulk  of 
remaining  emissions  are  concentrated  in  four 
subsectors:  iron  and  steel,  the  minerals  industry 
(including cement), the petrochemical industry, and 
refineries.  These  sectors  share  a  common 

challenge  in  that  further  emission  reductions 
cannot be achieved through incremental efficiency 
gains  alone  but  require  fundamental  process  or 
product  changes.  Several  of  the  larger  industrial 
actors  are,  however,  planning  such  technology 
shifts, meaning significant emission reductions are 
anticipated within the coming years (156). 

Policies to promote industry decarbonisation 

the 

support 

(Klimatklivet) 

Sweden  offers  various  forms  of  incentives 
for  industry  to  decarbonise.  This  includes 
primarily 
(Industriklivet) 
‘Industry  Leap’ 
scheme  to  support  the  scale-up  of  energy-
intensive  process  innovations  and  the  ‘Climate 
Leap’ 
investment 
to 
measures  to  reduce  greenhouse  gas  emissions  in 
different  sectors,  including  industry.  The  former, 
which  receives  funding  from  the  Recovery  and 
Resilience  Facility,  remained  a  priority  for  funding 
under  the  2025  budget,  specifically  targeting 
industry’s  transition  to  electricity  and 
heavy 
hydrogen (157).  Administered  by 
the  Swedish 
Energy  Agency,  the  programme  comprises  a  total 
of 1.3 billion SEK so far in 2025 and can finance 
projects  running  through  2033.  This  funding  is 
complemented  by  Sweden’s  national  carbon  tax, 
providing  a  continuous  economic  incentive  for 
firms to transition away from fossil fuels (158). The 
'Fossil  Free  Sweden'  (Fossilfritt  Sverige)  initiative 
also  covers  22  sectors  and  sets  out  roadmaps, 
which  are  being  implemented  as  of  2025 (159). 
These aim to coordinate the needs of the mining, 
steel  and  cement 
industries  to  ensure  that 
infrastructure  and  regulatory  support  keep  pace 
with technological preparedness.  

the 

specifically, 
For 
Sweden's  budget  supports  carbon  capture 

industry 

cement 

(154) Swedish Climate Policy Council (Klimatpolitiska rådet), Report 

2026 Link.. 

(156) Climate Policy Council - Link 

(155) This Annex discusses the transition of Sweden's 

manufacturing industry, specifically its energy-intensive 
industries, to low-carbon and net-zero modes of production, 
which is key to preserving competitiveness on the path 
towards climate neutrality as mandated by the European 
Climate Law. A broader perspective on the current 
competitiveness challenges facing Sweden's manufacturing 
industry is provided in Annex 5. For a more detailed 
description of greenhouse gas emissions from industry, see 
European Commission (2025), 2025 Country Report - 
Sweden, Commission staff working document, SWD (2025) 
205 final, Brussels, 4.6.2025, Annex A7. Clean industry and 
climate mitigation. 

(157) Swedish Climate Policy Council (Klimatpolitiska rådet), Report 
2025. Annual assessment of the government’s climate 
policy, specifically addressing the 2025 budget priorities, 
industrial bottlenecks, and the need to prioritise 
electrification, Link. 

(158) Swedish government 'Sweden's Carbon Tax'. Fact sheet on 
the economic incentives provided by the national tax on 
fossil fuels, Link. 

(159) Fossil Free Sweden (Fossilfritt Sverige), 'Sectoral Roadmaps 
for Fossil Free Competitiveness'. Official status update for 
2025 regarding the 22 roadmaps and industrial coordination,  
Link. 

58 

 
 
 
 
 
 
 
and storage (CCS). The budget recognises CCS as 
the  only  viable  path  for  the  Slite  cement  plant, 
which  accounts  for  by  far  the  largest  share  of 
national  production  and  generates  roughly  3%  of 
total  emissions (160).  Sweden  has 
Sweden's 
pioneered a SEK 36 billion (EUR 3.2 billion) reverse 
auction  scheme  for  bio-CCS,  which  uses  a 
competitive  bidding  process 
run  20-year 
operations for the capture and storage of biogenic 
carbon (161).  This  programme  awarded  its  first 
major  contract  to  Stockholm  Exergi  in  early  2025 
to  capture  800 000  tonnes  of  CO2  annually,  with 
subsequent rounds upcomin. 

to 

an 

long 

for 
remains 

timeline 
permit 

industry  decarbonisation 

Critical  bottlenecks  in  the  environmental 
permitting  process  and  a  lack  of  clear 
market  structures  for  carbon  removals  are 
significant  obstacles  to  achieving  Sweden's 
2030 
targets. 
Despite  recent  strides  to  streamline  regulations, 
industrial 
average 
the 
(162). 
environmental 
Manufacturing  also  faces  gridlock  in  electricity 
allocation, where grid capacity is often granted on 
a  first-come,  first-served  basis.  Without  a  policy 
shift  to  prioritise  projects with the  highest  proven 
emission 
and 
strategically  vital  projects  may  be  delayed  by 
speculative  applications  for  power.  Lastly,  the 
financial struggles of certain high-profile industrial 
projects,  most 
2025 
bankruptcy,  might  have  led  to  some  municipal 
scepticism as local authorities are often forced to 
pay billions to fund infrastructure without support 
from  central  government.  This  has  created  new 
bottlenecks  where  municipalities,  wary  of  being 
left  with  stranded  assets,  expenditure  increases 
and  debt,  are  increasingly  hesitant  to  host  large-
scale 
a 
guaranteed state safety net. 

notably  Northvolt’s 

potential,  mature 

projects  without 

decarbonisation 

reduction 

(160) Swedish government (Regeringen), Government Bill 

2024/25:1 (Budget Bill for 2025) detailing support for CCS 
technologies and the strategic importance of the Slite 
cement plant, Link. 

(161) Swedish Energy Agency (Energimyndigheten), 'Support for 
Bio-CCS through reverse auctions'. Technical report on the 
SEK 36 billion framework and the 20-year operational 
support model, Link. 

(162) Swedish Climate Policy Council (Klimatpolitiska rådet), Report 
2025, annual assessment of the government’s climate 
policy, specifically addressing the 2025 budget priorities, 
industrial bottlenecks and the need for prioritisation in 
electrification, Link. 

59 

Many of the challenges facing industry in the 
process of decarbonisation in Sweden require 
streamlining  the  permitting  framework.  The 
current  Environmental  Code  is  poorly  adapted  to 
giga-scale  projects  such  as  Stegra  (formerly  H2 
Green  Steel)  in  Boden,  which  combines  hydrogen 
production, iron reduction and steel manufacturing 
in  a  single  site.  For  example,  Stegra  received  a 
EUR 250  million  EU  Innovation  Fund  grant  and 
highlights how overlapping competencies between 
regional  boards  and  national  courts  can  lead  to 
fragmentation.  Different  parts  of  an  integrated 
isolation,  creating 
project  are 
uncertainty,  administrative  delays  and  increasing 
financial risk. Further standardisation and bringing 
in  fast-track  status  for  integrated  net-zero  sites 
would  reduce  this  uncertainty  and  support  the 
swift  deployment  of 
industrial 
investments. 

large-scale 

reviewed 

in 

Reduction of effort sharing emissions 

Compliance  with  effort  sharing  limits  with 
domestic measures 

Sweden’s  effort  sharing  emissions  are 
projected  to  be  above  its  target  in  2030; 
earlier  years’  unused  emission  allocations 
will  not  suffice  to  close  the  gap and  comply 
with  the  Effort  Sharing  Regulation (163).  In 
2024,  greenhouse  gas  emissions  from  Sweden’s 
effort  sharing  sectors  are  expected  to  have  been 
29.4%  below  2005  levels.  By  2030,  current  and 
planned  policies  and  measures  are  expected  to 
lead  to  a  44.9%  reduction,  leaving  a  gap  of  5.1 
percentage  points  to  the  2030  target,  a  50% 
reduction.  Sweden  could  bridge  part  of  this  gap 

(163) The national GHG emission reduction target is set out in 

Regulation (EU) 2018/842 (the Effort Sharing Regulation). It 
applies jointly to buildings (heating and cooling), road 
transport, agriculture, waste and small industry (known as 
the effort sharing sectors). The emissions from effort sharing 
sectors for 2024 are based on approximated inventory data. 
The final data will be established in 2027 after a 
comprehensive review. Projections about the impact of 
current policies (‘with existing measures’, WEM) and 
additional policies (‘with additional measures’, WAM) as per 
Sweden’s 2025 reporting under Article 17 of Regulation (EU) 
2018/1999 (the Governance Regulation). Also see European 
Commission (2025), Climate Action Progress Report 2025 – 
Technical Information, Commission staff working document, 
Brussels, Chapter 9 (pp. 111ff.), and in particular Tables 25 
and 26. 

 
 
 
with own unused annual emission allocations from 
earlier  years  but  would  also  need  transfers  of 
allocations  from  other  Member  States  to  achieve 
compliance with the Effort Sharing Regulation (164). 
Progressing towards climate neutrality will require 
the  swift  implementation  of  additional  measures 
and identification of new measures. 

Sustainable transport  

Recent policy changes in Sweden have led to 
an  increase  in  greenhouse  gas  emissions, 
chiefly  from  road  transport  (+24%)  and  non-
road  mobile  machinery  (+33%)  in  2024(165).  The 
main  reason  for  the  rise  in  emissions  is  the 
combined impact of a significant reduction in fuel 
lowering  the 
blending  requirements,  markedly 
minimum share of biofuels in diesel and petrol to 
6%  in  2024  (before  rising  again  to  10%  in  July 
2025)  (166),  and  tax  cuts  and  extended  tax 
exemptions on liquid fuels. This has increased fuel 
consumption  and  fuel  emissions  in  both  the  road 
transport and non-road mobile machinery sector.  

progress 

have  weakened 

The  phasing  out  of  fiscal  incentives  to 
purchase electric vehicles has contributed to 
electric vehicle sales stalling since 2023 and 
increasing  only  slightly  in  2025 (167).  These 
measures 
on 
decarbonisation  in  the  transport  sector.  Sweden 
has,  however,  brought  in  a  premium  for  electric 
vehicles,  directed  at  lower-income  households  in 
areas  with low  access to public  transport,  as  part 
of Sweden’s social climate plan co-financed by the 
EU.  For  heavy-duty  vehicles,  Sweden  has  not  yet 
implemented  tolls  designed  to  better  reflect  the 
actual  use  of  infrastructure  and  external  costs  of 
heavy-duty vehicles (168). Toll exemptions for zero-
emission  vehicles  are  allowed  under  EU  law  until 
30 June 2031 (169). 

(164) European Commission, Climate Action Progress Report 2025, 

Link. 

(165) Swedish Environment Protection Agency - Sveriges utsläpp 

och upptag av växthusgaser, Link. 

(166) Swedish government - Reduced tax on petrol and diesel and 

reformed reduction obligation, Link. 

(167) European Commission, European Alternative Fuels 

Observatory, Link. 

(168) Trafikverket  

(169) European Commission proposes toll exemptions to boost 

Graph A8.1: Greenhouse gas emissions in the 
effort sharing sectors, 2005, 2023, and 2024 

Source: European Environment Agency. 

Sweden’s transition to sustainable transport 
is driven by a public transport system that is 
almost fully fossil fuel free, though the roll-out 
of  electric  vehicles,  which  reached  nearly  39%  of 
new  registrations  in  2023,  has  slowed (170).  The 
reason for progress stalling is primarily due to the 
removal  of  the  climate  bonus  (electric  vehicle 
premium),  the  low uptake  of  the  recent  scrapping 
premium and lower fossil fuel prices following the 
lowering of the national reduction obligation. While 
the roll-out of zero-emission vehicles is still above 
its  stalling  affects 
the  EU  average  (14.5%), 
Sweden’s  ability 
transport 
emissions.  The  passenger  modal  split  consists  of 
approximately 80% passenger cars, 12% railways 
and 8% buses (171). 

reduce 

road 

to 

billion 

SEK 1 171 

To decarbonise transport, Sweden’s proposed 
national  plan  for  2026–2037  includes  a 
historic 
investment 
framework  that  prioritises  the  14 200  km 
railway  network (172).  Although  the  power  used 
for  Sweden’s  rail  transport  system  is  almost 
entirely  fossil-free,  many  regional  transport  flows 
still  rely  on  road  infrastructure.  Shifting  these 
flows  to  rail  transport  requires  clear  policy 
objectives,  long-term  planning  and  substantial 
investment  to  address  deferred  maintenance  and 
meet the needs of Swedish industry. Consequently, 
approximately  80%  of  the  plan’s  investments  are 
in railway development, focusing on strengthening 

(170) European Commission, European Alternative Fuels 

Observatory, Link. 

(171) Eurostat, Modal split of inland passenger transport, Link. 

demand for zero-emission lorries and buses, Link. 

(172) Trafikverket - Nationell plan 2026-2037, Link. 

60 

051015202530354045200520232024MtCO2eDomestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
 
 
  
 
the 
robustness 
infrastructure (173). 

and 

capacity 

of 

rail 

Sustainable industry 

Circular economy industry 

to 

has 

scope 

improve 

Sweden 
its 
performance  on  the  circular  economy  and 
waste  management.  In  2020,  Sweden  adopted 
its  circular  economy  strategy  (174)  and  in  2021,  it 
followed up with a circular economy(175) plan. The 
action  plan  sets  out  more  than  100  different 
measures along the entire life cycle of products. It 
identifies  a  set  of  priority  sectors, 
including 
plastics, 
renewable  and  bio-based 
materials,  food,  the  construction  and  property 
sector  (including  building  and  demolition  waste) 
and  innovation-critical  materials  and  minerals. 
Sweden  also  adopted  an  action  plan  for  plastics 
(176)  in  2022  and  has  taken  some  non-legislative 
measures on food waste and textiles. 

textiles, 

some 

improvements, 

Despite 
Sweden 
continues  to  rank  below  the  EU  average  on 
circular  economy  indicators.  The  country’s 
circular material use rate was 10.4% in 2024 (EU 
average:  12.2%)  (177),  and  resource  productivity 
reached  EUR 2.45/kg  (EUR  average:  EUR 2.99/kg) 
(178).  The  level  of  raw  material  consumption 
remains  one  of  the  highest  in  the  EU  at  22.3 
tonnes per capita in 2023 (EU average: 13.7) (179), 
underscoring  a  persistent  reliance  on  primary 
resources. 

By contrast, Sweden has reduced the volume 
of  municipal  waste  generation  over  the  last 
five  years.  In  2024,  the  country  generated  427 

(173) Trafikverket - Nationell plan 2026-2037, Link. 

(174) Ministry of the Environment, Circular Economy – Strategy for 

the transition in Sweden, Elanders, 2020, Link. 

(175)Ministry of Climate and Enterprise, Cirkulär ekonomi – 
Handlingsplan för omställning av Sverige, Stockholm, 
2021, Link . 

(176)Sveriges handlingsplan för plast – En del av den cirkulära 

ekonomin, Stockholm, 2022, Link.  

(177)Eurostat - Circular material use rate, Link. 

(178)Eurostat - Resource productivity, Link. 

(179)Eurostat, Material footprints, Link.  

61 

kg  of  municipal  waste  per  capita,  which  is  below 
the EU average of 517 kg per capita (180). Despite 
recent  improvement,  Sweden’s  recycling  rate  of 
46%  remains  slightly  below  the  EU  average  of 
48%  (181).  The  country  is  at  risk  of  missing  the 
target  for  preparing  55%  of  municipal  waste  for 
reuse  and  recycling  by  2025.  Incineration  is  the 
predominant  method  of  waste  treatment 
in 
Sweden, accounting for 53% of all waste treated, 
while  less  than  1%  is  landfilled.  The  low  rates  of 
materials  prepared  for  reuse  and  recycling  are 
mainly  due  to  low  capture  rates  of  recyclables 
(182).  As  of  2027,  municipalities  are  mandated  to 
offer  property-close  collection  of  recyclables, 
which is expected to increase sorting rates.   

change  mitigation 

Despite  being  a  very  innovative  country, 
Sweden does not perform well on patents for 
climate 
technologies 
related to wastewater treatment or waste. It 
filed  only  four  applications  for  such  patents  in 
2021.  Despite  a  4%  increase  in  the  number  of 
people  employed  in  the  circular  economy  sector 
(183),  the  sector  only  accounted  for  1.5%  of  all 
employment  in  2023  (below  the  EU  average  of 
2%).   

Fiscal tools are in place to encourage circular 
practices, but there is room for improvement. 
Since  2000,  Sweden  has  a  landfill  tax  in  place, 
adjusted yearly. As of 1 January 2026, the tax rate 
is SEK 750/t (EUR 69/t equivalent). The landfill tax 
is  close  to  the  average  level  charged  by  the 
Member  States  that  apply  such  taxes.  There  is  a 
ban on landfilling residual or biodegradable waste, 
with  an  exemption  for  sorted  combustible  waste 
containing  less  than  18%  total  organic  carbon 
(TOC),  and  waste  containing  less  than  10%  TOC 
(184).  The  previous  tax  on  incineration  has  been 
removed.  

(180) Eurostat - Municipal waste by waste management 

operations, Link. 

(181)Idem. 

(182)Commission staff working document, The early warning 

report for Sweden, SWD(2023) 200 final of 8 June 2023, 
Link. 

(183)Eurostat, Persons employed in circular economy sectors, 

Link. 

(184) SEPA information provided during the Eionet review of the 

draft EEA country profile on waste management for Sweden, 
2024. 

 
 
 
Extended  producer  responsibility  applies  to 
packaging  waste  from  households  and  non-
households  and 
covers  all  packaging 
materials. Sweden applies a limited degree of fee 
modulation  based  on  recyclability  criteria  for 
paper,  cardboard  and  plastics  packaging.  To 
incentivise  sorting  at  source,  Sweden  has  fully 
rolled  out  pay-as-you-throw  systems,  mostly 
based  on  container  volume  and  collection 
frequency.  In  addition,  the  fee  for  biowaste  is 
lower  than  for  residual  waste  or  free  of  charge 
(185). 

in 

the 

investment 

Meeting  its  environmental  objectives  on  the 
circular  economy  and  waste  would  require 
additional 
circular 
economy  estimated  at  EUR 831  million  per 
year,  with  an  additional  EUR 71  million  for 
waste  management,  not  categorised  under 
the  circular  economy.  Combined,  this  amounts 
to EUR 902 million per year, representing 0.16% of 
Sweden’s  GDP.  This  circular  economy  investment 
gap  includes  EUR 217  million  to  fund  recent 
initiatives,  such  as  the  eco-design  for  sustainable 
products,  packaging  and  packaging  waste, 
labelling  and  digital  tools,  CRM  recycling  and 
measures  proposed  under  the  amended  Waste 
Framework Directive, and an additional investment 
need of EUR 613 million (186).  

Bioeconomy industry 

Between 2018 and 2023, the value added by 
the  bioeconomy  has  grown  by  1.3%  on 
average,  below  the  EU-27  average  of  5.1%. 
With  the  exception  of  the  bio-based  textiles 
manufacturing  sector,  which  grew  by  around  2% 
on  average  over  the  same  period,  all  other 
bioeconomy  subsectors  (187)  registered  a  decline 
between 2018 and 2023(188). Overall employment 
in  the  bioeconomy  has  fallen.  Similarly  to  value 
added,  among  the  bioeconomy  sub-sectors  of 

interest  (189),  only  bio-based  textiles  recorded  a 
different  trend  with  growth  in  total  employment 
between  2018  and  2023  (4.8%  on  average). 
Labour productivity in the bioeconomy – measured 
as  value  added  per  person  employed  –  reached 
94.6% of the national average and has decreased 
in  2018(190).  By  contrast,  R&D 
from  95.2% 
business  expenditure  from  bioeconomy-relevant 
sub-sectors has grown faster than the overall R&D 
business  expenditure  in  Sweden  (9.3%  compared 
to 4.5% on average between 2018 and 2023) (191). 

Sweden’s bioeconomy is defined by its world-
leading  wood  products  and  furniture  sector 
as  well  as  by 
innovative  technologies 
converting  cellulose  into  sustainable  fibres 
like  viscose  and  lyocell.  Sweden  is  currently 
elaborating  its  national  bioeconomy  strategy.  In 
addition,  the  country  participates  in  the  Nordic 
Bioeconomy bioeconomy initiative (192).  

Zero-pollution industry 

through 
tighter 

cleaner 
vehicle 

Over  the  past  decade,  Sweden  has  made 
in  reducing  key  air 
significant  progress 
pollutants 
energy 
generation, 
emission 
standards  and  improvements  in  industrial 
technology.  Emissions  of  several  air  pollutants 
have  decreased  significantly  in  Sweden  since 
2005.  Nonetheless,  the  European  Environment 
Agency (EEA) estimates that in 2023, 1 970 years 
of life were lost due to pollutants that exceed the 
air  quality  guidelines  (193).    According  to  the 
inventories  submitted  under  Article  10(2)  of  the 
Commitments 
National 
Directive  (194)  in  2024,  Sweden  has  met  its 
emission  reduction  commitments  for  2020-2029 
for  the  air  pollutants  nitrogen  oxides  (NOx),  non-

Reduction 

Emission 

(189) Joint Research Centre, Developments of Economic Growth 

and Employment in Bioeconomy Sectors across the EU, Link. 

(190) Ibid. 

(185) European Environment Agency (EEA), Early warning 

(191) Joint Research Centre, Business expenditure in Research and 

assessment related to the 2025 targets for municipal waste 
and packaging waste – Sweden, Link. 

Development (R&D) in the EU bioeconomy, Link. 

(192) The Nordic Bioeconomy Initiative, NordBio, Link. 

(186) European Commission, Environmental Implementation 

Review (2025), Sweden country report, Link. 

(187) Bioeconomy subsectors: food and beverages; bio-based 

textiles; wood products and furniture; bio-based chemicals 
and plastics. 

(188) Joint Research Centre, Developments of Economic Growth 

and Employment in Bioeconomy Sectors across the EU, Link. 

(193) EEA, 2025, Harm to human health from air pollution in 

Europe: burden of disease status, 2025, Link.   

(194) Directive (EU) 2016/2284 of the European Parliament and of 

the Council of 14 December 2016 on the reduction of 
national emissions of certain atmospheric pollutants, 
amending Directive 2003/35/EC and repealing Directive 
2001/81/EC, Link. 

62 

 
 
 
indirect  costs  of  EUR 192 million  a  year  (198),  and 
these  costs  are  not  yet  sufficiently  borne  by  the 
polluters.  

Sweden’s  investment  needs  for  pollution 
prevention  and  control  are  estimated  to 
reach  EUR 1.9  billion  per  year 
(including 
baseline  investments)  over  the  period  2021–
2027(199).  Most  of  this  need,  EUR 1.3  billion, 
relates  to  air  pollution  control  to  comply  with  the 
clean  air  requirements  for  the  five  main  air 
pollutants  under  the  National  Emission  Reduction 
by  2030.  Current 
Commitments  Directive 
investment  in  pollution  prevention  and  control  is 
estimated  at  EUR 866 million  per  year.  Therefore, 
to meet its environmental objectives towards zero 
pollution,  Sweden  needs  to  provide  an  additional 
EUR 1  billion  per  year  (0.18  %  of  GDP),  mostly 
related  to  investments  in  clean  air  and  in  noise 
reduction. 

methane  volatile  organic  compounds  (NMVOC), 
sulphur dioxide (SO2) and PM2.5, and has not met 
them  for  ammonia  (NH3).  Sweden  is  projected  to 
meet  its  emission  reduction  commitments  for 
2030  onwards  for  NMVOC,  SO2  and  PM2.5,  but 
not for NOx and NH3. 

improvements 

A recent OECD study (195) on the impact of air 
pollution  on  labour  productivity  suggests 
in  air  quality  have 
that 
contributed 
labour 
to 
significantly 
productivity  growth  in  Europe  since  2000  and 
could  contribute  further  to  future  economic 
growth. 
is 
estimated to have increased by 2% between 2000 
and 2020 due to a 3.7% reduction in PM2.5. 

labour  productivity 

In  Sweden, 

Water pollution from industry also remains a 
critical  challenge.  In  2022,  Sweden  had  the 
seventh  highest  level  of  emissions  of  heavy 
metals  to  water  (130 kg,  weighed  by  human 
toxicity)  and  ranks  sixth  on  emission  intensity  in 
the EU (1.57 kg/EUR 1 billion in gross value added 
(GVA)  against  the  EU  average  intensity  of  0.86). 
Progress  on  water  pollution  in  Sweden  includes  a 
34%  reduction  in  industrial  heavy  metal  releases 
(cadmium,  mercury,  nickel  and  lead)  and  a  21% 
reduction  in  total  organic  carbon  emissions  to 
water since 2010, as reported under the Industrial 
(196).  However,  no surface 
Emissions  Directive 
water  body  is  in  good  chemical  status  (see  the 
3rd river  basin  management  plans),  and  none  are 
expected  to  reach  good  chemical  status  by 
2027, mainly due to the ubiquitous persistence of 
two  bioaccumulative  and  toxic  (uPBT)  chemicals: 
mercury  and  polybrominated  diphenyl  ethers 
(PBDE).  Emissions  of  mercury  can  be  challenging 
to 
long-range 
atmospheric transport and deposition (197).  

their  sources: 

tackle  due 

to 

In  Sweden,  industry  generates  by  far  the 
biggest share of the cost of water pollution. 
Water  pollution  by  industry  imposes  direct  and 

(195) Dechezleprêtre A. & Vienne V, The impact of air pollution on 

labour productivity (EN), 2025, Link. 

(196) EEA, Water pollutant releases changes from 2010 to 2022 

for the EU Member States, 2024, Link. 

(197) Commission staff working document SWD (2025)22 

accompanying the Report from the Commission to the 
Council and the European Parliament on the implementation 
of the Water Framework Directive (2000/60/EC) and the 
Floods Directive (2007/60/EC), Link. 

(198) European Commission: Directorate-General for Environment, 

IEEP, Green taxation and other economic instruments, 
Internalising environmental costs to make the polluter pay 
(p. 48, Table 5), 2021, Link. 

(199) European Commission, Environmental Implementation 

Review (2025), Sweden country report, Link. 

63 

 
 
 
Table A8.1:  Key clean industry and climate mitigation indicators: Sweden 

Sources and notes: Industry decarbonisation: All data are from Eurostat; data following the UNFCCC Common Reporting 
Format (CRF) are from the European Environment Agency (EEA), republished by Eurostat. (1) Sectors covered: all divisions of 
section C - Manufacturing - of the NACE Rev. 2 statistical classification of economic activities, except C19 (manufacture of coke 
and refined petroleum products). (2) GHG emissions as per UNFCCC Common Reporting Framework (CRF) categories 1.A.2 - fuel 
combustion in manufacturing in industries and construction (that broadly correspond to the broadly correspond to the NACE 
sections C - Manufacturing and E - Construction, excluding C-19 and CRF2 - industrial processes and product use. The figures 
shows the emissions in the 1.A.2 category as a share of the sum of CRF1.A.2. and CRF2 emissions. (3) Sectors covered: CRF 1.A.2 
as described above. Gross value added (GVA) data in the denominator aligned in sectoral coverage, in 2020 prices. (4) Sectors 
covered: NACE section C excluding C19. (5) Nominator: NACE divisions C17, 20, 23, 24; denominator: NACE section C excluding 
C19 (see above). (6) GVA (denominator) in 2020 prices. Reduction of effort sharing emissions: Data source: European 
Environment Agency, greenhouse gas data viewer; European Commission, Climate Action Progress Report, 2025. For details, see 
the footnote in the "Reduction of effort sharing emissions" section. Sustainable road transport: (7) Source: Eurostat; (8) Source: 
European Alternative Fuels Observatory; (9) Source: Eurostat. For all climate mitigation indicators, the trend arrows compare the 
latest available data (year t) with the data four years earlier (t-4). Sustainable industry: Bioeconomy value added, employment 
and productivity: JRC, Developments of Economic Growth and Employment in Bioeconomy Sectors across the EU. Bioeconomy 
R&D business expenditure: JRC, Business expenditure in Research and Development (R&D) in the EU bioeconomy. Damage cost for 
industrial pollution: EEA, The costs to health and the environment from industrial air pollution in Europe, 2024. Water industrial 
pollutants releases: EEA, Industrial releases of pollutants to water and economic activity in the EU-27, 2024. Water chemical 
status: WISE, Surface water bodies: Chemical status, 2024 and WISE Groundwater bodies: chemical status, 2024. Other indicators: 
Eurostat. For circular economy indicators, the trend arrows compare the latest available data (year t) with the data two years 
earlier (t-2). 

64 

Climate mitigationTrendIndustry decarbonisation201820192020202120222023202420182023GHG emissions intensity of manufacturing production, g/€ (1)182194176166151163-330-Share of energy-related emissions in industrial GHG emissions (2)48.446.349.047.050.246.8-55.557.9Energy-related GHG emissions intensity of manufacturing and construction, g/€ (3)102.2103.499.989.780.186.4-203.9163.0Share of electricity and renewables in final energy consumption in manufacturing, % (4)79.780.580.579.879.880.681.942.843.9Energy intensity of manufacturing, GWh/€ (4)1.791.781.961.711.581.781.761.271.05Share of energy-intensive industries in manufacturing production, % in GVA (5)0.000.000.000.000.000.000.00--GHG emissions intensity of production in sector [...], g/€ (6)- paper and paper products (NACE C17) 280          278          259                 227            204                  386           -722             619            - chemicals and chemical products (NACE C20) ---------- other non-metallic mineral products (NACE C23) 2 068       1 678       1 733              1 680         1 540               2 000        -2 495          2 352         - basic metals (NACE C24) 1 159       1 507       1 153              1 693         1 700               2 453        -2 842          3 099         Reduction of effort sharing emissions201820192020202120222023202420182023GHG emission reductions relative to base year, % -32.8-37.0-38.0-29.4- domestic road transport-21.6-21.8-27.1-26.9-34.6-35.2-20.8-1.4-5.6- buildings-57.6-57.0-58.1-57.4-62.0-61.5-56.7-20.3-33.520052021202220232024TargetWEMWAMEffort sharing: GHG emissions, Mt; target, gap, %43.229.027.226.830.5-50.0%-44.9%-44.9%Sustainable road transport2018201920202021202220232024202520182021New zero-emission vehicles, electricity motor, % (7)1.964.309.5218.9532.9138.6334.921.038.96Number of publicly accessible AC/DC charging points (8)--143271842324357371665377862517446956n/aShare of electrified railways, % of total (9)75.3475.1075.0275.0275.0075.0975.1355.4756.49Sustainable industryTrendEU-27Circular economy transition20182019202020212022202320242018latest dataMaterial footprint, tonnes per person26.126.024.725.425.022.321.514.813.7Circular material use rate, %6.6            6.4           6.9                  9.5             12.1                  10.1           10.411.612.2Resource productivity, €/kg1.9            1.8           1.9                  2.1             2.1                    2.3             2.52.13.0Employees in circular economy1.5            1.61.5                  1.7             1.4                    1.5             -2.12.0Patents in circular economy17.4915.6         8.2                  3.7             12.312.0Recycling rate           45.8           46.6                  38.3             39.5                   39.7            39.4 46.1            46.4048.1Plastic recyling -------41%42%Construction and demolition waste (CDW) recovery 90-748889Bioeconomy industry 2018201920202021202220232024CAGR 2018-202320182023Value added, million EUR22 14121 84821 61725 22027 26523 910-1.3%642 438863 436Employment, total number of people employed292 925296 335295 427300 982287 779288 975--0.2%17 649 04017 085 642ProductivityValued added per worker, thousand EUR75.673.773.283.894.782.7-1.5%36.450.5Valued added per worker, % of national average95.291.588.992.4105.494.6--62.270.7R&D business expenditureTotal bioeconomy (biomass producing and converting sectors)5766087148569569839.3%15 67223 335Total R&D business expenditure11 09111 58312 13313 32814 10514 472-4.5%196 587259 525Zero pollution industry201820192020202120222023202420182021Damage cost for industrial pollution6.76.56.06.3---414.9352.7Water industrial pollutants releases 2021change (2010)2021change (2010)2021change (2010)2021change (2010)5 770       -34%7 913 555       -16%483 613           -21%290 100      -9% Water chemical statusGood-                  Good (%)-                   Poor23814.0Poor (%)100%EUTOCPhosporusSwedenSwedenCd, Hg, Ni, Pbnitrogen 
 
  
 
ANNEX 9: AFFORDABLE ENERGY TRANSITION 

This  annex  outlines  the  progress  made  and 
improving 
ongoing  challenges  faced 
energy  affordability,  while  advancing  the 
energy transition towards net zero.  It reflects 
the  implementation  of  the  past  energy-related 
country-specific recommendations (CSRs). 

in 

In  2025  Sweden  made  limited  progress  in 
installing  renewable  energy  capacity  and 
improving  energy  efficiency.  Accelerating  and 
streamlining  permitting  procedures  for  deploying 
renewables,  particularly  for  offshore  and  onshore 
wind  energy,  remains  a  priority.  Topics  requiring 
further  attention  include:  investments  in  grid 
infrastructure  and  network  capacity;  tapping  the 
full  potential  of  energy  efficiency;  and  increasing 
market  surveillance  of  products  with  eco-design 
and energy labelling. 

Energy prices and costs 

retail  prices  vary  markedly 
Electricity 
between  bidding  zones  amid  high  volatility 
but  remained  below  the  EU  average.  In  the 
first  half  of  2025,  average  household  electricity 
prices  in  Sweden  increased  yet  remained  below 
the  EU  average,  at  EUR  0.2654-kWh.  However, 
household  gas  prices  increased  significantly  and 
average 
remained 
levels,(200)EUR 0.2128/kWh, the highest in the EU . 
Similarly, non-household final user gas prices have 
increased since 2024 and remained the highest in 
the  EU,  while  industrial  electricity  prices  have 
stabilised,  staying  well  below  EU  levels,  being the 
second lowest in the EU. Importantly, final energy 
prices  in  Sweden  in  the  first  half  of  2025  stayed 
similar for all.  

above 

well 

EU 

(200)Source: Eurostat. 

65 

Graph A9.1: Electricity and gas prices for 
household and non-household consumers, first 
half of 2025 

(i) For household consumers, the consumption band is DC for 
electricity and D2 for gas. 
(ii) For non-household consumers, the consumption band is ID 
for electricity and I4 for gas. VAT and recoverable charges are 
not displayed for non-household consumers as these are 
typically recovered by businesses. This also applies to the ‘% 
of taxes and levies’, which is shown excluding VAT and 
recoverable charges for non-household consumers. 
(iii) ‘Without taxes and levies’ indicates the retail price 
excluding all taxes and levies. It always includes the 
energy/supply and network cost components, which are not 
disaggregated in Eurostat’s six-monthly price dataset. 
Source: Eurostat 

For large corporations, electricity prices were 
nearly  as  high  as  average  gas  prices,  and 
taxes  and  levies  accounted,  on  average,  for 
1% of electricity bills but represented nearly 
34% of gas bills. Excluding taxes and levies, the 
electricity-to-gas price ratio would  have signalling 
an offsetting(201).  

Owing  to  a  full  share  of  clean  energy  in  its 
electricity  mix,  with  renewables  providing 
over  72.4%,  Sweden  had  the  EU’s  second-
lowest  wholesale  electricity  prices.  The 
in  2025(202), 
country  averaged  EUR 44/MWh 
compared  with  an  EU  average  of  EUR 85/MWh. 
Average  day-ahead  electricity  prices  in  Sweden 
increased  by  18%  in  2025  influenced  by  rising 
natural  gas  costs(203).  The  effect  of  the  latter  on 
electricity  prices  was  mitigated  by  Sweden’s 

(201) Eurostat data from the first half of 2025. 

(202)Source: Ember. 

(203) Short-run marginal costs (SRMCs) are the sum of the variable 
costs associated with producing electricity using hard coal 
and fossil gas. These are fuel costs, carbon costs and 
variable operating and maintenance costs. Estimates are 
provided by Ember. 

 
 
 
 
 
 
 
growing  penetration  of 
renewables.  Sweden 
remains, however, vulnerable to price spikes during 
is  partly  reflecting 
peak-demand  hours.  This 
limited  non-fossil  flexibility,  and 
largely  grid 
bottlenecks and large transmission distance which 
with  higher  demand  leads  to  a  costly  increase  in 
other energy sources that determine prices at the 
margin in order to cover supply–demand gaps. As 
a  result(204)  in  Sweden  price  spreads  averaged 
EUR 67/MWh  in  2025,  a  30%  increase  compared 
to 2024. 

tax 

the 

throughout 

government 
In  September  2025 
introduced the following measures to protect 
customers  from  high  electricity  prices: 
reduced  electricity 
the 
country  by  9.875  öre  (including  VAT,  which 
entered into force as of 1 January 2026) and 
high-cost  protection  against  high  electricity 
prices for households during the period from 
November  2025  and  throughout  2026.  The 
high-cost protection will apply if the average spot 
price  of  electricity  during  a  month  exceeds 
SEK 1.5/kWh in a bidding area (205). 

Graph A9.2: Low-carbon electricity generation vs. 
electricity wholesale prices, 2025 

Flexibility and electricity grids 

introducing 

Sweden  has  not  set  a  national  quantified 
objective for flexibility. However, it has clear 
objectives  for  non-discrimination  of  demand 
response, storage and flexibility. To this end, it 
is 
non-
discriminatory  participation  of  new  flexibility 
services and developing an aggregator framework 
in order to boost demand-side participation in the 
energy  market  and  comply  with  the  requirements 
of the Clean Energy Package. 

policies 

enable 

that 

Sweden is further developing energy markets 
at  regional  level  for  balancing  services, 
which  would  allow  more  types  of  resources 
and  stakeholders  to  participate  in  trade. 
Legislation  also  allows  electricity  grid  companies 
to  pilot  smaller-scale  tariff  plans  to  stimulate 
more efficient grid use through demand response. 
A  dialogue  forum  explores  ways  to  develop 
regulatory  frameworks,  enabling  aggregators  to 
offer  flexibility  and  support  services  in  a  well-
functioning market. 

the  EU’s  2030 

The  Swedish  electricity  system  reached 
15.5%  interconnectivity  in  2025,  thereby 
reaching 
for 
interconnection capacity. Compared to previous 
years, the availability of both AC and DC capacities 
increased.  This  is  in  line  with  Sweden’s  new 
transmission investments and renewal of parts of 
the existing transmission network. 

target 

Unavailable data for Cyprus and Malta. Wholesale price is 
given as average of day-ahead electricity prices over 2025. 
EU-27 average is calculated as consumption-weighted. EU 
low-carbon share is calculated out of total EU electricity 
generation. Low-carbon share by country is calculated out of 
total public electricity generation. Low-carbon includes 
renewables and nuclear. 
Source: Eurostat 

According  to  its  network  development  plan 
for  2026-2035,  Svenska  kraftnät, 
the 
transmission system operator (TSO), plans to 
increase  work  on  both  new  investments  and 
reinvestment  in  the  grid  over  the  next 
decade.  This  includes  2 900 kilometres  of  new 
lines  and  about  40  new  stations  brought  into 
operation.  In  addition,  it  will  reinvest  in  around 
1 100 km  of  lines  and  half  of  its  approximately 
200  substations.  Investments  are  expected  to 
increase  sharply  in  the  coming  years  and  to 
amount to approximately SEK 20 billion per year in 
2026 and 2027. 

(204)‘Spread’ refers to the difference between the highest and 
lowest hourly day-ahead electricity prices in a single day.  

(205) Mer pengar i plånböckerna – Regeringen.se and PowerPoint 

presentation of the measures introduced. 

Sweden has two projects of common interest 
for  electricity:  the  Aurora  Line  and  Aurora 
Line 2 connections to Finland. The Aurora Line 
connecting  Messaure  in  Sweden  to  Pyhänselkä  in 

66 

 
 
 
 
in  November  2025, 
increasing 
significantly,  by  up 

Finland, which was completed in 2025 and put into 
is  a  400 kV 
operation 
cross-border 
transmission 
electricity 
to 
1 900 MW, 
deepening 
cooperation  between  neighbouring  countries  and 
increasing the EU system’s efficiency. 

line 
capacity 

directions, 

both 

in 

Sweden  is  currently  assessing  the  potential 
for  grid  extension  and  updates  to  reduce 
internal  congestion.  The 
inclusion  of  new 
electricity projects of common interest (PCIs) in the 
second  Union  list  reflects  these  needs.  They 
involve,  in  particular,  projects  increasing  cross-
border 
internal 
bottlenecks. 

capacity  and 

relief 

from 

Sweden  applies  locational  generation  tariffs 
reflecting  grid  usage  and  is  reforming  its 
cost-allocation  framework  from  2027  to 
improve  efficiency  and  support  system 
integration. The increasing incidence of negative 
[wholesale]  prices  and  renewable  curtailment 
highlights the need to complement grid expansion 
with additional flexibility solutions that, ideally, are 
to  ensure  that  price  signals  are  consistent  with 
incentives  to  optimise  network  capacity  use. 
communicating 
identifying  and 
Furthermore, 
geographical  areas  suitable  for  new  connections, 
for  both  production  and consumption,  can  lead  to 
priority investments. 

Challenges  to  energy  system  integration  are 
presented mainly by the need to have a more 
efficient permitting process to construct and 
connect  to  the  grid  and  the  introduction  of 
storage  and 
services.  Grid 
flexibility 
connection waiting times currently vary in Sweden: 
if  connection  is  possible  at  a  current  grid  station, 
the lead time is usually 3-4 years. If a new station 
is  required,  however,  the  lead  time  is  5-7  years. 
The  RES  (renewable  energy  source)  curtailment 
was  equal  to  35 462.78 GWh  in  2025.    Sweden 
does  not  have  specific  national  objectives  for 
market integration  but  is continuously  working  on 
and  developing  market  integration  measures  and 
participates in Nordic cooperation in this area. 

prices in recent years has shown the importance of 
increased  flexibility  for  end  users.  Price  volatility, 
transmission  bottlenecks  and  an 
increasing 
incidence  of  negative pricing  in  the  country’s  four 
bidding  zones  (SE1  and  SE2:  434;  SE3:  429;  and 
SE4:  368)  highlight  the  need  to  make  the  system 
more resilient. 

Sweden is further developing energy markets 
at  regional  level  for  balancing  products, 
which  should  allow  more  types  of  resources 
and  stakeholders  to  participate  in  them. 
Current  legislation  already  allows  electricity  grid 
companies 
to 
to  pilot  smaller-scale 
stimulate more efficient grid use through demand 
response. 

tariffs 

to  make 

An  electricity  market  review  of  the  legal 
framework  for  balance  responsibility  was 
concluded  in  April  2025.  The  review  was 
legislation  future-proof, 
undertaken 
enable  operations  of  new  actors  and  allow  new 
intermittent 
pending 
implementation of the review’s recommendations, 
EU  regulations,  such  as  those  on  balance  service 
supply / balancing service providers (BSPs) are not 
yet in place. While most of the review’s proposals 
may be considered technical, a political agreement 
must be reached in parliament before the progress 
made in this field can be assessed. 

However, 

energy. 

taken  up 

In  the  retail  market,  Sweden  is  advanced  in 
terms  of  empowering  consumers  as  their 
uptake  of  dynamic  and  flexible  electricity 
pricing  contracts  stands  at  86%  (of  which 
dynamic-pricing 
14%  have 
contracts,  56%  average  monthly  spot-price 
contracts and 14% other types of contracts). 
Consumers  can  also  take  advantage  of  cost 
savings from non-fixed pricing. For this, consumer 
activation  remains  fairly  stable,  with  a  slight 
decrease  from  just  below  11%  in  2024  to  9%  in 
2025. 

There  are  no  regulated  price  measures  in 
force  in  Sweden.  Consumers  can  benefit  from 
smart metering as the roll-out is 100%. 

In  2025  the  country  had  one  of  the  lowest 
rates of storage capacity in Europe, with only 
47 operational projects producing 0.84 GW of 
operational  storage  capacity  and  another 
1.62 GW  of  capacity  announced  or  under 
construction.  The  volatility  of  Swedish  energy 

Sweden  is  also  one  of  the  Member  States 
with  the  highest  share  of  heat  pumps 
installed,  at  more  than  30%.  However,  the 
proportion  of  household  prosumers  (consumers 
who both produce and consume energy) in Sweden 
corresponds  to  the  EU  average  (around  5%  of  all 

67 

 
households).  There  are  191  projects  that  may  be 
considered to be energy communities. However, no 
specific initiatives have been identified that enable 
and  support  frameworks  for  renewable  energy 
communities  and  citizen  energy  communities,  as 
laid  down  in  the  Renewable  Energy  Directive  and 
the  Internal  Electricity  Market  Directive,  nor  are 
there  any  programmes  or  incentives  to  promote 
them. 

Sweden  is  one  of  the  few  Member  States  to 
provide  comparison  tools  that  meet  all  the 
legal  requirements,  including  full  market 
coverage and dynamic contract comparison. 

having significant untapped potential to achieve a 
higher  share  of  renewables  by  2030,  for  both 
onshore and offshore wind power. 

permit-granting 

Sweden  has  put  in  place  several  reforms  to 
procedures, 
facilitate 
including  a  one-stop  shop  for  renewable 
energy  projects  in  line  with  the  Renewable 
Energy  Directive.  The  country  aims  to  further 
improve  permitting  through  the  digitalisation  of 
administrative procedures. Additionally, it plans to 
designate  acceleration  areas  to  facilitate  wind 
power  projects,  which  have  faced  significant 
challenges recently.  

In  2024,  electricity  accounted  for  33.4%  of 
Sweden’s  final  energy  consumption,  above 
the EU average of 23.4%, and this share has 
increased  slightly  in  the  past  decade (206). 
When it comes to households, electricity  accounts 
for  48.9%  of  final  energy  consumption,  while  in 
industry  it  represents  34.5%  (see  also  Annex  8). 
For  the  transport  sector,  this  share  remains 
negligible, 
in 
electrification across sectors is required in order to 
cost-effectively  decarbonise  the  economy  and 
bring 
renewable 
generation to consumers. 

the  benefits  of  affordable 

at  6.3%. 

progress 

Further 

Renewables and long-term contracts 

In  2025  Sweden  made  limited  progress  in 
accelerating  the  deployment  of  renewables. 
In 2025, the share of renewables in electricity mix 
reached  72.4%,  well  above  the  EU  overall  RES 
share of 45%, and 2% increase from the previous 
year.  In  2025,  total  renewable  energy  capacity 
installed was 42,9GW (a 3% increase from 2024). 
Wind capacity and solar capacity installed in 2025 
were 562 MW and 652 MW respectively. 

In  its  final  national  energy  and  climate  plan 
(NECP),  Sweden  proposed  a  67%  share  of 
renewable  energy  as  its  contribution  towards  the 
is 
2030  EU 
significantly below the required level  laid down in 
the Governance Regulation (76%), despite Sweden 

renewable  energy 

target.  This 

in 

changed 

In  2025  the  government  took  the  following 
steps  to  address  the  municipal  veto  that 
hampers the uptake of wind energy projects: 
introducing  of  financing  incentives  focusing  on 
income-sharing  models  for  nearby  residents  and 
introducing  incentives  for  municipalities  hosting 
wind projects with budget allocated for 2025 and 
2026. However, so far, no compensation has been 
terms  of 
paid,  and  nothing 
achievements  in  new  wind  investments  during 
2025.The  figures  for  2025  show 
the 
proportion  of  vetoes  from  municipalities  for  new 
wind  power  projects  increased  from  previous 
years.  In  2025,  93%  (43  out  of  46)  of  onshore 
wind  power  projects  were  stopped  by 
the 
municipalities.  Between  2021  and  2024,  an 
average  of  68%  of  projects  were  vetoed  by 
municipalities(207). In 2025 alone the municipalities 
stopped  26  out  of  29  wind  projects.  This 
corresponds to 346 out of 359 wind turbines that 
to 
together  would  have  had 
contribute 7.3 TWh. 

the  potential 

that 

Sweden has an active and mature market for 
power  purchase  agreements  (PPAs),  based 
mostly  on  hybrid  and  wind  generation 
installations,  with  some  solar  photovoltaic 
projects.  The  dynamism  of  this  market  depends 
on  the  existence  of  a  healthy  pipeline  of 
renewable  energy  projects  and  on  expanding 
access to the market to include smaller entities. 

In  2023,  electricity  accounted  for  33.2%  of 
Sweden’s  final  energy  consumption,  above 
the  European  Union  average  of  22.9%,  and 

(206)CAGR (compound annual growth rate) of −0.24% between 
2015 and 2024 and minimum/maximum share of 33.3% 
and 34.7% respectively (source: Eurostat). 

(207)Data from Green Power Sweden study: Nästan all vindkraft 

stoppades av kommunerna 2025 – Green Power Sweden. 

68 

 
 
 
 
in 

industry 

this  share  has  increased  slightly  in  the  past 
decade.  When  it  comes  to  households,  electricity 
accounts  for  48.2%  of  final  energy  consumption, 
while 
represents  33.8%.  For 
transport,  this  share  remains  low,  at  just  below 
68%.  Further  progress  in  electrification  across 
sectors  is  required  in  order  to  cost-effectively 
decarbonise the economy and bring the benefits of 
affordable renewable generation to consumers. 

it 

Graph A9.3: Sweden’s installed renewable capacity 
vs electricity generation mix 

Electricity mix is given as net electricity generation (gross 
electricity production minus consumption of power stations’ 
auxiliary services). Electricity produced in pumped hydro 
plants is excluded from total net electricity production, as it 
was previously counted as electricity produced from another 
source. 
“Other” includes renewable municipal waste, solid biofuels, 
liquid biofuels, and biogas. 
Source: IRENA, Eurostat 

Sweden  is  planning  to  expand  its  nuclear 
power  capacity  as  part  of  its  efforts  to 
achieve energy independence. In 2024, nuclear 
power  accounted  for  nearly  25%  of  electricity 
generation,  with  six  operational  reactors.  Sweden 
plans  to  construct  two  large-scale  reactors  by 
2035  and  the  equivalent  of  10  new  reactors  in 
total,  including  small  modular  reactors,  by  2045. 
Since  1 August  2025,  companies  seeking  to  build 
nuclear  reactors  can  apply  for  financial  support 
from 
to 
investments  of  up  to  a  total  installed  capacity  of 
approximately  5 000 MW,  which  is  equivalent  to 
four 
reactors.  The  2026  budget 
incorporates  frameworks  that  enable  agreements 
on the terms for loans for investments in nuclear 
power  and  two-sided  price  hedging  agreements 
(contracts for difference) within those frameworks. 
Agreements can be concluded in 2026 and 2027. 

the  state.  The  support 

large-scale 

limited 

is 

Energy efficiency 

Sweden  has  made  no  progress  in  energy 
efficiency. In 2024 final energy consumption 
(FEC)  increased  by  0.7%,  compared  to  2023, 
to  30.36 Mtoe,  reversing  the  slight  decline 
since 2019. Sweden FEC in 2024 is thus slightly 
unaligned  with  the  trajectory  to  its  expected 
contribution in 2030. 

(− 5.0%), 

While  in  the  medium  term  since  2019  FEC 
has  decreased  slightly  in  services  (− 3.9%) 
and  the  residential  sector 
in 
industry  it  has  increased  and  in  transport  it 
(+ 3.0%  and  –  6.0% 
has  decreased 
respectively).  Between  2019  and  2024,  final 
energy  consumption 
residential  buildings 
in 
decreased by 5%. This decrease was driven mostly 
by  improvements  in  buildings  and  an  increase  in 
the number of heat pumps, in particular in single-
family buildings. 

Sweden is on track to meet the objective, set 
in its 2020 long-term renovation strategy, of 
a  7%  reduction 
in  energy  consumption 
between 2020 and 2030. The fact that 36% of 
the  energy  consumed  in  the  country  is  used  in 
buildings  highlights  the  importance  of  Sweden’s 
draft  national  building  renovation  plan,  submitted 
in May pursuant to the recast EPBD, and which will 
ensure  a  clear  and  predictable  pathway  towards 
an  energy-efficient  and  decarbonised  building 
stock. 

final 

residential 

Heating  and  cooling  account  for  73%  of  the 
country’s 
energy 
consumption, with renewables supplying 67% 
of  the  total  energy  used  for  heating  and 
cooling  in  all  sectors.  Around  145 000  heat 
pumps  were  sold  in  2024,  a  decrease  of  24% 
compared  to  the  previous  year,  taking  the  total 
stock  of 
to  around 
installed  heat  pumps 
2.4 million.  Heat  pumps  are  very  common  in 
single-family houses, 65% of which already had a 
heat  pump  in  2022(208).  Financial  support  for 
energy  efficiency  improvements  in  single-family 
buildings,  which  was  introduced  in  2023,  will  be 

(208)Swedish Energy Agency,   2025 energy indicators. 

69 

 
 
 
electricity  and  gas  costs  from  January-
February  2026.  Sweden  is  also  participating  in 
the  IEA's  oil  stock  release  and  has  increased 
funding  for  electric  vehicle  purchases  for  low-
income households. 

Fossil fuel subsidies 

In  2024,  environmentally  harmful (211)  fossil 
fuel  subsidies  without  a  planned  phaseout 
before  2030  represented  0.13% (212)  of 
Sweden’s GDP (213). Additionally,  Sweden’s 2023 
effective carbon rate (214) averaged EUR 89.69 per 
tonne  of  CO₂  –  above  the  EU  weighted  mean  of 
EUR 84.80 (215). 

extended until  2030 and focus specifically  on  the 
worst-performing buildings (209). 

In  district  heating  the  percentage  of  coal  is 
very  low  and  has  been  under  2%  of  input 
energy  used  on  the  production  of  district 
heating  for  the  past  five  years.  Use  of 
renewable  sources 
is  extensive  and  biomass 
represents over 60% of input energy. In particular, 
Sweden  has  the  highest  share  of  renewables  in 
heating and cooling among the EU countries (210). 

Sweden  reported  18  eco-design  and  energy 
labelling  checks  in  2025.  This  was  better  than 
in  previous  years,  yet 
insufficient  given  the 
country’s size and the EU’s overall non-compliance 
levels. 

Security of supply and diversification 

Overall,  Sweden’s  energy  mix  in  2024  was 
highly  reliant  on  renewables  and  biofuels 
(47.1%)  and  on  nuclear  (24.9%).  Sweden 
does  not import  Russian  gas  and  40% of its 
pipeline  gas  is  biomethane.  The  aim  is  to 
further increase its share of biomethane and LBG 
and  the  market  has  set  a  target  of  100%  biogas 
by 2030. 

Security of supply is based largely on nuclear 
and  on  the  new  interconnection  with  the 
Aurora Line and the future Aurora Line 2. 

The  deployment  of  multiple  of  Small  Modular 
Reactors  SMR  projects 
remains  challenging, 
requiring  a  predictable  financing  environment 
within the  liberalised  market.  Success  will depend 
on 
streamlined 
licensing, and enhanced cross-border cooperation 

coordinated 

chains, 

supply 

In  response to  rising  energy prices  following 
the regional crisis in the Middle East, Sweden 
has  reduced  petrol  and  diesel  taxes  to  EU 
Energy Taxation Directive minima (1 May-30 
September  2026)  and  introduced  ex-post 
cash  support  for  households  to  cover  high 

(209)Bidraget för energieffektivisering i småhus förlängs och   

utvecklas – Regeringen.se. 

(210) Small increase in renewable heating & cooling in 2024 – 

(211) Explicit fossil fuel subsidies (e.g. direct transfers) and implicit 
fossil  fuel  subsidies  (i.e.  tax  expenditures  linked  to  forgone 
tax  revenues  that  have  an  identifiable  fiscal  impact  for  the 
central  budget)  that  support  fossil  fuel  energy  production, 
transmission and/or consumption”.  

(212) European  Commission  calculation  based  on  underlying  data 
from  the  Study  on  energy  subsidies  and  other  government 
interventions in the EU – 2025 edition, Enerdata. 

(213) 2024 gross domestic product at market prices, Eurostat. 

(214) The  effective  carbon  rate  is  the  sum  of  carbon  taxes,  ETS 
permit  prices  and  fuel  excise  taxes,  representing  the 
aggregate effective carbon rate paid on emissions. 

News articles – Eurostat. 

(215) OECD (2024), Pricing Greenhouse Gas Emissions 2024. 

70 

 
 
 
ANNEX 10: CLIMATE ADAPTATION, PREPAREDNESS AND ENVIRONMENT 

Sweden’s  carbon  removals  are  falling  short 
of  its  2030  EU  target  for  LULUCF,  and  the 
country  also 
faces  environmental  and 
climate-related  challenges,  including  nature 
increasing  exposure  to 
degradation,  and 
climate change impacts. Despite a strengthened 
climate  adaptation  framework,  national  funding 
has not kept pace with growing needs for climate 
adaptation against climate-induced events such as 
floods or rising sea levels and droughts. Sweden's 
carbon  removals  target  for  2030  is  at  risk,  with 
the  country’s  carbon  sink  having  shrunken  over 
time, driven by harvesting pressures, ageing forest 
stock, and climate-induced stressors such as bark 
beetle  infestations  and  drought.  Eutrophication, 
hydropower  pressures,  ageing  water  supply 
infrastructure  and  high  PFAS  levels  in  drinking 
water 
situation. 
the 
Eutrophication  due  to  excessive  nutrient  loads 
from  agriculture  and  from  small  and  non-
connected sewage systems affects surface waters, 
including  the  Baltic  Sea,  and  is  a  threat  to 
biodiversity  and  ecosystem  integrity.  Hydropower 
is  the  most  extensive  pressure  on  lake  and  river 
water  bodies  in  Sweden.  The  country’s  water 
supply infrastructure is impacted by  ageing pipes, 
underinvestment and increasing demand, requiring 
major upgrades and modernisation.  

aggravate 

overall 

Climate adaptation and preparedness 

the 

rapid 

remains 

 Sweden  is  increasingly  exposed  to  climate 
change impacts, which will require significant 
investments  across  a  range  of  policies.  Its 
main  challenge 
rate  of 
temperature  rise,  which is  nearly  twice  the  global 
average.  Since  the  mid-1800s,  Sweden  has 
experienced  an  average  temperature  increase  of 
1.9 °C. The country is exposed to floods, rising sea 
levels,  heatwaves,  and 
landslides,  which  are 
increasingly  affecting  infrastructure,  agriculture, 
and human health(216).  If current levels of coastal 
protection  are  not 
raised,  direct  economic 
damages and social impacts from coastal flooding 
in  Sweden  are  projected  to  rise  sharply  this 
century.  The  cost  of  investments  in  sustainable 
infrastructure  and  climate  adaptation  amounts  to 

(216) Swedish Government, 2024, Regeringens skrivelse 

2023/24:97, Nationell strategi och regeringens handlingsplan 
för klimatanpassning, Skr. 2023/24:97. Link 

71 

several  hundred  billion  SEK.  A  recent  study 
estimates  that  Sweden  will  need to invest  almost 
EUR 3.6  billion  per  year  up  to  2050  (0.5%  of 
annual  GDP):  first  and  foremost  in  ecosystems 
restorations 
(more  than  47%  of  the  total), 
retrofitting  and 
followed  by 
reinforcement  (around  35%  of  the  total)  and 
health (around 12(217)). 

infrastructure 

Sweden has further strengthened its climate 
adaptation  framework  at  all 
levels  of 
government.  However,  while  the  division  of 
labour is becoming clearer, the financial burden is 
a growing concern, primarily affecting regions and 
municipalities.  The  national  adaptation  strategy 
(NAS), originally implemented in 2018, was revised 
and  updated  in  2024.  Furthermore,  the  2018 
Climate  Adaptation  Ordinance  mandates  that 
national  authorities  and  County  Administrative 
Boards 
their  core 
the  principal 
operations.  Municipalities  have 
responsibility  for  local  implementation  and  land-
use  planning, 
the  built 
environment  from  flooding  and  erosion.  Regions 
and  County  Administrative  Boards  serve  as 
regional  coordinators,  providing  support  and 
aligning local efforts with national goals(218). 

integrate  adaptation 

including  protecting 

into 

lack  of  growth 

Despite  these  clear  mandates  and  the 
requests  from  municipalities  for  increased 
financial  support,  the  2026  government 
budget for adaptation measures remains the 
same  (219).  This 
in  funding 
complicates the ability of local authorities to move 
from  planning  to  large-scale  physical  protection 
measures.  Sweden  also  uses  EU  funding  streams 
to  enhance  resilience,  including  the  European 
(ERDF)  and  the 
Regional  Development  Fund 
Facility 
Resilience 
Recovery 
(RRF), 
and 
(220)"protection 
nature"  which 
valuable 
the 
contributes 
subnational 
its 
support structures for regional adaptation and is a 

to  ecosystem 
resilience.  At 
level,  Sweden  has  expanded 

of 

(217) European Commission (2026), Assessment of adaptation 

investment needs, Table 25, Link. 

(218) Swedish Government, 2024, Regeringens skrivelse 

2023/24:97, Nationell strategi och regeringens handlingsplan 
för klimatanpassning, Skr. 2023/24:97. Link 

(219) European Commission, 2025, Commission staff working 

document, 2025 Country Report - Sweden, SWD(2025) 227 
final. Link 

(220) Sweden’s Recovery and Resilience Plan - Link 

 
 
 
 
 
the 

country’s 

highly  active  participant(221)  in  the  EU  Mission  on 
Adaptation  to  Climate  Change.  Of  the  311  EU 
regions  and  local  authorities  participating  in  the 
Mission,  8  are  Swedish,  including  representatives 
from 
three  most  populous 
municipalities(222). Additionally, 18 cities and towns 
per  country  that  are  part  of  the  Covenant  of 
Mayors,  representing  2.6  million  citizens,  about 
25% of the Swedish population. Of those, 83% of 
signatories  have  submitted  a  2030/2050  Action 
Plan (223). 

threat 

Climate  risks  continue  to  directly  impact 
Sweden’s society and economy. Between 1980 
and  2024,  Sweden  recorded  EUR 3.9  billion  in 
losses(224)  caused  by  weather  and 
economic 
these 
climate-related  extreme  events.  While 
developments  pose  a  significant 
to 
vulnerable  groups,  Sweden’s  overall  climate-
related  human  and  economic  costs  remain  low 
relative  to  the  EU  average.  Between  1980  and 
2024,  there  were  927  recorded  fatalities  due  to 
such  events,  the  ninth  lowest  in  the  EU(225). 
Sweden’s  economic  losses  during  this  timeframe 
represent  approximately  0.5%  of  the  EU’s  total 
climate-related  losses,  with  26%  of  those  losses 
covered  by  insurance.  This  constitutes  the  third 
lowest  level  of  economic  losses  per  capita  in  the 
EU, after Estonia and Luxembourg. Sweden shows 
an  above  average  rate  of  insurance  coverage 
against  weather-  and  climate-related  extreme 
events in the EU (26% vs 19% for EU27) (226) . The 
Financial  Supervisory  Authority  has  conducted  in-
depth analyses to monitor how escalating extreme 
weather  risks  may  impact  consumer  insurance 
coverage and affordability. 

Systematic  climate  proofing  of  critical 
infrastructure is still not operational. Sweden 
has  mandated  climate  adaptation  across  national 
authorities  since  2018,  but  systematic  climate 
proofing  across  sectors  is  still  transitioning  from 
planning  to  large-scale  physical  implementation. 

(221) EU Mission on Adaptation to Climate Change - link. 

(222) EU Covenant of Mayors - link. 

(223)EU Covenant of Mayors - Link. 

(224) ECB, EIOPA (2024), Towards a European system for natural 

catastrophe risk management, Link. 

(225) ECB, EIOPA (2024), Towards a European system for natural 

catastrophe risk management, Link.  

in 

(0.38 

transport 

(TEN-T)  network 

Sweden  has  assessed  the  energy  sector  as 
vulnerable  to  changing  hydrological  patterns  and 
extreme  weather  risks  to  hydropower  generation 
from  seasonal  water  shifts  and  potential  threats 
to  nuclear  cooling  systems  during  extreme 
heatwaves  and  droughts.  Municipalities  alone 
estimate that  they  require  an  estimated  SEK 2  to 
3  billion  annually  to  protect  local  infrastructure 
from  flooding  and  rising  sea  levels.  Similarly,  the 
in 
trans-European 
Sweden  has  been  identified  in  the  medium  range 
of  vulnerability(227)  geohazard 
the 
Transport Vulnerability Index, where 0.40 would be 
high  vulnerability),  such  as  landslides  in  the  Göta 
älv(228)  adaptation  gaps in  land-use  planning  with 
infrastructure  goals(229).  While  winter 
national 
storms  and  snow  were  historically  the  primary 
threats, future risks are increasingly dominated by 
extreme precipitation and heatwaves that threaten 
rail  stability  and  road  integrity.  The  highest  costs 
are  expected  for  protecting  the  built  environment 
and transport corridors from floods and landslides, 
with  annual  damage  costs  to 
infrastructure 
estimated to reach several billion SEK if no action 
is taken(230). Estimates show that a total of EUR 4 
billion will need to be invested until mid-century in 
TEN-T,  mostly 
(EUR 1 550 
million) and roads (EUR 394 million). Sweden also 
reported the second-highest investments in TEN-T 
adaptation among 136 million until 2035. 

in  maritime  ports 

There  is  significant  scope for  Sweden to  tap 
into nature-based solutions more widely and 
systematically.  Nature-based  solutions  and 
prevention  play  a  key  role  in  protecting  Sweden’s 
biodiversity and built environment from increasing 
climate  risks.  So  far,  nature-based  solutions  have 
not been deployed at a large scale across sectors 
in Sweden and remain largely project-based. They 
are  mostly  applied  in  specific  contexts  such  as 
coastal protection and flood management, for the 
LIFE  Coast  Adapt  project,  which  focuses  on  using 

(227) European Commission, 2024, Support study on the climate 

adaptation and cross-border investment needs to realise the 
TEN-T network, Publications Office of the European Union, p. 
69. Link. 

(228) Swedish Government, 2024, Regeringens skrivelse 
2023/24:97, Nationell strategi och regeringens 
handlingsplan för klimatanpassning, Skr. 2023/24:97. Link 

(229) Swedish Government, 2024, Regeringens skrivelse 
2023/24:97, Nationell strategi och regeringens 
handlingsplan för klimatanpassning, Skr. 2023/24:97. Link 

(226) EEA, 2025, Economic losses from weather- and climate-

(230) European Commission, 2026, Assessment of adaptation 

related extremes in Europe, Link. 

investment needs, Link 

72 

 
 
 
nature-based  techniques  like  restoring  dunes  and 
wetlands to protect against erosion and rising sea 
levels(231). 

Water resilience 

Sweden possesses vast water resources, but 
climate change creates challenges. Half of the 
country’s  local  water  supplies  come  from  surface 
water,  i.e.  from  lakes  and  running  watercourses. 
The  other  half  comes  from  groundwater.  The 
consequences of climate change for drinking water 
supply are considerable, including drought-induced 
scarcity, particularly in southern regions(232). 

It  follows  from  the  assessment  of  the  third 
river  basin  management  plans  (RBMPs)  that 
there  has  been  a  minor  improvement  in  the 
ecological  status/potential  of  surface  water 
bodies and no improvement in their chemical 
status,  as  compared  with  the  status  reported  in 
the  second  RBMPs  (covering  2015-2021).  About 
38.4%  of  surface  water  bodies  are  in  good  or 
better  ecological  status/potential,  showing  some 
improvement  compared  with  the  second  RBMPs 
(36.8%).  However,  the  scope  of  monitoring  has 
reduced:  now  only  21%  of  surface  water  bodies 
are 
ecological 
status/potential. 

monitored 

assess 

to 

Significant  impacts  on  surface  waters  are 
from  nutrient  pollution, 
eutrophication 
in  the  water  bodies, 
physical  changes 
chemical pollution and acidification. The main 
pressures  result  from  atmospheric  deposition, 
dams  and  other  barriers,  agriculture,  industry, 
transport and forestry. One of the main pressures 
on 
from 
hydromorphological  alteration,  which  is  largely 
caused  by  hydropower  production  and  water 
regulation  as  well  as  mill  dams,  remnants  of 
timber rafting, canals and bridges(233). 

surface  waters 

comes 

inland 

(231) European Commission, 2024, LIFE Coast Adapt: Working with 
nature, not against it, European Climate, Infrastructure and 
Environment Executive Agency (CINEA). 

(232) Fresh water resources – Climate Change Post, Link. 

(233) Commission Staff Working Document SWD (2025)22 
accompanying the Report from the Commission to the 
Council and the European Parliament on the implementation 

73 

Hydromorphological  alteration  is  registered 
as pressure on almost 60% of surface water 
bodies  in  Sweden.  Almost  4 000  river  water 
bodies  and  1 000  lake  water  bodies  are  affected 
lack  of  connectivity. 
by  water  regulation  or 
According  to  the  Swedish  Agency  of  Marine  and 
Water  Management, hydropower 
the  most 
extensive pressure on lake and river water bodies 
in Sweden(234). 

is 

Eutrophication  is  a  major  challenge  and  a 
to  biodiversity  and  ecosystem 
threat 
losses  of  nitrogen  and 
integrity.  Diffuse 
phosphorus from agriculture remain a main driver. 
Although  nitrate  concentrations  in  ground  and 
surface  waters  are  in  general  relatively  low  in 
Sweden,  the  country  faces  a  challenge  from  the 
eutrophication  of  surface  waters,  including  the 
Baltic  Sea.  Data  reported  by  Sweden  under  the 
Nitrates  Directive  for  2020-2022  indicate  that 
34%  of  watercourses,  14%  of  lakes  and  78%  of 
coastal  and  marine  waters  are  eutrophic  or  could 
become eutrophic. 

is 

According  to  the  latest  reporting  under  the 
Urban  Wastewater  Treatment  Directive(235), 
97% of  wastewater 
is  treated  and  the 
fully  based  on  biological 
cleaning 
treatment  with  nitrogen  and  phosphorus 
removal.  Nevertheless,  diffuse  pollution  from 
discharges  not  connected  to  sewage  network  is  a 
significant pressure for around 9% of rivers, 8% of 
lakes and 25% of coastal water bodies(236). 

Sweden’s  water  supply  infrastructure  faces 
from  ageing  pipes 
significant  challenges 
(mostly  from  the  1950s/60s),  underinvestment, 
climate change (droughts), and increasing demand, 
requiring  major  upgrades  and  modernisation.  The 
and 
ubiquitous 
polyfluoroalkyl  substances)  in  drinking  water  is  a 
growing concern. According to a 2024 report from 

presence 

PFAS 

(per- 

of 

of the Water Framework Directive (2000/60/EC) and the 
Floods Directive (2007/60/EC), Link. 

(234) Swedish Agency for Marine and Water Management - 
Towards sustainable hydropower in Sweden: Link. 

(235) WISE – country profiles on urban wastewater treatment – 

Sweden, Link. 

(236) Commission Staff Working Document SWD (2025)22 
accompanying the Report from the Commission to the 
Council and the European Parliament on the implementation 
of the Water Framework Directive (2000/60/EC) and the 
Floods Directive (2007/60/EC), Link. 

 
 
 
 
the Swedish Society for Nature Conservation, PFAS 
was  encountered  in  over  90%  of  the  drinking 
water samples(237). 

activity  in  Sweden,  has  a  91%  supply  chain 
dependency on ecosystem services. 

million 

supports 

in  2021-2027(238).  Of 

Water  investments  in  Sweden  are  estimated 
to  be  around  EUR 736  million  per  year  (in 
2022  prices) 
this, 
EUR 671 
wastewater 
management,  EUR 5  million  drinking  water  and 
around  EUR 55  million  the  other  aspects  of  the 
Water  Framework  Directive  (water  management 
and protection). Sweden’s water investment gap to 
meet the various environmental targets under the 
Water  Framework  Directive  and 
the  Floods 
Directive is estimated at EUR 473 million per year 
(0.08%  of  GDP),  with  EUR 287  million  linked  to 
wastewater  measures.  Drinking  water  measures 
require  an  additional  EUR 16  million  per  year  and 
the  other  aspects  of  the  Water  Framework 
Directive around EUR 165 million per year over the 
existing levels of financing. 

Although  initially  not  programmed,  under  the 
recent  mid-term  review  of  cohesion  policy  for 
2021-27,  Sweden  decided  to  allocate  funds  for 
water management under the national programme 
(EUR 12.2  million)  as  well  as  under  the  Småland 
and  the  islands  regional  programme  (EUR 6.1 
million). 

Nature restoration 

44%). 

Sweden 

Nature  degradation  creates  risks  for  the 
country’s economy and competitiveness  (239), 
with  almost  half  of  the  Swedish  economy 
(47%)  highly  dependent  on  ecosystems  (EU 
a 
average: 
high supply chain  dependency  on  ecosystem 
services  of  28%  of  its  gross  value  added  (EU 
average:  22%).  Several 
such  as 
agriculture, forestry,  water  utilities and  healthcare 
depend 
ecosystem 
services for  their gross  value  added.  Moreover, 
forestry, which is an important branch of economic 

fully  and  directly  on 

sectors 

also 

has 

(237) PFAS i dricksvatten och ytvatten – Analysrapport 2024, Link. 

(238) European Commission, Environmental Implementation 

Review (2025), Sweden country report, Link. 

(239) Hirschbuehl  et  al.  (JRC),  The  EU  economy’s  dependency  on 
European 

VASILAKOPOULOS, 

editor(s), 

P. 

nature, 
Commission, (2025), Link. 

legally  protects  15%  of 

Taking  into  account  both  Natura  2000  and 
other  nationally  designated  protected  areas, 
its 
Sweden 
terrestrial areas (EU average: 26%) and 16% 
of its marine areas (EU average: 13%)(240). As 
regards  the  conservation  status  of  habitats  and 
species  covered  by  the  Habitats  Directive  for 
2013-2018,  the  share  of  habitats 
in  good 
conservation  status  has  decreased  by  3.09 
percentage  points  and  accounted  for  22.58%  in 
2018  compared  with  the  25.67%  reported  under 
the 
However, 
conservation  statuses  are  uneven  across  groups: 
of the 33 biogeographical assessments of the 16 
EU  forest  habitat  types  protected  under  the  EU 
Nature Directives in Sweden, only 6% (two habitat 
types  in  the  Alpine  region)  have  a  status  of 
protected  area(241).  For  forest  habitats,  the  main 
pressure  is  forestry  (including  conversion  to  less 
biodiverse forests),  followed  by energy production 
(biomass).  

reporting 

previous 

period. 

Sweden  has  not  yet  aligned  with  the  EU 
Biodiversity Strategy as regards meeting the 
target for free-flowing rivers. The EU target is 
to make at least 25 000 km of rivers free flowing 
by  2030.  The  aim  is  to  restore  freshwater 
ecosystems,  the  natural  function  of  rivers  and  to 
mitigate  the  impact  of  floods.  Free-flowing  rivers 
also  generate  broader  socio-economic  benefits, 
including  enhanced  rural  landscape  quality,  new 
recreation  and  tourism  opportunities,  local  job 
creation and improved water quality. Due to better 
sediment  transport,  deltas  and  coastal  areas  are 
protected against erosion and rising sea levels. 

Sustainable agriculture and land use 

Sweden’s carbon removals fall short of what 
is  needed  to  meet  its  2030  target  for  land 
use,  land-use  change  and  forestry  (LULUCF). 
In  Sweden,  net  carbon  removals  in  the  LULUCF 
sector  have  been  declining  over  time,  though 

(240) Eurostat, Protected Areas Indicator, Link. 

(241) EEA, State of Nature in the EU: Results from reporting under 
the Nature Directives 2013-2018, Publications Office of the 
European Union, Luxembourg, 2020, Link.  

74 

 
 
 
preliminary  data  shows  a  small  trend  break  in 
recent  years.  This  decline  is  primarily  driven  by 
high  levels  of  timber  and  bioenergy  harvesting,  a 
slowdown in forest growth due to an aging forest 
stock,  and  the  increasing  impact  of  climate-
induced  stressors  such  as  spruce  bark  beetle 
infestations  and  drought(242).  The  2030  LULUCF 
target requires additional carbon removals of 4 Mt 
CO2eq for Sweden, compared to 2016-18(243). The 
latest  available  projections  show  a  gap  to  target 
In  addition 
of  21 Mt  CO2-eq 
to increasing  LULUCF  net 
further 
investments in healthy forests and soils are key to 
building  resilient bio-based product  value  chains 
and  enabling  a  growing, 
competitive  EU 
bioeconomy. In particular, continued improvements 
in the monitoring system of net removal data and 
projections will be crucial in supporting in this area. 

in  2030(244). 

removals, 

agricultural land area, against 20.4% in 2019(247). 
While this is still one of the best results among EU 
Member  States,  Sweden  ranks  above  the  EU 
average  regarding  the  share  of  soil  samples 
presenting  maximum 
residues 
pesticide 
concentrations above 0.05 mg/kg(248). 

Emission 

the  National 

Sweden  has  not  met  its  emission  reduction 
commitments  for  ammonia,  as  evidenced  by 
the inventories submitted under Article 10(2) 
of 
Reduction 
Commitments  Directive  (2016/2284/EU)  in 
2023. According to the latest projections, it is not 
on  track  to  meet  them  for  2030  onwards 
either(249).  With  ammonia 
from 
agriculture at  15.8 kg/ha in 2023 (250), agriculture 
is  responsible  for  86%  of  the  total  national 
ammonia emissions (251).  

emissions 

Sweden’s  policy  response  prioritises  the 
rewetting  of  drained  peatlands  alongside 
expanded  advisory  initiatives  to  promote 
climate-smart  forest  management(245)  As 
presented  in  the  Swedish  NECP,  these  targeted 
actions  are  essential  to  bolster  the  country’s 
natural  carbon  sinks  and  close  the  projected 
emissions gap. 

Sweden  faces  environmental  and  public-
health  risks  due  to  persistent  agricultural 
pollution  pressures.  Such  pressures  emanate  in 
particular from nutrient loads in water bodies and 
from  ammonia  emissions.  Agriculture  affects  the 
aquatic environment through nutrient leakage and 
pesticide  use,  among  other  factors.  Diffuse 
pollution from agriculture is a significant pressure 
for around 9% of rivers, 8% of lakes and 38% of 
coastal  water  bodies(246). The  excess  of  nutrients 
leads  to  eutrophication  causing  proliferation  of 
algae  blooms  and  oxygen  depletion  in  both  lakes 
and coastal waters.  

The  share  of  organic  farming  continues  to 
decline  in  recent  years in  Sweden.  In  2024,  it 
accounted  for  16.7%  of  the  country’s  utilised 

(242) Swedish Climate Policy Council report 2025 - Link 

(243) National LULUCF targets of the Member States in line with 

Regulation (EU) 2023/839, Link 

(244) Climate Action Progress Report - Link 

(247) Eurostat - Area under organic farming, Link. 

(248) Vieira et al. (JRC), Pesticides residues in European agricultural 
soils - Results from LUCAS 2018 soil module, Publications 
Office of the European Union, 2023, Link.  

(249) European Commission, Environmental Implementation 

Review (2025), Sweden country report, Link. 

(245) Sweden - Final updated NECP 2021-2030 (2024) - Link 

(250)Eurostat - Ammonia emissions from agriculture, Link. 

(246) Pressures and impacts – Water Framework Directive experts 

(251) Eurostat - Ammonia emissions from agriculture - % of total 

dashboards – WISE Freshwater, Link. 

emissions, Link. 

75 

 
 
 
 
     
 
 
 
 
 
 
 
 
 
 
 
 
Table A10.1: Key Adaptation Indicators 

(1) EFFIS (European Forest Fire Information System). Link. 
(2) The climate protection gap refers to the share of non-insured economic losses caused by climate-related disasters, based on 
modelling of the risk from floods, wildfires and windstorms and on the insurance penetration rate. Scale: 0 (no protection gap) – 4 
(very high gap). EIOPA, 2025, Dashboard on insurance protection gap for natural catastrophes. 
(3) This measures total water consumption as a percentage of the renewable freshwater resources available for a given territory 
and period. Values above 20% are generally considered to be a sign of water scarcity, while values equal to or greater than 40% 
indicate severe water scarcity. 
(4) European Commission, 2024, Seventh Implementation Report from the Commission to the Council and the European 
Parliament on the implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC) (Third 
River Basin Management Plans and Second Flood Risk Management Plans). 
(5) Indicator refers to concentrations of nitrate (NO3) in groundwater, measured as milligrams per litre (mgNO3/L). Nitrate can 
persist in groundwater for a long time and accumulate at a high level through inputs from anthropogenic sources (mainly 
agriculture). The EU drinking water standard is limited to 50 mgNO3/L to avoid threats to human health. 
(6) Net removals are expressed in negative figures, net emissions in positive figures. Reported data are from the 2025 
greenhouse gas inventory submission. 2030 value of net greenhouse gas removals as in Regulation (EU) 2023/839 – Annex IIa. 
Source: Eurostat, EEA and JRC 

76 

Climate adaptation and preparedness:EU-27201920202021202220232024latest dataDrought impact on ecosystems6.24.035.82.583.06-2.76[area impacted by drought as % of total]Forest fires burned area (1)485          769          946          266          188          288          354 510     [burned area in ha. per year]Economic losses from extreme events154          69            48            -          95            -           40 452       [EUR million at constant 2022 prices]Insurance protection gap (2)---1              1              1              -[composite score between 0 and 4]Sub-national climate adaptation action19            26            26            26            25            25            34              [% of population covered by the EU Covenant of Mayors for Climate & Energy]Water resilience:EU-27201920202021202220232024latest dataWater Exploitation Index Plus, WEI+ (3)0.32         0.30         0.22         0.27         0.23         -4.53            [total water consumption as % of renewable freshwater resources]Water productivity182          177          -220          --151[EUR per m3]Water abstractionWater abstraction by source (% from surface water)84.20%84.10%----Water abstraction by sectorAgricultureElectricity coolingManufactu-ringPublic water supplyMining and QuarryingConstru- ction 4.09%5.15%44.42%46.35%0.00%0.00%Status of water bodies (4)[% of water bodies in a good status]Surface water bodies (ecological)-----38%38%Groundwater bodies (quantitative)-----99%93%Nature restoration:EU-27201920202021202220232024latest dataEcosystem dependency---47%--44%[% of direct dependency]Protected area14.814.814.914.915.326.4[% of terrestrial protected areas]Invasive alien species (IAS)-----5429.2[number of IAS of Union concern]Damage cost of IAS----0.481.69[EUR billion]Eutrophication 3939295[AAE of area at risk of euthrophication]Sustainable agriculture and land use:EU-272012-20182018-2021latest dataYearly net land taken by Member State297          306          670            [ppm of total urban surface per Member State]Land conversion in functional urban area [% of total land taken from 2018-2021]Arable land24%Complex and mixed cultivation0%Forests47%Herbaceous vegetation associations3%Open spaces with little or no vegetation0%Pastures26%Permanent crops0%Water0%Wetlands0%201920202021202220232024latest dataNitrates in groundwater (5)2.72.82.82.62.4[mgNO₃/l]Livestock density0.550.550.75(number of livestock units per hectare of utilised agricultural area)Ammonia emissions 89%90%90%90%90%-94%[% of total utilised agricultural area]Pesticide contamination on rivers and lakes water bodiesrivers7%27%[% of monitoring sites with pesticides exceeding thresholds, 2018-2023]lakesn.d.18%Pesticide contamination in soil 49%57%[% of samples with a concentration over 0.5 mg/Kg⁻¹]Net greenhouse gas removals from LULUCF (6)-39767.4-39351.3-36666.5-33614.0-31223.6--198 421 [ktCO₂-eq] 
 
  
 
FAIRNESS 
ANNEX 11: LABOUR MARKET 

skills 

shortages 

Sweden’s  labour  market  remains  resilient 
overall,  but  structural  challenges  persist. 
Weaker employment outcomes for certain groups, 
especially  people  with  a  migrant  background,  and 
labour  and 
could  affect 
productivity  growth  and  competitiveness  and 
hinder the green and digital transitions. The south 
experiences higher unemployment rates compared 
with  northern  regions,  which  impacts  productivity. 
There  is  room  for  further  integrating  under-
represented  groups  into  the  labour  market,  which 
would  help  unlock  its  full  potential,  reduce  social 
inequalities  and  foster  productivity  growth  and 
competitiveness. 
country-specific 
The  2025 
recommendations for Sweden highlighted the need 
to  develop  the  labour  force’s  skills,  particularly 
those  from  disadvantaged  socio-economic  and 
migrant  backgrounds,  through  targeted  policy 
their 
to 
measures  and 
integration into the labour market. 

resources 

improve 

The  labour  market  continues  to  exhibit  not 
only  high  employment  rates  but  also  high 
unemployment, 
exceptionally 
reflecting 
strong 
labour  market  participation.  The 
employment  rate  stood  at  81.8%  in  2025,  well 
above  the  EU  average  (76.1%)  and  only  slightly 
below its peak of 82.6% in 2023, but still close to 
the  national  2030  employment  target  of  82%. 
However,  unemployment  rose  to  8.8%  from  8.4% 
in  2024,  well  above  the  EU  average  (6.0%).  It  is 
projected to gradually decline to 8.4% in 2026 and 
7.9%  in  2027 (252).  Part-time  employment  has 
steadily decreased in recent years and was 17.6% 
in  2024  (EU:  17.1%).  Labour  market  slack (253) 
reached 14.3% in Q4-2025, up from 13.2% in Q2-
2024,  and  well  above  the  EU  average  of  11%, 
mainly  driven  by  a  higher  share  of  unemployed 
people.  Long-term  unemployment  also  slightly 
increased  to  1.8%  in  2025,  more  than  doubling 
since  2019  (0.8%),  but  still  slightly  below  the  EU 
in 
average  Marked 
unemployment  rates  exist  between  the  north  and 
the  south.  There  are  regional  differences  in  the 

disparities 

regional 

(252) European Economic Forecast Autumn 2025 

(253) Labour market slack refers to all unmet needs for 

employment: it represents the extent to which labour supply 
exceeds labour demand in the short run. It encompasses four 
components: underemployed people working part-time, 
unemployed people, people seeking work but not 
immediately available, and people available to work but not 
seeking. 

unemployment  rate:  while  the  northern  region  of 
Övre  Norrland  reported  an  unemployment  rate  of 
7.3%  in  2025,  this  figure  stands  at  10.3%  in 
Sydsverige. 

Graph A11.1: Employment rate by county of birth, 
Sweden 

(1) Employment rates ages 20-64 (% of population) 
Source: Eurostat [lfsa_ergacob] 

in 

groups 

continue 

to 
face 
Vulnerable 
significant  challenges 
labour  market 
integration (254).  The  employment  rate  for  those 
born  outside  the  EU  stood  at  71.0%  in  2025  (EU 
average: 68.7%), significantly below that of those 
born  in  Sweden,  at  84.7%,  which  is  a  gap  of 
13.7 pps. The gap is even larger among women, at 
18.4 pps  (non-EU:  65.3%  vs  native:  83.7%).  The 
unemployment rate for those born outside the EU 
stood at 19.1% in 2025, compared with 5.3% for 
the native-born. The gap among women was even 
larger  (20.9%  vs  5.9%).  Persons  with  disabilities 
also  face  barriers  to  employment,  and  this  is 
reflected in the disability employment gap, at 22.6 
pps in 2025 (EU:24.2 pps). 

unemployment 

Long-term 
over-
qualification are also markedly higher among 
long-term 
non-EU-born  workers. 

In  2025, 

and 

(254) 2025 country-specific recommendations for Sweden (4.2): 

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. 

77 

50556065707580859020152016201720182019202020212022202320242025Native, totalNon-EU, totalNative, femaleNon-EU, female 
 
 
 
       
 
 
 
non-EU-born 

unemployment  accounted  for  30.2%  of  total 
people, 
unemployment  among 
17.2 pps  higher  than  those  born  in  Sweden. 
Although this share has declined in recent years, it 
remains significantly higher than its pre-pandemic 
level of 20.3% in 2019, and an estimated 70% of 
those  who  have  been  unemployed  for  more  than 
two  years  are  foreign-born (255).  Furthermore, 
over-qualification among 20-64-year-olds is much 
higher for those born outside the EU: 27.5% have 
a qualification not required in their field (vs 10.9% 
for  those  born  in  Sweden).  This  signals  entry 
for  highly  educated  migrants  and 
barriers 
indicates  underused  potential,  which 
further 
hinders competitiveness and social cohesion. 

to 

the 

new 

Under 

that  aims 

to  contribute 

Measures have been launched, some with EU 
funding, to address the remaining challenges 
on  the labour market, but there is  scope  for 
further  efforts. 
In  October  2025,  Sweden 
introduced  a  new  income-based  unemployment 
insurance 
job 
transitions.  This 
is  coupled  with  a  gradual 
reduction  in  unemployment  benefits  to  encourage 
labour 
unemployed  people  to  return  to  the 
market (256). 
system, 
unemployment  benefits  are  based  on  income 
rather than hours worked, and the benefit level, in 
terms of percentage, is reduced earlier than under 
the  previous  model.  Furthermore,  in  September 
2025,  the  government  announced  a  benefits 
includes  an  activation 
reform  package 
requirement for recipients of social assistance; it is 
expected  to  be  implemented  from  2027 (257).  The 
2026 budget introduced additional funds to enable 
the  Labour  Market  Entry 
an  extension  of 
Agreement (‘etableringsjobb’), which provides work 
for people with prolonged spells of unemployment 
the  country (258). 
and  for  recent  arrivals 
Moreover, the public employment service has been 
tasked with increasing matching and monitoring of 
those jobseekers that follow  active labour market 
programmes  (ALMPs)  provided  by  private  training 

that 

in 

(255) Identifiering och bedömning av arbetssökande med 

funktionsnedsättning som medför nedsatt arbetsförmåga - 
Delrapport. 

(256) https://www.regeringen.se/regeringens-
politik/inkomstbaserad-a-kassa/. 

(257) A reform to break the dependency on benefits and 

strengthen Sweden - Regeringen.se. 

(258) Recent arrivals are defined as those individuals aged over 20 
who have been granted a residence permit or residence card 
in the last 36 months for the purpose of this programme. 

78 

the 

conditions, 

framework 

labour  market  could  make 

providers.  This  includes  increasing  occupational 
jobseekers. 
and  geographical  mobility  among 
However,  further  efforts  to  reduce  the  gap 
between non-EU migrants and natives are needed. 
In line with the Council Recommendation on social 
greater 
economy 
involvement  of  social  economy  organisations  in 
preparing and implementing targeted active labour 
market measures to integrate foreign-born women 
those 
into 
measures’  more  effective,  with  the  European 
Social  Fund  Plus 
(ESF+)  funding  playing  a 
supporting  role.  The  Swedish  national  programme 
for the ESF+ includes measures to: (i) improve the 
integration of people who are far from the labour 
market; (ii) improve access to lifelong learning for 
those  already  employed,  to  adapt  to  a  changing 
labour market; (iii) activate those who are far from 
the  labour  market;  and  (iv)  promote  the  social 
inclusion  of  vulnerable  groups..  In  addition,  the 
recovery  and  resilience  plan  (RRP)  has  supported 
the upskilling of more than 8 000 care workers for 
older  people  (a  significant  share  of  care  workers 
are women from migrant backgrounds). It has also 
funded  some  16 900  new  study  places,  giving 
priority  to  those  who  need  education  and  skills 
development the most. 

formally 

Youth unemployment remains relatively high, 
but the number of young people in education 
and  training  continues  to  increase.  While 
Sweden  recorded  one  of  the  highest  youth 
unemployment rates in the EU in 2025 (24.3% vs 
EU:  15.2%),  the  figure  is  partially  inflated  by 
students  who  are 
registered  as 
unemployed(259).  To  lower  youth  unemployment, 
the  2026  budget  includes  a  measure  to  reduce 
labour  costs  for  employers  hiring  young  people 
aged  19-23(260).  Sweden  continues  to  record  one 
of  the  lowest  rates  of  young  people  (15-24) 
neither  in  employment  nor  in  education  and 
training  (NEETs),  at  5.9%  in  2025,  significantly 
below  the  EU  average  of  11.0%,  making  the 
country  one  of  the  best  performers  in  the  EU. 
However,  the  NEET  rate  is  significantly  higher 
among  persons  with  disabilities,  at  14.5%.  To 
reduce  the  number  of  NEETs,  in  April  2025,  the 
government commissioned the Swedish Agency for 

(259) According to the Ministry of Labour’s estimations, roughly 
half of reported youth unemployment consists of full-time 
students looking for work during their holidays. 

(260) The reform is proposed to enter into force on 1 April 2026 

and to apply until 30 September 2027. 

 
 
 
Youth  and  Civil  Society  to  serve  as  a  national 
coordination and support hub, focusing on mental 
health,  and  allocated  SEK 31  million  in  grants  to 
municipalities and regions. 

in 

sectors 

the  green 

Labour  shortages  have  eased  but  remain 
significant 
and 
selected 
occupations. The macroeconomic skills mismatch 
is relatively low (16.2% vs EU: 19.2% in 2024) and 
the  job  vacancy  rate  fell  to  1.9%  in  2025,  down 
from  2.3%  in  2023.  This  is  reflected  in  employer 
surveys: the share of firms reporting shortages as 
a  factor  limiting  their  production (261)  in  October 
2025 was significantly lower than the EU averages 
across  sectors.  However,  labour  shortages  persist 
in  specific  sectors.  As 
transition 
advances, green industries will continue to expand 
and  labour  demand  is  expected  to  rise  further, 
particularly  in  renewable  energies.  Shortages  are 
most  pronounced  in  administrative  and  support 
service activities, with a job vacancy rate of  3.7% 
in  2025  (EU:  3.3%).  The  ICT  sector  is  also 
experiencing shortages, despite Sweden having the 
highest share of ICT specialists in the EU, at 8.6% 
in  2024.  Other  sectors (262)  with  widespread 
shortages 
include  professional,  scientific  and 
technical activities (a 3.4% vacancy rate), services 
of  the  business  economy  (2.6%),  and  agriculture, 
forestry  and  fishing  (3.0%).  Moreover,  19.4%  of 
companies  in  construction  (vs  27.5%  at  EU  level), 
13.9% in services (vs 23.1%), and 7.2% in industry 
(vs 17.5%) have reported labour shortages in their 
respective sectors (263)  

risks 

years, 

posing 

coming 

Labour shortages are expected to intensify in 
to 
the 
competitiveness and growth. Labour demand in 
northern  Sweden  is  high,  particularly  in  sectors 
linked to the green transition, energy, construction 
and  the  public  sector.  However,  the  northernmost 
county  of  Norrbotten  has  some  of  the  lowest 
unemployment  rates  in  the  country.  By  contrast, 
unemployment  is  higher  in  southern  Sweden, 
making labour mobility from the south to the north 
crucial  for  skills  supply  and  long-term  economic 
growth  (see  Annex  18).  Further  incentives  for 
workers 
job 
to 
opportunities  are  available  should  therefore  be 
explored.  The  green transition  is  progressing,  with 

regions  where 

to  move 

an increase in skills training in the energy sector, a 
key sector for the transition: over 30% of workers 
in energy-intensive industries took part in training 
activities  in  2024,  the  highest  rate  in  the  EU  (EU: 
12%).  However,  there  is  scope  to  reach  the 
national  all-industry  average  (39.1%).  Several 
projects  funded  under  the  ESF+,  led  by the  public 
employment  service  and  local  municipalities,  aim 
to  improve  the  supply  of  skilled  workers  for  the 
green  transition,  increase  geographical  mobility 
and attract workers to where the jobs are.  

Wage  growth  is  broadly  aligned  with  EU 
trends,  but  the  recovery  in  real  wages  has 
only  partially  offset  earlier  losses.  Wage 
growth reached 5.2% in 2024 and 1.69% in 2025 
and  is  projected  to  fall  to  3.1%  in  2026 (264), 
broadly  in  line  with  EU  averages  for  the  same 
period.  In  turn,  after  marked  drops  in  2022  and 
2023  (4.8%  and  2%,  respectively),  real  wage 
growth  reached  2%  in  2024  and  0.69%  in  2025 
and  is  projected  to  grow  to  2.5%  in  2026 (265). 
Relatively  low wage  growth  over  the  past  decade 
has  supported  cost-competitiveness:  unit  labour 
costs  increased  by  6.8%  in  2023  and  3.8%  in 
2024, less than in most other Member States, and 
are expected to rise more slowly in the short term 
(2.6%  in  2025  and  1.3%  in  2026).  This  suggests 
there  is  some  scope  for  further  wage  increases 
without jeopardising competitiveness. 

Sweden’s  social  dialogue  model  remains 
highly  effective,  combining  strong  labour 
protection with regular consultation between 
the  state  and  social  partners.  Labour  market 
conditions  are  primarily  determined  by  collective 
agreements  between  employer  organisations  and 
trade unions, with the state playing a limited role. 
These agreements operate flexibly within the legal 
framework,  allowing  social  partners  to  set  terms 
that  often  surpass  statutory  protections  for 
employees (266).  In  2024,  88%  of  all  employees 
were 
agreements, 
representing  4  million  workers  in  the  18-68  age 
group (267).  As  all  public  sector  employees  are 
covered by collective agreements, the only workers 
not covered are those in the private sector, where 

collective 

covered 

by 

(264) European Economic Forecast Autumn 2025 

(265) Internal calculations by the Directorate-General for 

(261) Source: European Business and Consumer Surveys. 

Employment, Social Affairs and Inclusion. 

(262) See Eurostat for sectoral differences 

(266) Eurofound, 2018. 

(263) European Business and Consumer Surveys 

(267) Data from OECD/AIAS ICTWSS v2.0. 

79 

 
 
 
the  coverage  rate  stood  at  82% (268).  However, 
trade  union  density  was  65.9%  in  2024,  the 
highest  in  the  EU (269),  and  employer  organisation 
density stood at 89.1%. Moreover, since 2000, the 
Swedish  National  Mediation  Office  has  played  a 
central role in sustaining this system by promoting 
orderly  wage-setting,  mediating  labour  disputes 
and publishing official wage statistics.  

Sweden  performs  strongly  in  most  aspects 
relating  to  job  quality,  pointing  to  a  well-
balanced  model  that  delivers  both  economic 
security and high-quality working conditions. 
The  country  ranks  among  the  top  EU  performers 
for  fair  earnings  (4.1%),  in-work  poverty  (7.1%) 
and  work-life  balance,  reflecting  a  labour  market 
relatively  high  wages  with 
that  combines 
supportive  working  time  arrangements.  Sweden 
also  stands  out  on  gender  equality  and  equal 
opportunities,  with  small  gender  pay  and 
employment  gaps  and  a  high  share  of  women  in 
managerial positions. 

(268) Collective agreement coverage and degree of unionisation - 

The National Mediation Institute 

(269) Data from OECD/AIAS ICTWSS v2.0. 

80 

 
 
ANNEX 12: SOCIAL POLICIES 

Overall,  Sweden’s  social  situation  has 
improved,  but  vulnerable  groups  continue  to 
face  a  higher  risk  of  poverty.  Despite  recent 
improvements 
in  the  effectiveness  of  social 
transfers,  the  gap  in  poverty  rates  between  the 
native-born  population  and  people  born  outside 
the  EU  continues  to  be  one  of  the  largest  in  the 
EU.  People  with  a  low  level  of  education,  children 
and  persons  with  disabilities  also  face  higher 
poverty  risks.  There  are  also  regional  disparities, 
with  Sydsverige  recording  the  highest  poverty 
levels.  Income  inequality  has  decreased  since 
reaching  its  highest  level  in  a  decade  in  2023. 
Addressing  these  challenges  will  help  foster 
Sweden’s inclusive growth and competitiveness.  

Graph A12.1: At-risk-of-poverty or social exclusion 
rate by age group in Sweden 

(1) AROPE: At-risk-of-poverty or social exclusion rate (% of 
total population). 
Source: Eurostat, EU-SILC 

Poverty and social exclusion risks are  rising, 
and  the  poorest  are  experiencing  deeper 
poverty. The at-risk-of-poverty or social exclusion 
rate  (AROPE)  rate  rose  from  17.5%  in  2024  to 
18.6%  in  2025,  remaining  below  the  EU  average 
of  20.9%.  However,  this  increase  has  not  been 
steady in recent years. Severe material and social 
deprivation reached 3.9% in 2025, its highest level 
in a decade. While this remains well below the EU 
average of 6.3% and among the lowest in the EU, 
the  increase  suggests  that  the  gap  with  the  EU 
average  is  narrowing.  Since  2015,  Sweden's  rate 
of severely materially or socially deprived persons 
has  increased  by  2.8  percentage  points  (pps), 
whereas the EU average has decreased by 3.4 pps, 

indicating  that  a  growing  number  of  people  in 
Sweden  are  unable  to  afford  certain  goods, 
services  and  social  activities.  The  relative  poverty 
gap,  which  measures  the  intensity  of  poverty, 
decreased  to  23.1%  in  2024  (from  23.4%  in 
2023). However, it remains above the EU average 
of 22.5%, indicating that people living in poverty in 
Sweden  generally  fall  further  below  the  poverty 
threshold  than  the  EU  average.  The  Swedish 
European Social Fund Plus (ESF+) programme has 
allocated  around  EUR 21  million 
reduce 
financial  vulnerability  and  foster  a  more  inclusive 
society.  To  address  the  multiple  dimensions  of 
poverty,  the  implementation  of  a  comprehensive 
approach,  as  set  out  in  the  EU  Anti-Poverty 
Strategy, can support progress towards eradicating 
poverty.   

to 

People with a migrant background and other 
vulnerable  groups  experience  a  significantly 
higher  risk  of  poverty  and  social  exclusion. 
Although  the  figures  have  decreased  since  last 
year, the gap between people born outside the EU 
(36.7%)  and  those  born 
in  Sweden  (12.3%) 
remains significant, at 24.4 pps. This is wider than 
the EU average gap of 21.3 pps (38.9% for people 
born outside the EU vs 17.6% for the native-born 
population).  Barriers  to  employment,  including 
language  constraints, 
institutional,  skills  and 
contribute  to  these  higher  poverty  levels.  Poverty 
and  social  exclusion  risks  are  also  higher  among 
people  with  a  low  level  of  education  (270)  (37.1%) 
than among those with a higher level of education 
(271) (12%). Similarly, persons with disabilities aged 
16  years  and  over  face  a  higher  risk  of  poverty 
and  social  exclusion  (28.1%)  than  those  without 
disabilities  (15.3%),  close  to  the  EU  average  of 
28.8%.  

Child  poverty  is  declining  in  Sweden,  but  it 
remains  higher  than  the  EU  average  among 
parents  with  a  low  level  of  education.  The 
AROPE  rate  for  children  increased  by  2.5  pps, 
reaching 23.4% in 2025 (vs EU: 24.3%). However, 
the  risk  of  poverty  or  social  exclusion  remains 
much  higher  for  children  whose  parents  have  a 
low level of education (70.6% vs an EU average of 
62.5%).  Sweden  has  set  a  relatively modest  child 
poverty reduction target for 2030, aiming to lower 
the number of children at risk by 5 000 compared 

(270) i.e. ISCED levels 0-2. 

(271) i.e. ISCED levels 5-8 

81 

0510152025303540455020152016201720182019202020212022202320242025Children (<18y)Non-EU bornPeople with disabilityTotalPeople with low-level education 
 
   
 
 
 
with  2019  levels.  This  target  has  already  been 
achieved,  paving  the  way  for  potential  further 
improvements.  

To reduce the impact of poverty on children, 
Sweden has implemented the European Child 
Guarantee  (ECG)  through  its  national  action 
plan  launched  in  March  2022.  The  2024 
progress  report  (272)  shows  that  support  has 
increased  in  several  areas.  These  include  early 
childhood education and care, services for children 
with  disabilities  and  learning  difficulties,  and 
special  needs  training  for  teachers.  According  to 
the  2025  Teaching  and  Learning  International 
Survey  (TALIS),  15%  of  teachers 
in  Sweden 
reported  a  high  need  for  training  in  teaching 
students  with  special  needs,  which  is  lower  than 
the EU average (24.2%). However, implementation 
challenges  remain,  and  some  groups  continue  to 
face  barriers.  Moreover,  there  are  insufficient 
national data on poverty, social exclusion, children 
with disabilities and access to welfare services for 
children  in  care,  which  hinders  the  effective 
monitoring  of  these  groups.  The  European  Social 
Fund  Plus  (ESF+)  supports  the  ECG  by  funding 
initiatives  to  prevent  early  school  dropouts  and 
provide  organised  extracurricular  activities  for 
vulnerable children.  

Significant  regional  differences  in  poverty 
risks  persist.  In  2024,  the  highest  AROPE  levels 
were  found  in  Sydsverige  (21.4%),  followed  by 
Östra  Mellansverige  (20.7%),  Mellersta  Norrland 
(19.8%) and Norra Mellansverige (19.3%). The gap 
in  AROPE  rates  is  especially  pronounced  between 
the 
the 
northernmost  regions  (Övre  Norrland),  at  5.9  pps 
(21.4% vs  15.5%).  The poverty  rate in  Sydsverige 
is driven not only by the severe material and social 
deprivation rate (3.9%), but also by the at-risk-of-
poverty  rate  (17.8%)  and  higher  unemployment 
levels (see also Annex 11 and Annex 19).  

southernmost 

(Sydsverige) 

and 

The  impact  of  social  benefits  on  poverty 
reduction  has  recently  increased  again  but 
remains far  below  historically  high  levels.  In 
2024,  social 
(excluding  pensions) 
decreased  by  2.2pps  compared  with  the  previous 
year,  reaching  38.3%.  Further,  the  rates  observed 

transfers 

(272) Progress Report on Sweden’s national action plan for the 
implementation of the European Child Guarantee (2024). 
https://ec.europa.eu/social/BlobServlet?docId=27563&langId
=en.  

82 

between  2022  and  2025  have  been  the  lowest 
since  2005.  Sweden  allocates  45.4%  of  its  total 
social-benefit  spending  to  old-age  benefits  and 
38.2% to sickness, healthcare and disability. Much 
smaller  shares  are  spent  on  unemployment 
(2.53%)  and  social  exclusion  benefits  (1.81%). 
Income  inequality  decreased  between  2023  and 
2024, when the income of the richest 20% of the 
population  was  approximately  4.58  times  higher 
than  that  of  the  poorest  20%.  Nevertheless,  in 
2023,  income  inequality  was  at  its  highest  level 
since 2004. 

In-work  poverty  is  rising,  with  the  rate  for 
temporary workers among the highest in the 
EU.  In  2025,  the  in-work  poverty  rate  reached 
7.1%,  down  by  0.5  pps  since  2024,  moving  away 
from  the  EU  average  of  8.3%.  The  rate  was 
significantly  higher  among  non-EU-born  workers 
(17.2%  vs  4.3%  for  native-born  workers),  and 
(10.2%  vs  the  EU 
single-person  households 
average  of  11.8%).  For  single-person  households, 
the  rate  is  now  below  the  EU  average,  with  a 
decrease  of  2.5  pps  since  the  previous  year. 
Employees  on  temporary  contracts  face  a  much 
greater  risk  of  poverty.  Their in-work  poverty  rate 
reached 18% in 2025 (vs 12.9% in the EU), having 
decreased  by  3.4pps  from  the  previous  year  and 
much  higher  that  the  EU  average  of  12.9%  and 
one  of  the  highest  in  the  EU,  indicating  that 
despite  being  employed,  temporary  workers  still 
face a high risk of poverty. 

Energy  poverty  in  Sweden  is  relatively  low, 
although more households are  falling behind 
on  utility  bills.  In  2025,  4.7%  of  the  population 
were  unable  to  keep  their  homes  adequately 
warm,  an  increase  of  0.6  pps  from  the  previous 
year.  While  this  is  well  below  the  EU  average  of 
8.8%, it is one of the highest levels observed over 
the  past  decade,  reflecting  the  impact  of  the 
recent  energy  crisis.  At  the  same  time,  the 
percentage of households unable to pay utility bills 
on  time  is  at  its  highest  in  a  decade  (4.4%), 
although  still  below  the  EU  average  of  7%.  To 
tackle  energy  poverty,  Sweden  has  adopted  a 
range of social welfare policies, including financial 
assistance for low-income households and housing 
allowances.  The  upcoming  introduction  of  the  EU 
emissions  trading  system  for  buildings  and  road 
transport  (ETS2)  is  expected  to  lead  to  smaller 
in  heating  spending  than  the  EU 
increases 
average,  as  fuels  covered  by  ETS2  account  for 
only  2%  of  household  energy  consumption. 
However, as energy poverty persists amid inflation 

 
 
and  rising  electricity  prices,  and  as  arrears  on 
utility bills continue to increase, more support may 
be  needed  to  help  households  meet  the  cost  of 
electricity and natural gas supply.  

travel 

Transport  poverty  risks  are  higher  in  rural 
areas.  Transport  affordability,  measured  as  the 
share  of  people  unable  to  afford  a  car,  stood  at 
6%  in  2024,  slightly  above  the  EU  average  of 
5.6%.  Transport  poverty  risks  are  more  severe 
among vulnerable groups, particularly in rural and 
sparsely  populated  areas,  where 
is 
expensive and public transport options are limited. 
Under ETS2, transport fuel spending is projected to 
increase  more  than  the  EU  average.  From  2026 
onwards, the Social Climate Fund will help mitigate 
vulnerable 
these 
households  in  rural  areas  with  limited  access  to 
public transport to purchase or lease new or used 
electric vehicles. In the Norra Mellansverige region, 
for example, where 16.8% of the population is at 
risk  of  poverty,  around  half  of  residents  cannot 
reach  a  healthcare  facility  within  16  minutes  by 
public transport(273). See also Annex 19. 

supporting 

impacts 

by 

(273) Based on calculations from the Joint Research Centre. 

83 

 
 
 
ANNEX 13: EDUCATION AND SKILLS 

affects 

particularly 

The  performance  in  education  and  skills  is 
strong  overall,  but  challenges  persist. 
Shortages of qualified teachers persist at all levels 
but  are  particularly  severe  for  early  childhood 
education  and  care  (ECEC).  Reforms  launched 
recently  aim  to  improve  the  attractiveness  of  the 
profession.  The  shortage  of  qualified  ECEC 
teachers 
disadvantaged 
children.  While  Swedish  students  perform  above 
the  EU  average 
in  basic  and  digital  skills, 
education  outcomes  in  basic  skills  have  declined 
since  2018  and  significant  gaps  exist  for  pupils 
with  a  migrant  background.  The  school  system  is 
insufficiently  fulfilling  its  compensatory  mission. 
Difficulties  in  the  transition  to  upper  secondary 
school  are  yet  to  be  addressed  and  many  pupils 
leave  school  without  sufficient  qualifications (274). 
those  who  complete  vocational 
Furthermore, 
education  and 
(VET)  face  declining 
employment  rates  and  increasing  mismatches 
between  their  qualifications  and  available  jobs. 
Adult  learning  remains  among  the  highest  in  the 
EU, across all age cohorts. These challenges weigh 
on  Sweden’s  competitiveness 
in  key  sectors, 
especially  those  with  high  occupational  skills 
shortages (275).  

training 

The  shortage  of  qualified  ECEC  staff 
especially  affects  disadvantaged  children. 
The participation rate for children from the age of 
three to the beginning of compulsory school stood 
at  96.3%  in  2023,  above  the  EU-level  target  of 
96%. From 1 July  2025, the ECEC curriculum has 
become  mostly  screen-free,  and  emphasis  is  put 
on  reading  and physical  exercise.  The  shortage  of 
qualified staff remains a challenge: only 43% are 
qualified  ECEC 
teachers  and  16%  qualified 
childminders.  The  shortage  is  bigger  in  urban 
areas,  especially  those  with  a  high  share  of 
children  with  a  migrant  background.  According  to 
the  Swedish  national  report  on the  TALIS  Starting 
Strong  survey,  despite  90.3%  of  ECEC  teachers 
being satisfied with their job, 40% of them plan to 
change  career  within  five  years  (238),  which  may 

(274) 2025 CSR 4.1 ‘Improve educational performance, including 

of students from 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.’ 

(275) 2025 CSR 4.2 ‘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.’ 

84 

exacerbate  the  situation  further.  ECEC  facilities 
with a higher proportion of disadvantaged children 
have  a  slightly  lower  share  of  trained  ECEC 
teachers (276).  The  National  Audit  Office’s  (NAO) 
report  shows  that  monitoring  of  quality  provision 
and data collection could be further improved (277).  

The  shortages  of  qualified  teachers  may  be 
exacerbated  by  a  high  dropout  rate  from 
teacher  education  studies.  A  significant  share 
of teachers is not fully qualified, with variations by 
geographical  area,  education  level  and  service 
provider (278).  Municipal  schools  have  a  higher 
share  of  qualified  teachers  (in  all  grades)  than 
independent  schools  (72%  vs  65%) (279).  At  the 
same  time,  limited  expansion  of  places  in  initial 
teacher education and high dropout rates continue 
to constrain the supply of new teachers. While the 
number of places in higher education significantly 
increased in 2021 and 2022 (by 18 000 in 2022), 
only 263 new places were created in initial teacher 
education for vocational teachers. NAO’s review of 
dropouts (280) found that dropout was highest from 
subject teacher studies, with only 46% of enrolled 
students  graduating.  Dropout  rates  from  other 
teacher  studies  are  also  very  high 
(see 
graph A13.1)  due  to  insufficient  basic  skills  and 
wrong  study  choice.  Some  higher  education 
institutions are developing tools for early detection 
of dropout risk. For primary teacher students, one 
of  the  obstacles  is  the  practical  part  of  initial 
(281).  The  government  has 
teacher  education 
decided to raise the entry requirement for primary 
teacher  education  programmes  from  grade  E  to 
C (282)  from  autumn  2026 (283),  which  may  reduce 
the dropout rate. 

(276) For a certain increase of children with a low socio-economic 
background (and/or migrant background), the share of 
qualified ECEC teachers will decrease by around 10% of that 
increase in children. 

(277) National Audi Office, 2025, Likvärdighet i förskolan – statens 

stöd, uppföljning och tillsyn.  

(278) The share of qualified teachers is in compulsory school: 88% 
in grades 1-3, 81% in grades 4-6; 69% in grades 7-9; in 
upper secondary school: for subject teachers 79%, for 
vocational teachers 57%. 

(279) National Agency for Education, 2025, Lärarprognos 2024. 

(280) Measured as the proportion of students who complete the 

programme within its nominal duration +3 years. 

(281) National Audit Office, 2025, Lärosätenas arbete mot avhopp 

från bristyrkesutbildningar (RiR 2025:3). 

(282) The grade scale goes from A as the highest to F as fail. E 

was a low pass, C is medium-level knowledge.  

 
 
 
 
 
Sweden  is  taking  steps  to  improve  the 
attractiveness  of  the  teaching  profession, 
but  challenges  persist.  The  TALIS  2024  survey 
shows  that  societal  recognition  of  the  teaching 
profession  is  rising  but  remains  low  at  14.7%. 
Satisfaction  with  salary  has  also  increased,  from 
34.8%  in  2018  to  40.1% in  2024,  despite  a drop 
in the ratio of salaries when compared to those of 
tertiary  educated  from  0.87  in  2019  to  0.76  in 
2024.  At  the  same  time,  at  44  hours  per  week, 
teachers’ working time is one of the highest in the 
EU  (EU  average:  39  hours),  and  a  higher  share 
report  stress  related  to  administrative  work 
(64.8%  vs  EU  average:  54.8%).  Despite  the 
provision  of  teaching  assistants,  these  pressures 
have  not  eased  since  2018.  A  high  share  of 
teachers  work  in  a  school  where  more  than  10% 
of  students  have  special  education  needs  (62.9% 
vs  EU:  50.2%)  and/or  where  more  than  10%  of 
students  are  not  native  speakers  (63.5%  vs  EU: 
24.4%).  The latter  figure is  the  highest  in the  EU, 
and  both  have  increased  since  2018.  In  Sweden, 
almost  all  eligible  children  and  students  are 
enrolled 
in  mainstream  education  across  all 
education levels, with only 1-2% of students going 
to  separate  special  schools.  The  government  is 
introducing  legislation  regulating  the  number  of 
teaching  hours,  their  planning  and  follow-up. 
Moreover,  the  national  professional  programme 
for  headteachers,  teachers  and  ECEC  teachers, 
included  in  the  recovery  and  resilience  plan, 
started  in  September  2025.  It  consists  of  two 
parts:  1) 
the 
development  of  professional  competencies  of 
headteachers,  teachers  and  ECEC teachers  and  2) 
the  national  merit  system  for  licensed  teachers 
and ECEC teachers, with qualification levels (284).  

the  national 

structure 

for 

(283) Ministry of Education, 2025, Nu reformeras lärarutbildningen 

– här är alla förändringar, press release. 

(284) Government 2025, Nytt professionsprogram för lärare, 

förskollärare och rektorer ska göra yrkena mer attraktiva, 
press release.  

85 

Graph A13.1: Completion rate of teaching studies 
in Sweden 

Source: SCB, 2022, Universitet och högskolor. 
Genomströmning på grundnivå och avancerad nivå till och 
med 2021/22. 

to 

for 

share 

students 

the 
has 

EU  24.2%.  However, 

Swedish  students’  education  outcomes  are 
relatively  good,  but  worse  for  those  with  a 
migrant  background.  Underachievement  in  the 
OECD  Programme 
International  Student 
Assessment  (PISA)  2022  is  lower  than  the  EU 
average: for mathematics 27.2% vs EU 29.5%, for 
reading 24.3% vs EU 26.2% and for science 23.7% 
vs 
of 
underachieving 
increased 
significantly  since  2018.  Digital  skills  are  slightly 
better than the EU average – 40% of eighth-grade 
students  underachieve  vs  EU  43%  (ICILS,  2023). 
According  to  the  Swedish  national  ICILS  report, 
students  with  a  migrant  background  are  much 
more  likely  to  underachieve:  6  out  of  10  pupils 
born  abroad  to  foreign  parents  do  not  reach  the 
basic  level  of  digital  skills,  and  there  are  also 
significant  differences  according 
socio-
economic background affecting equity and access 
to the schooling system. The share of early leavers 
from  education  and  training  in  2025  was  6.7%, 
0.5  pps  lower  than  in  2024,  and  below  the  EU 
average  of  9.1%.  Yet  foreign-born  students  are 
twice as likely as native-born ones to leave school 
early (11.4% vs 5.5%). Challenges for transition to 
upper  secondary  and  continued  education  remain 
In  2022,  15%  of  all  pupils  failed  to  meet  the 
requirements 
in  a  national 
secondary  education. 
programme 
Disparities  in  grading  can  be  noted  between 
schools,  as  the  way  grades  are  awarded  varies 
across  schools  and  teachers,  with  independent 
schools  being  on  average  more  generous  in  their 
grading.  Greater  heterogeneity  in  the  classrooms 
could  also  help  address 
the  educational 
disadvantage  of 
learners  with  a  migrant 
background.  The  PISA  isolation  index  for  students 
with a migrant background is one of the highest in 
the EU (0.22), which shows that these students are 
more  likely  to  be  concentrated  in  certain  schools. 

for  enrolling 

in  upper 

72%61%46%74%65%0%10%20%30%40%50%60%70%80%90%100%ECECteacherPrimaryeducationteacherSubjectteacherSpecialneedsteacherVocationalteacher 
  
 
     
There  are  several  inquiries  and  policy  initiatives 
aiming to address these issues, e.g. a proposal to 
remedy grade inflation so that grades would fairly 
reflect  students’  knowledge  and  give  them  more 
equal  chances  to  continue  to  the  next  education 
level. However, measures based on these inquiries 
are still to be decided. 

VET  enrolment  and  support  have  increased, 
but  persistent  challenges  to  labour-market 
relevance remain. The share of learners enrolled 
in  vocational  programmes  at  medium  level  (285) 
increased  slightly  to  36.4%  in  2024  but  remains 
well below the EU average (49,4%). Participation in 
work-based VET learning stood at 67.3% in 2025, 
above the EU average (66%%) and above the EU-
level  2025  target  of  60%.  The  recent  economic 
downturn  has  weakened  employment  outcomes 
for  VET  participants.  The  employment  rate  for 
young  people  1-3  years  after  VET  completion 
continues to decline, from 85% in 2024 to 84% in 
2025,  though  it  remains  above  both  the  EU 
average  (77.7%)  and  the  EU  2025  target  (82%). 
Outcomes  are  also  weaker  in  the  first  year  after 
completion  of  post-secondary  non-tertiary  VET 
(yrkeshögskola),  where 
rate 
dropped  from  84%  in  2024  to  81%  in  2025, 
indicating  a  growing  delay  in  the  transition  to 
in 
employment.  Although  most  of 
employment  have  jobs  matching  their  education, 
this  share  has  fallen  over  time,  to  58%  in  2025, 
in  entirely  non-matching 
with  employment 
the 
occupations 
situation,  Sweden  has,  among  other 
things, 
introduced measures to strengthen the integration 
of  labour  market  needs  into  the  planning  and 
provision  of  upper  secondary  VET.  Moreover, 
regional  authorities  are  required  to  set  skills 
priorities  and  assess  their  short-  and  long-term 
skills needs (see also Annex 19). The Recovery and 
Resilience  Facility  has  supported  the  creation  of 
over  68  000  new  places 
in  regional  adult 
vocational education. 

increasing (286).  To  address 

the  employment 

those 

in  the  EU. 

Tertiary educational attainment is among the 
highest 
In  2025,  the  tertiary 
educational  attainment  rate  for  people  aged  25-
34  was  53.6%,  higher  than  the  EU  average  of 
44.8%). The rate for young people living in cities is 

(285) Combination of upper-secondary and post-secondary non-tertiary 

education. 

(286) Statistics Sweden (SCB), 2025, Svårare att få arbete efter 

examen från yrkeshögskolan. 

86 

nearly  twice  as  high  as  for  those  living  in  rural 
areas (66.9% vs 34.1%). The employment rate of 
recent  tertiary  graduates  was  high  at  91.1%  in 
2025 (EU: 87%). The share of students in science, 
technology,  engineering  and  mathematics  (STEM) 
programmes is higher than the EU average (28.9% 
vs  EU:  26.9%  in  2023).  However,  the  number  of 
jobs  requiring  STEM  degrees  is  growing  much 
faster  than  the  supply  of  people  with  STEM 
qualifications (287) (see also Annex 4). 

Sweden has one of the highest adult learning 
participation  rates  in  the  EU.  In  2022,  66.5% 
of adults participated in education and training, far 
above  the  EU  average  of  39.5%  and  further 
increasing.  These  results  reflect  a  long-standing 
tradition  of  adult  education  and  a  comprehensive 
network  of  folk  high  schools,  study  associations 
and similar providers (288). While participation rates 
vary  among  cohorts,  for  all  they  are  among  the 
highest in the EU. The largest share of learners are 
young  people  (18-24),  of  whom  some  95 700 
were enrolled in Komvux in 2024, around a quarter 
of  the  total (289).  This  represents  approximately 
11%  of  that  total  age  group  and  indicates  issues 
within  the  education  system,  as  students  who 
leave  formal  education  early  or  with  insufficient 
grades  continue  education  via  adult  learning.  A 
significant part (39%) are foreign born who did not 
start  their  education  in  Sweden.  Participation  was 
also  higher  among  those  with  higher  levels  of 
education  (around  45%)  and  among  people  living 
in  urban  areas  (around  40%) (290).  More  recent 
data  from  the  labour  force  survey  suggest  a 
possible  further  increase  in  participation  rates 
between 2022 and 2024. 

Sweden is  undergoing  one  of  the  fastest 
shifts 
posing 
challenges to competitiveness in key sectors. 
Rapid digitalisation, automation and the rise of AI 

demands (291), 

skills 

in 

(287) Farrahi, N., 2023, Framtiden kräver STEM: 

Rekommendationer för en framgångsrik nationell strategi, 
Naturvetarna. 

(288) Adult Education Survey 2022, special extraction excluding 

guided-on-the-job training. 

(289) Komvux is the Swedish municipal education system, offering 

free courses. 

(290) Statistics Sweden (SCB), 2025, Vuxnas lärande 2024. 

(291) Among OECD countries Gidehag, A. (2024). Arbetskrafts- och 
kompetensbrist: En kunskapsöversikt (2024). Myndigheten 
för tillväxtpolitiska utvärderingar och analyser 
(Tillväxtanalys). https://www.tillvaxtanalys.se 

 
 
 
are reshaping roles across industries. At the same 
time,  the  economy  is  moving  towards  a  more 
knowledge-based  model,  further  accelerating  this 
transformation.  As  a  result,  there  is  a  growing 
shortage  of  highly  skilled  workers (292).  Recent 
analysis (293)  points to especially  high demand for 
skills  in  AI,  cybersecurity,  software  development 
and green technologies (294). The green transition is 
having a significant impact on the Swedish labour 
market,  with  green  skills  required  across  the 
economy,  especially  in  the  north  of  the  country. 
Skills  for  the green transition  largely  overlap  with 
those  needed  in  an  increasingly  automated  and 
digital economy.  

Sweden  has  a  strong  digital  skills  base,  but 
ICT  growth  and  ensuring  a 
sustaining 
sufficient  number  of  STEM  graduates 
remains  a  challenge.  Sweden  scores  highly  in 
both  basic  and  advanced  digital  skills,  ranking 
among the highest in the EU. In 2025, 70% of the 
population  had  at 
least  basic  digital  skills, 
compared to  the  EU  average  of  60.4%.  Advanced 
IT skills are reflected in the labour market – 8.6% 
of  workers  are  ICT  specialists,  well  above  the  EU 
average of 5%. However, Sweden faces challenges 
in  keeping  pace  with  rising  demand  for  digital 
expertise (295).  Sweden’s  recovery  and  resilience 
plan  earmarks  EUR  42  million  in  funding  to 
enhance  digital  skills  at  higher  education 
institutions.  According  to  the  Swedish  Agency  for 
Growth  Policy  Analysis (296),  STEM  skills  are 
considered  essential  for  the  green  transition. 
Meanwhile,  the  number  of  students  graduating  in 
STEM  subjects 
insufficient  to  meet  rising 
demand (297). 
In  2024,  Sweden  had  36.0% 
medium-level  VET  pupils  in  STEM  fields  (EU: 
36.9%),  and  15.6%  were  female  pupils  (EU: 
15.9%).  Although  enrolment  in  tertiary  STEM 
programmes  surpassed  the  EU  average  in  2023 
(28.9% vs 26.9%), it fell short of the proposed EU-

is 

(292) Gidehag, A., 2024, Arbetskrafts- och kompetensbrist: En 
kunskapsöversikt, Myndigheten för tillväxtpolitiska 
utvärderingar och analyser (Tillväxtanalys). 

(293) Edstellar, 2025, Skills in demand in Sweden.  

(294) Edstellar, 2025, Skills in demand in Sweden.  

in 

level  target  of  32% (298).  Dropout  rates  among 
engineering  students  are high (46%),  and student 
interest 
science  programmes  at  upper 
secondary  school  has  been  declining.  This  may 
partly reflect weaker performance in mathematics, 
which  is  a  key  foundation  for  STEM  studies. 
Moreover,  according  to  the  Swedish  Agency  for 
Growth  Policy  Analysis,  occupational  stereotypes 
and gender segregation in the labour market may 
industries. 
constrain 
Broadening  the  talent  pool  and  developing  new 
and  existing  skills  would  be  beneficial  for 
obtaining  the  green  competencies  crucial  for  the 
green transition. In 2025, Sweden adopted a STEM 
strategy  to  improve  the  attractiveness  of  STEM 
programmes and increase enrolment. The Swedish 
European  Social  Fund  Plus  (ESF+)  programme  is 
further  investing  EUR  439  million  into  reskilling 
and  upskilling  measures  for  the  labour  force, 
including in STEM. 

into  green 

recruitment 

skills 

The  well-established 
intelligence 
system is crucial for ensuring that education 
provides  labour-market  relevant  skills.  The 
Swedish  skills  intelligence  system  is  built  on  a 
decentralised yet coordinated framework involving 
three  key  institutions:  Statistics Sweden (SCB),  the 
Public  Employment  Service  and  the  National 
Institute  of  Economic  Research.  These  bodies 
conduct  various  skills  anticipation  activities, 
forecasting, 
including  short-  and 
sector-specific 
employer 
assessments. Their work is grounded in extensive, 
frequently  updated  data  and  informed  by  close 
collaboration  with  stakeholders  including  trade 
unions,  employer  confederations  and  educational 
institutions.  Tools  such  as 
the  Occupational 
Compass (299) and  reports  such  as  Trends  and 
Forecasts (Trinder 
help 
disseminate  insights.  The  intelligence  gathered  is 
used to shape education and training policies and 
guide labour market interventions.   

long-term 
and 

prognoser) (300) 

surveys 

och 

(298) STEM Education Strategic Plan: skills for competitiveness and 

(295) European Commission Digital Decade Country Report, 2025. 

innovation, 2025. 

(296) Tillväxtanalys, 2024, Grön omställning och 

(299) Public Employment Service, Hitta yrken. 

kompetensförsörjning. 

(297) Education and Training Monitor 2025. 

(300) Last available report is for 2023 (published in 2024): Ditt 

utbildningsval påverkar dina jobbmöjligheter. 

87 

 
 
 
 
 
ANNEX 14: SOCIAL SCOREBOARD 

Table A14.1: Social Scoreboard for Sweden 

Update of 4 May 2026. Members States are categorised based on the Social Scoreboard according to a methodology agreed with 
the EMCO and SPC Committees. Please consult the Annex of the Joint Employment Report 2026 for details on the methodology 
(https://employment-social-affairs.ec.europa.eu/joint-employment-report-2026_en). 
Source: Eurostat 

88 

66.56.770.05.93.94.5881.88.81.8121.218.623.438.322.610.859.62.1Critical situationTo watchWeak but improvingGood but to monitorOn averageDynamic labour markets and fair working conditionsSocial protection and inclusionShare of individuals who have basic or above basic overall digital skills(% of the population aged 16-74, 2025)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2025)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2025)Self-reported unmet need for medical care (% of the population aged 16+, 2025)Disability employment gap (percentage points, population aged 20-64, 2025)Housing cost overburden (% of the total population, 2025)Adult participation in learning (during the last 12 months, excl. guided on the job training, % of the population aged 25-64, 2022)Equal opportunities and access to the labour marketBest performersBetter than averageEarly leavers from education and training(% of  the population aged 18-24, 2025)Young people not in employment, education or training(% of the population aged 15-29, 2025)Gender employment gap(percentage points, population aged 20-64, 2025)Income quintile ratio (S80/S20, 2025)At risk of poverty or social exclusion (AROPE) rate (% of the total population, 2025)Employment rate(% of the population aged 20-64, 2025)Unemployment rate(% of the active population aged 15-74, 2025)Long term unemployment(% of the active population aged 15-74, 2025)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2024)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2025) 
 
 
 
  
 
 
Graph A15.2: Treatable mortality 

ANNEX 15: HEALTH AND HEALTH SYSTEMS 

health 

system 

Sweden’s 
performs 
comparatively well, with high life expectancy 
at birth linked to low levels of treatable and 
preventable  mortality.  However,  the  country 
faces  shortages  of  healthcare  professionals  and 
hospital  beds,  and  an  uneven  geographical 
distribution  of  healthcare 
resources.  Several 
measures  are  underway  to  address  these  issues 
and  place  the  country  in  a  better  position  to 
ensure the health of its population, social fairness 
and productivity. 

Graph A15.1: Life expectancy at birth, years 

Age-standardised death rate - mortality that could be avoided 
through optimal quality healthcare. 
Source: Eurostat (indicator: hlth_cd_apr) 

Preventable  mortality  in  Sweden  is  among 
the  lowest  in  the  EU  despite  comparatively 
modest  spending  on  disease  prevention.  In 
in  Sweden 
2023,  spending  on  prevention 
accounted  for  3.1%  of  total  spending  on  health, 
lower  than  the  EU  average  of  3.7%.  Yet,  the  rate 
of  preventable  mortality  in  Sweden  was  around 
30% lower than the EU average, among the lowest 
in the EU. High vaccination coverage (above the EU 
average  levels  for  measles,  influenza  and  human 
papillomavirus)  and  high  uptake  of  cancer 
screening contribute to this achievement. Notably, 
participation  rates  in  screening  programmes  for 
breast,  cervical  and  colorectal  cancer  are 
substantially  higher  than  the  EU  averages  (302). 
low  fruit 
Unhealthy  dietary  habits,  such  as 
consumption, 
to 
preventable  deaths.  While  Swedish  adults  report 
physical activity rates well above the EU average, 
obesity  rates  have  risen  in  recent  years  and 
surpassed the EU average, raising concerns about 
the  prevalence  of  diabetes  and  cardiovascular 
diseases  in  the  future.  The  smoking  rate  among 
adults  is  one  of  the  lowest  in  the  EU,  but  regular 
use  of  vaping  products  has  been  on  the  rise 
among  adolescents  and  exceeds  the  EU  average 
rate.  Sweden  participates  in  joint  actions  funded 
by  EU4Health  aimed  at  reducing  the  onset  and 
burden  of  non-communicable  diseases,  such  as 
PreventNCD  (303).  In  its  2025  report,  Sweden’s 
Productivity Commission proposed putting in place 
a  national  programme  to  strengthen  people’s 

contributors 

leading 

are 

Source: Eurostat (indicator: demo_mlexpec) 

Life  expectancy  at  birth  in  Sweden  was 
among  the  highest  in  the  EU  in  2024.  As  in 
other  EU  countries,  women  can  expect  to  live 
longer than men (3.3 years longer). However, they 
can expect to live around 2.2 years less than men 
in  good  health.  At  age  65,  the  life  expectancy  for 
Swedish people is longer than the EU average, and 
importantly,  their  healthy  life  expectancy  at  that 
age is among the longest in the EU. Sweden fares 
well  in  avoiding  deaths  from  treatable  causes.  In 
2023,  the  rate  of  treatable  mortality  was  among 
the  lowest  in  the  EU,  reflecting  the  clinical 
effectiveness  of  the  health  system.  Diseases  of 
the  circulatory  system  (‘cardiovascular  diseases’) 
and cancer were the leading causes of death, but 
with  mortality  rates  below  the  EU  average.  In 
particular,  the  age-standardised  mortality  rate 
from  cardiovascular  diseases  dropped  by  around 
50% in the past two decades, driven by significant 
advances  against  ischaemic  heart  disease  (301).  In 
2023,  the  suicide rate remained  above  the  EU 
average, having increased since 2014.  

(301) OECD/European Observatory on Health Systems and Policies 
(2025), Country Health Profile 2025: Sweden. State of 
Health in the EU.  

(302) Country Health Profile 2025: Sweden – see earlier footnote. 

(303) JA PreventNCD - Reducing Europe's cancer and NCD burden 
through coordinated strategies on health determinants. 

89 

82.483.183.183.483.8808080.681.481.520202021202220232024SwedenEU70.560.262.159.759.258.494.889.291.793.389.786.8201420192020202120222023per 100 000 populationSwedenEU 
 
     
 
     
 
 
 
ability  for  self-care  and  to  implement  prevention 
measures for themselves (304).  

Health  spending  in  Sweden  and  its  share 
covered  by  public  funds  are  well  above  the 
EU  average.  In  2023,  health  spending  per 
inhabitant  in  Sweden  (adjusted  for  differences  in 
purchasing  power)  was  among  the  highest  in  the 
EU.  Outpatient  care  accounted  for  the  largest 
share  of  health  spending  (higher  than  the  EU 
average), followed by long-term care. This reflects 
Sweden’s policies to shift care away from hospital 
to  community  settings.  In  2023,  the  publicly 
funded  share  of  health  spending  stood  at  86.1% 
of total health spending, one of the highest in the 
EU. Consequently, the share of households’ out-of-
pocket  payments  for  healthcare  was  lower  than 
the  EU  average.  Out-of-pockets  payments  relate 
mainly  to  retail  pharmaceuticals,  dental  care  and 
outpatient  care.  To  support 
long-term 
sustainability  of  the  health  system  against  a 
backdrop  of  rising  spending  for  pharmaceuticals, 
the government increased in July 2025 the ceiling 
for  out-of-pocket  payments  for  pharmaceuticals, 
from  SEK  2 900  to  SEK  3 800  over  a  12-month 
period. Despite this increase, targeted protections, 
such as exemptions or reduced fees, for vulnerable 
groups  remain.  To  strengthen  financial  protection 
from healthcare costs, a dental care subsidy came 
into  force  in  January  2026,  through  which  people 
aged  67  and  older  pay  only  10%  of  the  cost  of 
most dental treatments. 

the 

is  effective 

Sweden’s  health  system 
in 
keeping  hospital  admission  rates  low,  but  a 
low  density  of  hospital  beds  poses  capacity 
challenges.  Sweden’s  policy  choice  to  invest  in 
outpatient  care  has  been  effective  in  preventing 
unnecessary  hospitalisations.  In  2023,  the  rate  of 
avoidable  hospital  admissions  for  conditions  that 
are  sensitive  to  management  at  outpatient  care 
level  (such  as  congestive  heart  failure,  diabetes, 
asthma  and 
chronic  obstructive  pulmonary 
disease)  was  25%  below  the  EU  average  (305). 
Sweden is also among the leading EU countries in 
combating 
(AMR). 
Antibiotic  consumption  was  among  the  lowest  in 
the  EU  in  2023  and  Sweden  is  well  on  track  to 
meet its national 2030 consumption target set by 

antimicrobial 

resistance 

(304) More opportunities for greater prosperity, Final report from 

the Productivity Commission, 2025, SOU 2025: 96. 

(305) Country Health Profile 2025: Sweden – see earlier footnote. 

90 

an  EU  Council  Recommendation  on  AMR  (306).  The 
rate  of  emergency  department  visits  in  hospitals 
and  the  average  length-of-stay  in  hospitals  were 
comparatively lower in Sweden than in many other 
OECD countries (307). The average length-of-stay in 
hospitals  is  in  fact  among  the  lowest  in  the  EU. 
However, 
the  density  of  hospital  beds  per 
population  is  among  the  lowest  in  the  EU,  to  the 
extent  that  all  regions  in  the  country  identified 
shortages of available places (308). According to the 
National Board of Health and Welfare (NBHW), the 
number  of  hospital  beds  that  were  available  in 
2025  should  increase  by  12%,  or  approximately 
1 900  beds,  to  meet  short-term  needs.  The 
government  has  launched  a  multi-year  expansion 
plan 
through  a 
combination  of  efficiency  gains  and  funding  for 
new  beds.  The  expansion  has  encountered 
difficulties though, as it became apparent that the 
shortfall  of  hospital  beds 
is  mainly  due  to 
shortages of nursing staff and less due to lack of 
physical  capacity  or  funding.  Consequently,  the 
government redesigned the plan and now requires 
regions to implement workforce reforms targeting 
a 
nursing 
precondition  for  accessing  funding  for  new 
hospital  beds.  The  target  of  closing  the  bed 
capacity gap is postponed to 2027, but the NBHW 
warns that, without more decisive action, this may 
not be reached before 2033 (309). 

the  shortfall 

to  address 

recruitment 

retention 

and 

as 

Long  waiting  times  pose  challenges 
in 
accessing  healthcare,  but  measures  are 
underway  to  address  them.  In  2025,  3.6%  of 
the  Swedish  population  who  reported  needing 
medical  care  had  unmet  needs,  mainly  due  to 
waiting  times.  This  share  was  equal  to  the  EU 
average. Long waiting times constitute a challenge 
in  primary  care,  mental  healthcare  and  specialist 
care.  In  2024,  6.7%  and  11.2%  of  the  population 
reported unmet needs in primary care and mental 
healthcare 
the  EU 
respectively,  both  above 
averages  (310).  Significant  proportions  of  patients 

(306) Council Recommendation on stepping up EU actions to 

combat antimicrobial resistance in a One Health approach, 
2023/C 220/01. 

(307) OECD Health Statistics 2025.  

(308) Inspectorate for Health and Care, An interim report on the 

national hospital supervision, 2023.  

(309) Country Health Profile 2025: Sweden – see earlier footnote.  

(310) Country Health Profiles Data visualisation dashboard - Public 
Health - European Commission (the section ‘Performance: 
Accessibility’ for Sweden). 

 
 
 
Table A15.1: Key health indicators 

*The EU average is weighted for all indicators except for doctors and nurses per 1 000 population, for which the EU simple 
average is used based on 2023 data (or latest available). Doctors’ density data refer to practising doctors in all countries except 
Greece, Portugal (licensed to practise) and Slovakia (professionally active). Density of nurses: data refer to practising nurses (EU 
recognised qualification) in most countries except Portugal (licensed to practice) and Slovakia (professionally active). Latest data 
update on nurses for Belgium and Sweden: 2022; for France: 2021; for Luxembourg: 2017. 
** latest available 10-year trend: ratio 2023/2014 or 2024/2013; a factor of 2.00 means that it has doubled in 10 years. 
***‘Available hospital beds’ covers somatic care, not psychiatric care. 
Source: Eurostat 

on 

the 

regions 

have  waited  longer  than  the  statutory  90-day 
guarantee  limit  for  a  first  specialist  consultation 
(30%)  or  elective  surgical  procedures  (45%) 
between 2021 and 2024 (311). The government has 
launched  initiatives  to  reduce  waiting  times  and 
improve  access  to  healthcare.  A  main  measure 
was the allocation of SEK 5.9 billion funding to the 
regions in 2025, to increase capacity in specialised 
healthcare  and  shorten  waiting  lists.  Additional 
funding of SEK 1.8 billion for this was  announced 
in the 2026 budget. The funding will be distributed 
performance 
based 
to 
requirements.  Furthermore,  from  October  2025, 
regions  that  fail  to  comply  with  the  statutory 
waiting  time  guarantee  could  face  financial 
sanctions.  Moreover,  the  government  has  been 
working to establish a national healthcare referral 
service.  The  aim  is  to  enable  patients  to  receive 
care from healthcare providers in other regions, as 
well  as  from  the  private  sector,  where  waiting 
times  are  shorter  or  where  capacity  is  available. 
Finally,  the  Swedish  eHealth  Agency is  working  to 
make  available  by  May  2026  a  web-based 
national  comparison  service  for  primary  care 
providers.  The  service  will  include  indicators  such 
as waiting times and opening hours, to help people 
make 
informed  choices  about  primary  care 
providers.  

and 

Shortages 
geographical 
distribution  of  health  professionals  add  to 
the  availability  of 
the  concerns  over 

uneven 

healthcare. The density of doctors and nurses in 
Sweden  is  above  the  EU  average.  However,  this 
masks  imbalances  in  specialty  and  geographic 
distributions,  as  well  as  the  level  of  capacity 
required  to  meet  the  demand  for  healthcare.  All 
regions  report  shortages  of  general  practitioners 
(GPs) and specialist doctors, with the most severe 
gaps  in  rural  and  northern  areas  (see  Annex  18). 
The distribution of specialist nurses is also uneven 
across  the  regions  (312).  Shortages  of  nurses  in 
hospital  settings  result  in  surgical  backlogs  and 
limit  hospital  bed  capacities.  Around  30%  of 
nurses  are  aged  55  and  over,  and  only  around 
24%  are  aged  below  35,  raising  concerns  about 
the  long-term  accessibility  of  health  services.  The 
share  of  GPs  among  all  practicing  doctors  is  low 
(14%),  compared  to  the  EU  average  (20%).  The 
NBHW  estimated  a  shortage  of  between  2 500 
and  6 000  GPs  in  2022.  In  its  2025  report, 
Sweden’s  Productivity  Commission  stressed  the 
importance  of 
the  proportion  of 
specialist  certificates  issued  in  general  medicine 
out  of  the  total  number  of  specialist  certificates 
issued. The Productivity Commission also proposed 
that  the  government  takes  a  more  strategic 
approach  to  the  provision  of  healthcare  skills;  for 
example,  by  setting  relevant  volume  targets  for 
higher  education  institutions  (313).  To  address 
shortages  and  meet  healthcare  demand,  Sweden 
has launched a new strategy for health workforce. 

increasing 

(312) Country Health Profile 2025: Sweden – see earlier footnote. 

(313) More opportunities for greater prosperity, Final report from 

(311) Country Health Profile 2025: Sweden – see earlier footnote. 

the Productivity Commission, 2025, SOU 2025: 96. 

91 

2020202120222023202410-year change**EU average* (latest year) Cancer mortality per 100 000 population214.1206.6205.0202.6n.a.0.86233.1 (2023)Mortality due to circulatory diseases per 100 000 population 267.3 257.1 258.7 246.9n.a.0.73313.0 (2023)Current expenditure on health, purchasing power standards, per capita3 9474 2454 3804 6884 8661.323834.9 (2023)Public share of health expenditure, % of current health expenditure 86.1 85.8 85.9 86.1 85.71.0280.6 (2023)Spending on prevention, % of current health expenditure 3.34.23.33.1n.a.1.053.7 (2023)Available hospital beds per 100 000 population*** 165 160 150 148n.a.0.75440 (2023)Doctors per 1 000 population*4.34.44.5n.a.n.a.n.a.4.3 (2023)*Nurses per 1 000 population* 10.7 10.9 11.0 11.0n.a.1.067.6 (2023)*Mortality at working age (20-64 years), % of total mortality10.110.710.010.19.70.8514.3 (2023)Consumption of antibiotics in the community and hospital sectors,      defined daily doses per 1 000 inhabitants 10.3 10.1 11.2n.a.n.a.n.a.20.3 (2024) 
 
 
 
     
 
and 

indicators 

A key element of this strategy is SEK 800 million 
annually  in  funding  to  regions  to  support  the 
uptake  of  permanent  posts  in  underserved  areas 
through  salary  supplements,  relocation  bonuses 
and  free  housing.  The  funding 
linked  to 
is 
accountability 
performance 
mechanisms. For example, regions must convert at 
least  70%  of  temporary  staff  spending  into 
permanent  contracts  within  two  years.  Further 
measures  include  (i)  funding  of  SEK  1.3  billion  to 
create  more  than  2 000 permanent  nursing  posts 
and  re-open  closed  hospital  beds;  (ii)  funding  for 
scholarships  offering  a  full  salary  during  training 
to  doctors  who  choose  to  train  in  shortage 
specialties  and  who 
in 
underserved  regions  for  five  years;  and  (iii) 
funding  for  expanding  work-based  training  in 
nursing programmes. 

to  work 

commit 

Sweden  has  increased  investment  in  digital 
technologies  for  health,  expanding  their 
uptake. Sweden has been investing consistently in 
digital  technologies  for  health,  more  so  following 
the  COVID-19  pandemic.  Since  2015,  the  amount 
invested  annually,  expressed  in  EUR  million  per 
100 000  population,  has  been  over  twice  the  EU 
average. As a result, the shares of Swedish people 
accessing  their  personal  health  records  online  or 
using  online  health  services  (excluding  phone) 
instead  of  in-person  consultations  both  increased 
between 2020 and 2024 and stood above the EU 
average. To further increase the adoption of digital 
technologies in health, Sweden is taking measures 
to  improve  the  use  of  standards  that  support 
interoperability  across  regions  and  applications.  A 
project  under  the  Technical  Support  Instrument 
helped  to  inform  a  health  data  strategy  for  the 
regions.  The  government  has  set  up  a  national 
coordinator  for  the  deployment  of  a  national 
to  make  health  data 
digital 
accessible  across  the  care  chains  (see  Annex  7). 
Moreover, Sweden participates in joint actions and 
benefits  from  direct  grants  under  EU4Health, 
which aim to improve the semantic interoperability 
of  health  data  and  facilitate  the  implementation 
of the European Health Data Space. A coordinated 
national approach is also being pursued to ensure 
the meaningful  use of artificial intelligence (AI) in 
the  country’s  health  system.  All  regional  health 
authorities  are  working  together  with  academia 
and industry to scale-up successful pilot initiatives 
in AI applications for the health sector.  

infrastructure 

Sweden’s  pharmaceutical  sector  is  of  high 
economic  significance.  While  employment  in 

pharmaceutical manufacturing remains among the 
lowest  in  the  EU,  the  country  stands  out  as  a 
leading hub for clinical research and innovation. In 
2024,  Sweden  reported  one  of  the  highest 
numbers of clinical  trials per million population in 
the EU (28.7), much higher than the EU average of 
18.3 (314). Investment in research and development 
by  Sweden’s  pharmaceutical  industry  has  been 
strong  over  the  years,  with  the  amount  spent  per 
capita  annually  standing  well  above  the  EU 
average.  However,  a  considerable  reduction  was 
observed in 2023 (315). Despite this, the number of 
patents  granted  for  pharmaceuticals  per  million 
population (3.7) in 2024 was more than twice the 
(316).  Regarding  trade  and 
EU  average 
(1.8) 
commercialisation, 
pharmaceutical 
Sweden’s 
industry  maintains  a  rather  modest  share  of  the 
exports  to  non-EU  countries  (7.8%  in  2025vs  an 
EU average of 13.9%). 

(314) US National Library of Medicine, https://clinicaltrials.gov.  

(315) The Pharmaceutical Industry in Figures, EFPIA (European 

Federation of Pharmaceutical Industries and Associations). 

(316) European Patent Office: Statistics & Trends Centre | epo.org. 

92 

 
 
ANNEX 16: HOUSING 

In  2025,  Sweden  received  a  country-specific 
recommendation  on  private  debt  and  the 
housing  market. 
In  particular,  Sweden  was 
recommended  to  improve  the  efficiency  of  the 
housing  market,  including  by  introducing  reforms 
in  the  rental  market.;  to  stimulate  investment  in 
residential  construction  to  ease  the  most  urgent 
shortages;  to  remove  structural  obstacles  to 
facilitate  residential  construction;  and  to  address 
risks  related  to  high  household  debt  by  gradually 
reducing the tax deductibility of mortgage interest 
payments  or  increasing  recurrent  property  taxes, 
while developing appropriate tools to better assess 
and target policies.  

times 

increased, 

The  supply  of  housing  continues  to  be 
insufficient, particularly in the biggest cities 
of  Stockholm  and  Gothenburg.  The  supply 
issues stem essentially from credit incentives and 
rental  regulation.  Average  zoning  and  permitting 
reflecting 
have 
lead 
administrative  complexity  and  varying 
local 
requirements  that  push  up  land  and  property 
prices (317). Addressing such issues was partly the 
country-specific 
of 
aim 
recommendations 
resulting 
delays, together with strict rent controls, constrain 
new  rental  construction  and  lead  to  misallocation 
within  the  existing  housing  stock.  These  factors 
contribute  to  overcrowding,  long  rental  waiting 
lists in major cities and subdued mobility for both 
tenants  and  homeowners,  intensifying  the  urban 
housing shortage.  

for  Sweden.  The 

2025 

the 

Tax  incentives  in  Sweden  continue  to favour 
high-income  homeowners,  contributing  to  a 
demand-driven  increase  in  property  prices, 
especially 
in  urban  areas  where  supply 
cannot  easily  expand,  as  well  as  creating 
high  levels  of  private  debt.  These  policies 
exacerbate  inequality  between  homeowners  and 
renters  and  addressing  this  is  among  the  2025 
Country  Specific  Recommendations.  Household 
lending,  consisting  primarily  of  housing  loans, 
forms  the  largest  component  of  Swedish  banks’ 
portfolios  and  is  nearly  twice  the  EU  average  in 
relative  terms.  Swedish  households  have  become 
increasingly  indebted,  ranking  among  the  highest 
in the EU relative to income. This uptake of loans 
reflects  low  recurrent  property  taxation,  coupled 

(317) Matching housing supply and demand: OECD Economic 

Surveys: Sweden 2025 | OECD. 

93 

to 

leads 

in  higher 
rents 

with  tax  deductibility  of  mortgage  interest.  These 
forms  of  tax  incentives  often  take  the  form  of 
mortgage  interest  tax  relief  for  owner-occupied 
housing  and  hence  are  more  likely  to  benefit 
households 
income  deciles.  Tight 
rationing  and 
regulation  of 
misallocation  and  increases  pressures  on  the 
purchase  segment.  The  high  level  of  household 
debt,  often  financed  with  housing  loans  at  short 
maturities,  implies  a  high  interest  sensitivity  and 
has  made  the  economy  more  vulnerable  to 
housing  market  stagnation  or  marked  price 
declines  which  also  affect  aggregate  domestic 
demand and the business cycle. Mortgage interest 
deductibility and low recurrent property also affect 
public  finances  to  the  extent  that  it  implies 
foregone  revenue  and  a  higher  dependence  on  a 
more  distortive  tax  base.  More  lenient  borrower-
based  macroprudential  rules  for  mortgages  have 
taken  effect  from  1  April  2026.  The  Swedish  FSA 
expects  this  relaxation  to  spur  house  price  and 
credit growth (318). Detailed statistics on household 
balance  sheets  and  their  distribution  are  lacking.  
Developing  better 
of 
their 
household  assets  and 
distribution  as  recommended  in  the  CSR  would 
help  to  better  assess  such  vulnerabilities  and 
develop  calibrated  tools  and  policy  measures.  A 
proposal  to  that  effect  was  not  followed  up  on, 
however (319).  

statistical  measures 

liabilities  and 

Limited labour mobility is made worse by the 
shortage of affordable and available housing 
in  growth  centres.  The  prices  in  a  large  part  of 
the  rental  market  are  set  through  collective 
bargaining, a process intended to promote fairness 
and  stability  across  regions.  Rent  levels  are 
determined  by  different  factors  such  as  the  size 
and  condition  of  the  unit,  rather  than  by  the 
market  demand  for  specific  areas.  While  this  has 
helped  keep  rents more affordable for those able 
to  access  such  properties  in  the  most  dynamic 
cities, it  has  also  created scarcity  and  rigidities in 
allocation  adding  to  the  distortions  created  by 
degressive  fixed  property  taxation.  The  system 
leads to people often remaining in homes that do 

(318) Swedish FSA, Stability in the Financial System, FI 25–30190.  

(319) En ny statistik över hushållens tillgångar och skulder, Statens 

Offentliga Utredningar 2022:51. As an alternatvie it is 
proposed to expand Statistics Sweden’s microsimulation 
model to include sample-based data on a limited set of 
household sector debt and debt servicing variables, but that 
would be an imperfect substitute to comprehensive 
household balance sheet data . 

 
 
 
 
 
 
not match their job location, family size or income 
level,  while  low-income  and  marginalised  groups 
are  disproportionately  locked  out  or  pushed  into 
informal  arrangements.  As  a  result,  geographical 
mobility, especially the ability to move for work, is 
significantly  constrained.  The  absence  of  social 
housing also makes it difficult to allocate housing 
to those most in need. Therefore, a reform of the 
rental  market  to  address  these  challenges  was  a 
country-specific recommendation in 2025. 

their  interaction  with  the  impact  of  distortions 
in  the  ownership 
emanating  from  debt  bias 
segment. Rents follow inflation with a lag. Thus, as 
inflation eased after 2023, rents rose faster than 
overall inflation, increasing the burden on tenants. 
High living costs  relative to incomes and subdued 
household  confidence  thus  contributed  to  hold 
back private consumption growth. 

Graph A16.1: House prices, rents and price-to-
income evolution in SE and EU27 since 2005 

Housing market developments 

Nominal house prices in Sweden remain high. 
House  prices  peaked  in  2022  following  a  decade 
of  strong  growth.  They  have  adjusted  somewhat 
notably  in  response  to  the  peak  in  inflation,  with 
nominal  house  prices  declining  in  2023–2024 
before  stabilising,  with  1%  year-on-year  growth 
recorded  in  2025.  Nevertheless,  house  prices 
remain  overvalued  by  around  18% 
in  2025 
(according  to  the  standard  European  Commission 
methodology)  (320).  Furthermore,  eased  borrowing 
costs  coupled  with  improving  real  incomes  and 
looser macroprudential requirements are expected 
to  induce  additional  house  price  and  mortgage 
growth  in  future.  This  could  help  reverse  the  net 
effect  of  recent  movements  in  house  price  and 
income  growth,  where  affordability  had  improved 
ratio 
somewhat,  with 
declining. In all, housing remains expensive relative 
to incomes and affordability challenges persist. 

price-to-income 

the 

Rental prices and house prices have diverged 
over  the  past  decades.  About  one  third  of 
residents live in rental accommodation. The rental 
market  is  characterised  by  a  dual  structure, 
consisting  of  a  regulated  segment  (including 
existing and new rental contracts) and newer units 
with  market-aligned  rents  (321).  Rental  controls  in 
Sweden  are  the  strictest  in  the  OECD  (322).  This 
structure  continues  to  generate  long  waiting  lists 
for regulated housing and restricts labour mobility. 
Related  affordability  problems,  most  acute  in 
economically  stog  urban  areas,  are  aggravated  in 

(320) See  European  Commission  (2026),  In-depth  Review  2026 

Sweden, May 2026. 

(321) See  European  Commission  (2025),  In-depth  Review  2025 

Sweden, May 2025. 

(322) OECD Economic Surveys: Sweden 2025 | OECD. 

94 

Source: Eurostat 

Housing supply has weakened significantly in 
recent  years.  After  expanding  throughout  the 
second  half  of  the  2010s  and  peaking  in  2021–
2022,  residential  housing  investment  declined 
sharply  and  has  stabilised  at  relatively  low  levels 
in  line  with  the  high  interest  sensitivity  and  high 
land  prices  and  increases  in  costs  that  are 
restraining  construction  (Graph  A16.2).  This  trend 
is  mirrored  by  residential  building  permits,  which 
declined  by  more  than  50%  in  2023  after  a 
historic  peak  in  2021-2022.  Permit  levels  remain 
far  below  pre-pandemic  averages,  pointing  to  a 
persistently  constrained  housing  supply  pipeline 
(Graph  A16.2).  Construction  costs  have  continued 
to  rise  despite  the  downturn  in  activity.  Producer 
prices for residential buildings increased steadily in 
2020-2025,  weighing  on  profitability  and 
investment incentives (Graph A16.2). 

751001251501752002252502750507091113151719212325Index (2005 = 100)Nominal prices SENominal prices EU27Rental prices SERental prices EU27Price-to-income ratio SEPrice-to-income ratio EU27 
 
  
Graph A16.2: House supply indicators in SE since 
2005 

construction  needs  relates  mainly  to  urban  areas.  
As overall conditions in the housing market mirror 
to  a  large  extent  demand  conditions  that  are 
unlikely  to  be  solved  only  by  increased  supply, 
reforms  with  respect  to  housing  taxation  and 
credit  and  rental  regulation,  as  recommended  in 
the  CSR  would  be  needed  to  balance  supply  and 
demand conditions. 

Map A16.1:  Housing construction gap 

Source: Eurostat 

Housing  supply  has  failed  to  keep  pace  with 
demographic growth in the largest cities and 
economically  dynamic  areas,  while  a  rising 
number  of municipalities  report  a surplus  of 
housing. The Swedish National Board of Housing, 
Building and Planning  reports that only about 40 
000  dwellings  were  completed  in  2024  (323).  New 
housing  starts  in  2025  are  estimated  to  have 
declined somewhat further less than 30 000, with 
only  a  marginal  pick-up  foreseen  for  2026  and 
2027  (324).  Expected  shortfalls  in  housing  supply 
due  to  demographic  changes  over  the  coming 
decade  are  more  pronounced  in  the  metropolitan 
areas,  especially  in  greater  Stockholm,  Göteborg 
and  Malmö  (see  Map  A16.1)  (325).  Insufficient 
housing  supply  in  larger  cities  and  economically 
dynamic  centres  has  been  one  of  the  key  factors 
behind rising house prices. In addition, long zoning 
and  permitting  approval  times  coupled  with 
increasing  construction  costs  have  contributed  to 
mismatches  (326).  Consequently,  housing  supply 
growth is expected to remain subdued in the near 
term. Against the backdrop of demographic trends 

(323) Boverket – the Swedish National Board of Housing, Building 

and Planning. 

(324) See Swedbank Economic Outlook, January 2026. 

(325) In  Stockholm  County,  where  the  annual  net  increase  in 
population  averaged  around  35  000  between  2007  and 
2019,  an  average  of  only  about  11  000  dwellings  were 
started  per  year  over  the  same  period.  Source:  Finance 
Sweden, The Mortgage Market in Sweden, September 2025. 

(326) For  example,  average  time  from 

land  acquisition  to 
construction for a residential development can be 49 months 
in  Sweden,  compared  with  24  months  in  Germany.  Source: 
Fredrik Kopsch (2025), Byggindex, Timbro, October. 

95 

Housing construction gap: accumulated shortfalls of housing 
due to demographic changes, reduced by the projected 
constructions over 2025–2035, are indicators of future 
housing needs, see Balouktsi et al. (2026), Housing 
investment needs in the EU. JRC Technical Report 144419.. 
Source: ECFIN-JRC calculations 

Public  housing  accounts  for  around  20%  of 
the  Swedish  housing  stock  and  represents 
roughly half of the rental segment. The mostly 
municipally  owned  public  housing  companies 
therefore  control  a  substantial  portion  of  the 
national  housing  market.  However,  their  mandate 
notably concerns not social housing, but provisions 
which  must  function  on  market  terms.  However, 
these  companies  face  serious  challenges,  as  a 
significant  proportion  of  their  existing  housing 
stock  was  built  several  decades  ago  and  now 
requires large-scale renovation and modernisation. 
The 
upgrades, 
accessibility  improvements  and  maintenance  add 
to financial challenges. 

energy-efficient 

need 

for 

012345675070901101301501701902100507091113151719212325% of GDPIndex (2005 = 100)Residential building permits in m2, indexResidential buildings producer prices, indexInvestment in dwellings (right-hand side axis) 
  
 
 
 
 
Structural policies 

and 

Municipal 

of  modular 

Despite a long-standing and well-established 
off-site 
tradition 
construction,  local  regulations  still  hinder 
this  building  method  from  reaching  its  full 
self-determination 
potential. 
complicates 
large-scale, 
the  creation  of  a 
functioning  industry  capable  of  rapid  deployment, 
as the difference in rules complicate standardised 
production.  The  need  for  simplification  is  pointed 
out 
country-specific 
recommendations.  Various  models  and  solutions 
are  being  developed,  tested  and  proposed  to 
the 
bottleneck, 
address 
‘Kombohuset’, ‘Sverigehuset’ and ‘Stockholmhuset’ 
initiatives.  While  each  pursues  a  somewhat 
different  approach,  they  share  the  goal  of 
delivering  a  blueprint  for  a  housing  type  that  can 
be  implemented  across  Sweden  with  little  or  no 
need  for  amendments 
laws  or 
regulatory frameworks. 

to  existing 

including 

2025 

this 

the 

in 

Swedish municipalities enjoy a high degree of 
self-determination, but recent changes to the 
Housing  Provision  Act  require 
increased 
cooperation on housing matters. Municipalities 
are  now  expected  to  consider  more  coordinated 
planning and implementation of housing strategies 
that  cross  administrative  boundaries.  This  shift  is 
especially  relevant  in  larger  cities,  where  the 
functional  urban  area  often  extends  beyond  a 
single  municipal  jurisdiction  and  where  housing 
needs do not align neatly with municipal borders. 

Rents  in  Sweden  are  set  through  collective 
bargaining,  a  system  that  helps  maintain 
more  affordable  rent  levels  in  sought-after 
urban locations, while weighing on supply. On 
the  one  hand,  the  rent-setting  arrangement 
reduces  increases  in  rents,  making  renting  more 
affordable.  On  the  other  hand,  it  constrains  the 
supply  of  rental  units  and  leads  to  longer  waiting 
times  for  tenants  seeking  housing,  particularly  in 
high-demand  markets.  The  balance  between 
affordability  and  supply  remains  a  central  policy 
issue,  influencing  where  and  how  quickly  new 
rental  housing  can  be  brought  onto  the  market. 
There has not been significant progress with rental 
reforms as recommended in the CSR.  

country  does  not  have  a  formal  social  housing 
sector  comparable  with  that  in  other  EU  Member 
States,  the  country  operates  a  system  of  social 
contracts,  where  municipalities  rent  apartments 
from property owners and sublet them to tenants 
who  are  unable  to  find  affordable  housing.  Long 
waiting  lists  for  municipal  and  cooperative  rental 
housing  point 
to  severe  supply  bottlenecks, 
particularly in high-demand urban areas, resulting 
in  an  average  waiting  time  in  the  Stockholm 
Region of 8.8 years in 2024(327). These constraints 
contribute to housing exclusion and have increased 
pressure  on  municipalities,  which  often  resort  to 
temporary subletting arrangements for households 
unable to access the regular market. 

Vulnerable groups 

in 

shortages 

Sweden 
Housing 
disproportionately  affect  specific  population 
groups  and  highlight  significant  urban-rural 
disparities.  In  2024,  16.7 %  of  the  population 
lived in overcrowded homes, which is near the EU 
average of 16.%. However, the rate rises to 42.3% 
among  people  at  risk  of  poverty,  which  is  well 
above  the  EU  average  of  28.9 %.  Disparities  are 
particularly  pronounced  by  country  of  birth,  with 
47.0%  of  non-EU-born 
in 
overcrowded  conditions  compared  with  12.3%  of 
those  born  in  Sweden.  There  are  also  notable 
geographic  differences,  with  22.0%  of  people  in 
cities  living  in  overcrowded  households,  which  is 
nearly  twice  the  11.2%  recorded  in  rural  areas, 
emphasising  the  need  to  increase  the  supply  of 
suitable  and  quality  housing,  and  to  distribute 
housing according to needs.  

residents 

living 

Housing  affordability  pressures  persist,  with 
vulnerable groups being the most affected. In 
2024,  10.6%  of  the  population  faced  a  housing 
cost  overburden,  defined  as  housing  costs 
exceeding  40%  of  disposable  household  income, 
compared with an EU average of about 8.2%. The 
impact  is  significantly  more  pronounced  among 
people  at  risk  of  poverty,  who  experienced  a 
housing cost overburden rate of more than 47.7%. 
This is well above the EU average of 31.1% and is 
one  of  the  highest  rates  in  the  EU,  indicating 
for 
disproportionate  affordability 

challenges 

Sweden  does  not  have  a  dedicated 
programme  for  social  housing.  While  the 

(327) OECD Economic Surveys: Sweden 2025. 

96 

 
 
Graph A16.3: Housing affordability selected indicators 

Source: Eurostat and European Commission indicators.  The overburden rate should be read together with the tenure structure 
(homeowner, tenants), that may differ across country and regions. 

vulnerable groups. Households in Sweden allocate 
a  relatively  high  proportion  of  disposable  income 
to  housing,  with  average  housing  costs  (including 
rent, water, electricity and other fuels) among the 
higher end in the EU at 25% of disposable income 
in 2024. This is above the EU average of 19% and 
on par with countries with strong housing demand. 
Housing  cost  overburden  rates  are  considerably 
higher in cities than in rural areas (13.2% vs 8.2%) 
which could be partially explained by a lower share 
in  cities,  for  whom  the  housing 
of  owners 
overburden is lower (17.9% for tenants at market 
price  compared  to  4.7%  for  owners  with  a 
mortgage  or  loan).  There  are  notable  regional 
disparities,  with  housing  cost  overburden  much 
higher  in  the  southern  region  (13.6%)  compared 
with  the  northern  region  (9.0%)  (328).  These 
dynamics  underscore  ongoing  barriers  to  suitable 
in  high-
and  affordable  housing,  particularly 
demand urban areas, and highlight the importance 
of policies that support inclusive access to quality 
housing.  

The  use  of  social  contracts  has  declined 
sharply,  even  though  there  has  been  no 
legal 
formal  change  to  the  underlying 
provisions  that  allow  them.  Municipalities  can 
still  support  vulnerable  people  by  acting  as 
guarantors  and  by  providing  deposits  for  rental 
agreements,  but  the  practical  application  and 
uptake of this tool have fallen markedly and more 
abruptly in recent years, with no identified reason 
currently.  This  trend  raises  concerns  about  the 
for 
temporary 
availability 
households  at  risk  of  losing  housing  stability 
during periods of economic stress. The government 

protections 

of 

has presented a proposal to make the use of this 
provision obligatory. 

Low-income  and  marginalised  groups 
in 
Sweden  face  barriers  to  gaining  formal 
access  to  housing,  primarily  because  they 
lack the financial means to provide deposits 
and  income  guarantees  required  for  rental 
contracts. This means people in this group can be 
excluded  from  the  regulated  rental  markets  and 
forced to seek alternatives, such as subletting, on 
the  secondary  market.  There  seems  to have been 
a  rise  since  2017  in  the  number  of  people 
subletting,  although  no  exact  numbers  are 
available  in  the  2023  mapping  of  homelessness 
(329).  Subletting  arrangements  offer  fewer  legal 
protections  and  typically  involve  higher  rents. 
Alternatively,  the  people  in  these  groups  stay  in 
overcrowded dwellings, sharing limited space with 
multiple  households,  which  can  strain  both  social 
and  physical  wellbeing.  The  combination  of 
of 
financial 
affordable  housing,  and  weak  tenant  protections 
places these groups at risk of homelessness. 

availability 

exclusion, 

limited 

remains 

Despite  an  extensive  welfare  system, 
homelessness 
significant. 
Homelessness  remains  a  challenge,  with  around 
27 383  people  experiencing  homelessness 
in 
2023,  including  1 800  children  living  with  their 
parents 
temporary 
accommodation  (330).  The  figure  includes  rough 
sleepers, people in emergency accommodation and 
those  in  temporary  or  transitional  housing.  The 
2022-2026  national  homelessness 
strategy, 
including  implementation  of  the  Housing  First 

emergency 

or 

in 

(328)The overburden rate should be read together with the tenure 
structure (homeowner, tenants), that may differ across 
country and regions.   

(329) Kartläggning av hemlösheten 2023. 

(330) National Board of Health and Welfare - Homelessness 

remains at a high level . 

97 

 
 
 
 
the 

initiative, 

strengthen 

approach,  currently  provides  more  than  1 000 
tenancies and aims to expand this to 2 000 units. 
This  will  support  people  with  complex  needs  and 
uphold  rights  to  housing  and  social  inclusion.  To 
extend  and 
the 
government  has  allocated  additional  funds  in  the 
2026  budget  bill  equivalent  to  around  EUR 14 
million per year in 2027-2031. Sweden does have 
a  national  strategy  to  combat  homelessness, 
which is  currently  set to  expire  in  2026.  A  formal 
revision  and  renewal  of  that  strategy  is  expected, 
with  a  particular  focus  on  preventing  evictions  of 
the 
families  with  children  and  supporting 
implementation of the Housing First approach. 

Students  face  housing  challenges,  as  they 
mostly  compete  for  accommodation  on  the 
open housing market. While the average age of 
young  people  leaving  their  parental  home  is  still 
among  the  lowest  in the EU,  it  rose by two  years 
between  2012  and  2024 to  reach  21.9  (Eurostat: 
yth_demo_030).  This  upwards  trend  could  be 
caused  by  the  increased  difficulty  in  accessing 
affordable housing in the biggest cities, which are 
also education centres. At the same time, students 
do  receive  generous  benefits  and  possibilities  for 
loans during their studies. 

98 

 
 
HORIZONTAL 
ANNEX 17: SUSTAINABLE DEVELOPMENT GOALS 

social 

fairness 

This  annex  assesses  Sweden’s  progress  on 
the  Sustainable  Development  Goals  (SDGs) 
along  the  dimensions  of  competitiveness, 
and 
sustainability, 
macroeconomic stability. The 17 SDGs and their 
related  indicators  provide  a  policy  framework 
under  the  UN’s  2030  Agenda  for  Sustainable 
Development.  They  aim  to  end  all  forms  of 
inequalities  and  tackle  climate 
poverty,  fight 
change  and 
the  environmental  crisis,  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 the SDGs in 
the EU. 

Sweden  performs  well  on  competitiveness-
related SDGs (SDGs 4, 8, 9). It performs well on 
productivity-  and 
indicators, 
Its  share  of  gross  domestic 
notably  R&D. 

innovation-related 

Graph A17.1: Progress towards the SDGs in Sweden 

expenditure  on  R&D  (SDG 9)  remains  high  at 
3.57% of GDP in 2024, well above the EU average 
of  2.24%.  Sweden  also  performs  well  on  human 
resources in R&D, with 2.24% of the labour force 
working in R&D in 2024, exceeding the EU average 
of  1.59%.  It  performs  well  too  on  innovation 
output,  as  patent  applications  to  the  European 
Patent Office stood at 405 per million inhabitants 
in  2024,  remaining  far  above  the  EU  average  of 
156  applications.  On  SDG 8  (Decent  work  and 
economic  growth),  Sweden 
performs  well 
compared  to  the  EU  average,  with  a  high 
investment  share  of  GDP  (25.1%  in  2024,  EU 
average:  21.7%)  and  high  employment  rates 
(81.9%, EU average: 75.8%). 

On  SDG 4 
(Quality  education),  Sweden 
performs  well  compared  to  the  EU  average. 
The  country  has  a  high  tertiary  educational 
attainment rate (54.4% in 2024 vs EU average of 
44.1%). It also performs well on adult participation 
in  learning  (37.5%  in  2024  vs  EU  average  of 

For a detailed progress assessment towards the various SDGs, see the annual Eurostat report ‘Sustainable development in the 
European Union’; for extensive data on the short-term SDG progress of EU countries, see Key findings – Sustainable development 
indicators; for an interactive visualization of SDG progress of EU countries, see SDG country overview. A high status does not 
mean that a country is close to reaching a specific SDG, but signals that it is doing better than the EU on average. The progress 
score is an absolute measure based on the indicator trends over the past five or six years. The calculation does not take into 
account any target values, as most EU policy targets are only valid for the aggregate EU level. Depending on data availability for 
each goal, not all 17 SDGs are shown for each country. 
Source: Eurostat, latest update of 29 April 2026. Data refer mainly to the period 2019-2024 or 2019-2025. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

99 

 
 
 
 
 
 
 
 
13.5%),  and  on  digital  skills,  with  a  high  share  of 
adults  with  at  least  basic  digital  skills  (70%  in 
2025 vs EU average of 60.4% in 2025). To further 
strengthen  digital  skills  and  human  capital,  its 
recovery  and 
includes 
resilience  plan 
measures  to  increase  study  places  in  higher 
vocational  education,  ensure  adequate  resources 
for  universities  and  other  higher  education 
institutions,  and  support  investment  in  broadband 
expansion. 

(RRP) 

Sweden performs well on most SDGs related 
to sustainability (SDGs 2, 6, 7, 9, 13 and 15). 
Sweden  performs  very  well  on  SDG 13  (Climate 
action),  with  net  greenhouse  gas  emissions  of 
1.5 tonnes  per  capita  in  2024,  remaining  well 
below  the  EU  average  (6.6 tonnes  per  capita).  On 
SDG 7  (Affordable  and  clean  energy),  Sweden  is 
improving - the percentage of renewable energy in 
gross  final  energy  consumption  increased  from 
55.8% in 2019 to 62.8% in 2024, well above the 
EU  average (25.2%  in  2024).  On  SDG 9 (Industry, 
innovation  and  infrastructure),  Sweden  performs 
well  above  the  EU  average  on  all  indicators, 
including  R&D  intensity,  innovation  output  and 
sustainable 
recovery  and 
resilience  plan  supports  the  acceleration  of  the 
green 
in  carbon-intensive  sectors, 
notably transport and industry. 

infrastructure. 

transition 

Its 

and 

consumption 

However, Sweden needs to catch up with the 
EU  average  on  SDGs 12  and  14.  On  SDG 12 
(Responsible 
production), 
Sweden  is  improving,  as  the  circular  material  use 
rate  increased  from  6.4%  in  2019  to  10.4%  in 
2024 (EU average of 12.2% in 2024). On SDG 14 
(Life  below  water),  Sweden  performs  well  on 
marine  protection,  with  16.3%  of  its  marine  area 
protected  in  2023  (above  the  EU  average  of 
13.7%). At the same time, Sweden needs to catch 
up  with  the  EU  average  on  coastal  water  quality, 
as  the  share  of  coastal  bathing  waters  with 
excellent  quality  declined  to  69.1%  in  2024, 
compared with the EU average of 88.8%. 

cities 

SDG 11 

On 
and 
(Sustainable 
communities),  Sweden  performs  well  on 
several  targets  related  to  quality  of  life, 
with  outcomes  above  the  EU  average,  but  is 
slipping  on  some  indicators.  These  include 
sustainable  mobility,  as  the  share  of  buses  and 
trains  in  total  passenger  transport  declined  from 
19.6%  in  2018  to  18.2%  in  2023,  although  it 
remained above the EU average of 16.9% in 2023. 
Sweden  is  also  falling  behind  on  municipal  waste 

recycling, as the recycling rate fell from 45.8% in 
2018 to 39.4% in 2023, below the EU average of 
47.7% in 2023. 

leavers 

from  education  and 

Sweden performs well on most SDGs related 
to social fairness (SDGs 3, 4, 5, 7, 8 and 10). 
On SDG 3 (Good health and well-being), outcomes 
remain  above the  EU  average  on  most indicators. 
For  SDG 4  (Quality  education),  the  percentage  of 
early 
training 
increased from 6.5% in 2019 to 7.2% in 2024 but 
remains  below  the  EU  average  (9.4%  in  2024). 
Sweden’s  recovery  and  resilience  plan  includes 
measures  to  increase  study  places  in  universities 
and other higher education institutions, as well as 
in  higher  vocational  education  and  training  at 
upper  secondary  level.  Gender  equality  (SDG 5) 
and  decent  work  and  economic  growth  (SDG 8) 
also remain above the EU average. Under SDG 10 
(Reduced 
the  employment  gap 
between  EU  and  non-EU  citizens  is  narrowing, 
declining  from  29.0  percentage  points in  2019  to 
19.1 percentage points in 2024, but still needs to 
catch  up  with  the  EU  average  (12.4  percentage 
points in 2024). 

inequalities), 

Conversely,  Sweden’s  progress on  SDG 1  (No 
poverty)  has  been  mixed.  Measures  to  address 
income  poverty  have  had  some  success,  but 
material deprivation has deterioriated and housing 
cost  pressures  are  rising.  However,  most  poverty-
related indicators remain above the EU average.  

Sweden performs well on most SDGs related 
to  macroeconomic  stability  (SDGs 8,  16  and 
17).  Under  SDG 8  (Decent  work  and  economic 
growth),  outcomes  remain  above  the  EU  average 
for sustainable economic growth, employment and 
decent  work.  On  SDG 17  (Partnerships  for  the 
goals),  Sweden  is  improving.  General  government 
gross debt declined from 36% of GDP in 2019 to 
34% in 2024, remaining significantly below the EU 
average  (80.7%  of  GDP  in  2024).  For  SDG 16 
(Peace,  justice  and  strong  institutions),  Sweden 
performs  well  compared  to  the  EU  average  on 
most indicators related to institutional quality and 
access  to  justice.  In  particular,  the  percentage  of 
the population perceiving the independence of the 
justice  system  as  very  or  fairly  good  remained 
high at 76% in 2025, compared to an EU average 
of  54%.  Sweden’s  recovery  and  resilience  plan 
(RRP)  aims  to  help  preserve  the  sustainability  of 
the  Swedish  economic  model  and  therefore 
contributes  to  macroeconomic  stability,  notably 

100 

 
through 
challenges. 

reforms 

addressing 

demographic 

As the SDGs form an overarching framework, any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other annexes. 

101 

 
ANNEX 18: COMPETITIVE REGIONS 

Regional development trends 

regions 

between 

disparities 

Sweden’s  regions  have been  among the  EU’s 
more  developed  for  the  past  two  decades, 
but 
are 
increasing.  GDP  per  head  has  long  been  above 
the  EU  average  in  most  regions.  Stockholm  is  the 
clear  frontrunner  on  this measure,  with  a  ratio  of 
about  153%  of  the  EU  average  in  2024.  Outside 
Stockholm,  Västsverige  and  Övre  Norrland  are 
typically  the  strongest  (107  and  108%  in  2024). 
Most  other  regions  are  at  around  the  EU  average 
(94–101%),  with  Norra  Mellansverige  being  the 
only region clearly below (85%). At the same time, 
intra-regional  disparities  increased  between  2004 
and  2024.  Discounting  Stockholm, the  percentage 
point  difference  in  GDP  per  head  between  Övre 
Norrland  and  Norra  Mellansverige  increased  from 
10 to 23 in this 20-year period. 

Map A18.1:  GDP per head compared with the EU 
average 

category of a transition region (Map A18.1). While 
other  NUTS  2  regions  are  more  developed,  five 
(Norra  Mellansverige,  Småland  med  öarna,  Östra 
Mellansverige,  Mellersta  Norrland  and  Sydsverige) 
out  of  the  eight  Swedish  NUTS  2  regions  have 
regional  GDP  per  head  below  the  EU  average  in 
2024 (Table A18.2). 

Graph A18.1: Labour productivity growth (2013-
2023) and labour productivity (2023), Sweden 
(NUTS 2 regions) 

Source: Commission calculations based on JRC data 

in  Sweden  remains 
Labour  productivity 
strong in an EU-wide context, with all NUTS 2 
regions  at  or  near  the  EU  average,  but  the 
national  lead  is  anchored  by  Stockholm.  In 
2023,  productivity  levels  per  hour  (expressed  as 
purchasing power standard (PPS), EU=100) ranged 
from  132  in  Stockholm  to  90  in  Småland  med 
öarna.  Growth  in  productivity  per  hour  worked  is 
close  to  the  European  average  for  most  Swedish 
regions,  with  Övre  Norrland  recording  the  highest 
growth in productivity and Mellersta Norrland and 
Norra Mellansverige the lowest (Graph A18.1). 

2021-2023 average GDP per head in purchasing power 
standard compared with the EU average. 
Source: Commission calculations based on Eurostat 16 July 
2025 data 

Swedish regions are losing ground compared 
with  the  EU  average  when  comparing  GDP 
per head across regions. This trend also seems 
to  be  accelerating.  In  2021,  Norra  Mellansverige 
was  the  only  Swedish  NUTS  2  region  with  a  GDP 
per  head  just  below  the  EU  average  (99%), 
compared with 85% now, firmly placing it into the 

Key challenges for regional 
competitiveness 

Sweden is an innovation leader, but there are 
notable  disparities  in  regional  innovation 
performance  within  the  country  that  inhibit 
competitiveness.  Västsverige  was 
top 
Swedish  region  for  R&D  expenditure  in  2023 
(growth  of  5.6%),  while  Mellersta  Norrland  and 
Norra Mellansverige invested the least in R&D that 
year (around 1%) (Table  A18.2).  Stockholm is one 

the 

102 

0.70.71.00.90.80.60.60.60.50.11001071021059013298989487EUSwedenÖvre NorrlandVästsverigeSmåland med öarnaStockholmSydsverigeÖstra MellansverigeMellersta NorrlandNorra MellansverigeAverage annual growth2023 (%)Productivity in 2023GDP/hour, EU27 = 100 
 
 
 
 
   
 
 
Table A18.1: Main development trends, challenges and the concentration of resources 

Source: European Commission based on Eurostat data; categories of regions based on Map A18.1 

is 

and 

regions 

less  central 

innovation  diffusion 
complexity 

of  the  most  innovative  regions  in  the  EU.  In 
inhibited  by 
addition, 
regulatory 
fragmented 
responsibility  across  governance  levels,  especially 
(331).  Smart 
impacting 
specialisation  strategies  (332)  are  in  place  for  all 
Swedish  NUTS  3  regions,  with  variations  in  their 
degree  of  integration  into  regional  development. 
Limited administrative capacity and limited access 
to  innovation  ecosystems  are  further  barriers  to 
competitiveness,  especially  in  regions  facing  the 
green  transition  (particularly  the  north  and  Norra 
Mellansverige).  For  example,  regions  with  a  high 
proportion of SMEs and transition needs (including 
Kronoberg,  Kalmar,  Jämtland  and  Värmland)  are 
insufficient  technical  support  and 
limited  by 

(331) Riksrevisionen, 2022. 

(332) Smart specialisation strategies are strategic, territorially 

based frameworks for innovation and industrial policy that 
help Member States and regions identify and leverage their 
unique comparative advantages to address structural 
challenges, foster economic transformation and improve 
competitiveness. 

in 

territorial 

uneven access to innovation ecosystems for SMEs 
(333).  Differences 
innovation 
performance are reflected in GDP per head figures 
at  NUTS  3.  When  comparing  regional  GDP  per 
head for NUTS 3 regions (Map A18.2), the regional 
differences  within  Sweden  become  clear,  ranging 
from  81%  of  the  EU  average  in  Gävleborg  to 
153%  in  Stockholm.  13  out  of  21  regions  in 
Sweden  have  GDP  per  head  that  is  below  the  EU 
average,  while  some  other  Swedish  regions 
perform very well. 

There are also notable territorial differences 
between  the  regions  in  terms  of  both  the 
share  of  the  population  with  high  levels  of 
educational  attainment  and  the  share  of 
total  employment  accounted  for  by  high-
the 
technology 

hindering 

sectors, 

(333) Lindblad, S., 2025, ‘Ny politik för regional utveckling och 

landsbygsutveckling - en utredning med hjälp av moderna 
AI-verktyg genererad, granskad och regierad av Sverker 
Lindblad’. 

103 

Main development trendsTransition regions (population 857 000)Sweden only has one NUTS 2 transition region, Norra Mellansverige, consisting of three NUTS 3 regions: Dalarna, Gävleborg and Värmland. Norra Mellansverige shares many of the characteristics of the EU's other northern sparsely populated areas, such as low population density and long distances. However, Norra Mellansverige does not have these characteristics to the extreme degree seen in more northern parts of Sweden. The economic trends in Norra Mellansverige are negative compared with other Swedish and European regions. Its growth in GDP per capita per head over the last 10 years is the lowest of all Swedish NUTS 2 regions and significantly below the EU average. The region also has the lowest - or among the lowest - scores on many indicators related to economic and human capital (Table A18.2). More developed regions (population 9.7 million)Seven out of eight Swedish NUTS 2 regions are more developed regions. The differences between these more developed regions are significant, in both economic and social terms. The Stockholm capital region is a frontrunner within Sweden but also a top performer in the EU . Other Swedish regions, especially more rural areas within more developed regions, are close to the EU average and sometimes below, and display negative growth trends. The more developed Swedish regions are losing ground compared with the EU average due to their slow economic growth. Specific territoriesThe two northern most Swedish NUTS 2 regions, Mellersta Norrland and Övre Norrland, are classified as northern sparsely populated areas (NSPAs) due to their very low population density. They consist of four NUTS 3 regions: Jämtland, Norrbotten, Västerbotten and Västernorrland. The NSPAs in Sweden - and the NSPAs in the EU more generally - share common features, such as sparse populations, a harsh climate, and long distances to market and employment centres. They face significant socio-economic challenges, including labour and skills shortages, ageing populations, and connectivity issues. However, the northern regions of Sweden also have strong assets such as abundant natural resources, clean and renewable energy production capacity, and opportunities stemming from the green transition of heavy industry. Issues such as labour and skills shortages, ageing population and long distances are also present in rural areas all across Sweden. In addition, many rural municipalities also face a declining population which reduces the tax base and makes it more difficult to finance high-quality basic services. 
 
 
 
  
 
Table A18.2: Key regional indicators (at NUTS 2 level) for Sweden 

Dark green – the indicator is at least 120% of the EU average. 
Light green – the indicator is at least 100% but less than 120% of the EU average. 
Yellow – the indicator is at least 90% but less than 100% of the EU average. 
Light red – the indicator is at least 75% but less than 90% of the EU average. 
Dark red – the indicator is less than 75% of the EU average. 
Source: Eurostat data 

competitiveness  of  specific  regions.  Four 
regions (the three northernmost and Småland med 
Öarna)  score  the  lowest  in  Sweden  for  both  of 
these indicators, and in terms of R&D investments 
(Table  A18.2)  (see  Annex  13).  Studies  point  to  a 
disconnect  between  education  provision  in  these 
regions  and  labour  market  needs  (particularly 
related  to  the  industrial  transition)  as  a  driver  of 
these trends (334). 

Access  to  private-sector  financing  remains 
uneven  across  Sweden,  for  example  in small 
municipalities  in  the  north  like  Dorotea, 
Lycksele and Överkalix. SMEs based outside  of 
Sweden’s major urban centres find it more difficult 
to  secure  credit  and  investment  capital,  which 
reflects  the  weaker  financial  ecosystems  and 
limited  institutional  support  available  in  these 
areas  (See  Annex  6).  Often  dependent  on  public 
funds,  firms  in  these  areas  find  that  their  cash 
flows  and  ability  to  invest  are  restricted  by  the 
regions. 
lower 
Consequently,  SMEs  in  rural  and  remote  areas  – 
most  acutely  those  in  the  north  -  are  subject  to 

in  smaller 

revenues 

typical 

(334) Heikkonen et al., 2025. 

greater financial constraints, hindering growth and 
productivity (335). 

The  rate  of  population  growth  varies  by 
region, with northern rural areas particularly 
exposed  to  demographic  decline.  Population 
growth in Sweden is mainly due to migration, with 
the capital region’s population growing the fastest, 
and  the  three  most  northern  regions  growing  the 
most  slowly 
(Table  A18.2).  The  three  most 
northern  regions  have  the  largest  proportion  of 
people  over  65,  and  struggle  with  a  decline  in 
natural  population  (due  to  low  fertility  and  high 
mortality).  For  now,  however, 
this  declining 
population  in  the  three  most  northern  regions  is 
being  countered  by  net  migration.  According  to 
Swedish  population  forecasts  at  NUTS  3  level,  7 
out  of  21  regions  will  see  a  decline  in  population 
between now and 2040. The two counties with the 
lowest  demographic  forecasts  for  the  period 
2023-2040  are  Norrbotten  (population  set  to  fall 
by  -6.2%)  and  Västernorrland  (population  set  to 
fall  by  -7.3%),  which  are  two  of  the  sparsely 

(335) Andersson, M., Eklund, J.E., and Tsvetkova, A., 2023, Spatial 
variations in financial constraints of SMEs – evidence from 
firm-level estimates of investment-cash flow sensitivities in 
Sweden. 

104 

GDP per head (PPS, index)Real GDP per head growthPopulation growthUnemployment rateR&D expenditurePopulation aged 25-34 with high educational attainmentEmployment in high-technology sectorsTransport performance by carGreenhouse Gas EmissionsEU27=100Average annual % changeAverage annual change per 1000 residents% of labour force% of GDP% of population aged 25-34% of total employmentShare of population in a 120-km radius that can be reached within 1h30 (%)tCO2 equivalent per head20242014-20242015-2024202520232025202520232024EU1001.41.86.02.244.85.180.27.0Sweden1110.98.38.83.653.66.981.64.8Stockholm1530.811.89.13.565.910.896.81.5Östra Mellansverige971.18.89.44.450.56.276.75.7Småland med öarna930.76.47.31.445.13.272.26.8Sydsverige960.99.410.33.749.96.485.23.9Västsverige1070.98.68.55.652.96.680.45.0Norra Mellansverige850.42.58.41.045.73.962.95.6Mellersta Norrland991.21.26.61.139.33.776.57.6Övre Norrland1081.33.47.32.344.44.77111.1  
 
 
 
  
 
populated  areas  in  the  north  of  Sweden  (336). 
Population decline is most acute  outside of urban 
areas.  At  the  end  of  2024,  60%  of  municipalities 
in  Sweden  were  losing  population  and  shrinking 
(337). 

Map A18.2:  GDP per head (PPS), Sweden (NUTS 3 
regions) 

of  Sweden,  particularly  in  the  sparsely  populated 
northern areas (340). 

Sweden’s  northernmost  regions  are  facing 
shortages  in  skilled  labour  -  barriers  to  the 
green  transition  –  while  the  south  struggles 
with  high  levels  of  unemployment.  In  2025, 
Mellersta Norrland and Övre Norrland, where many 
large  industrial  investments  are  taking  place,  had 
the  lowest  unemployment  rate  in  Sweden  at  6.6 
and 7.3%, compared with the national average of 
8.8%. In contrast,  regions in the south and centre 
of  Sweden  struggle  with  high  unemployment: 
10.3% 
in  Östra 
Mellansverige.  Issues  with  labour  mobility  are 
drivers  of  the  large  variations  in  unemployment 
rates (341) (see also Annexes 11 and 13). 

in  Sydsverige  and  9.4% 

Despite  Sweden’s  strong  overall  public 
finances,  rural  municipalities,  especially  in 
the north, face increasing financial pressure, 
impacting  delivery  of  public  services.  Many 
small municipalities in rural areas are experiencing 
population  decline,  falling  business  activity  and  a 
shrinking tax base (342). Providing public services is 
often  more  expensive  in  northern  remote  and 
sparsely  populated  areas,  where  expenditure  on 
elderly  care  and  basic  infrastructure  is  rising  and 
limited.  Unsustainable 
local  revenues  remain 
municipal  finances, 
limited  digitalisation,  and 
unoptimised service delivery are some of the main 
barriers  to  ensuring  equal  access  to  services 
(343).  There  are  strong 
across 
in  highspeed  broadband  coverage 
disparities 
within  municipalities 
sparsely 
populated  areas  (NSPAs).  For  example,  in  the 
municipalities  of  Arjeplog  or  Pajala,  access  to  1 
Gbit/s  broadband  is  between  a  third  and  50%  of 
the  access  in  the  main  population  centres  in  the 
same municipalities (344). 

the  country 

northern 

in 

(340) OECD, 2025, ‘Navigating Global Transitions in European 

Arctic Regions’. 

(341) Wemberg and Andersson, 2022, ’Kompetensförsörjning 

under en pågående industriell revolution’. 

(342) OECD, 2025, ‘Navigating Global Transitions in European 

Arctic Regions’. 

(343) Lindblad, 2025, ’Ny politik för regional utveckling och 
landsbygsutveckling’; OECD, 2025, ’Navigating Global 
Transitions in European Arctic Regions’. 

(344) PTS – Swedish Post and Telecom Authority, 2025, 

Bredbandskartan. 

Source: Commission calculation based on Eurostat data 

The  employment  rate  is  high  in  all  Swedish 
regions,  but  labour  and  skills  shortages 
remain  an  issue,  especially  in  the  north  and 
outside  the  big  cities.  Labour  and  skills 
shortages in the health and social care sectors are 
especially  severe  in  rural  areas  and  in  commuter 
municipalities  (338).  According  to  the  Swedish 
Agency  for  Economic  and  Regional  Growth’s 
typology,  developed  to  identify  labour  shortages 
across  regions,  counties  such  as  Västernorrland 
and  Norrbotten  face  a  shortage  of  skilled  labour 
(339). An ageing and shrinking population outside of 
urban  areas  poses  challenges  for  providing 
accessible, good-quality services in different parts 

(336) SCB – Statistics Sweden, 2024. 

(337) SCB – Statistics Sweden, 2025. 

(338) Agrifood,  2024, 
möjlighet’. 

’Arbetskraftsbrist  –  ett  problem  eller 

(339) Labour shortages are identified based on a dataset of 
regional matching indicators reflecting labour supply, 
demand, and matching within Swedish counties. 
Tillväxtverket, 2025, ’Tillstånd och trender 2025. För regional 
utveckling och tillväxt’. 

105 

 
 
 
 
 
 
 
Transport  accessibility  is  significantly  worse 
and travel times longer in remote areas and 
NSPAs – both for road and rail. This is evident 
in  the  three  northernmost  regions  but  also  in 
Småland  med  Öarna,  when  compared  with  other 
Swedish  regions  and  the  EU  average  (see  Table 
A18.2). This makes these areas less attractive for 
businesses  and  the  public.  While  rural  and 
northern  areas  lack  sustainable  transport  options, 
the  country’s  urban 
regions  struggle  with 
congestion (see also Annexes 12 and 19). 

Övre Norrland stands out from other Swedish 
regions for greenhouse gas emissions due to 
its  heavy  industry.  While  the  rest  of  Sweden 
manages to stay under or around the EU average 
in  terms  of  greenhouse  gas  emissions,  Övre 
Norrland is significantly above (Table A18.2). 

The  large  supply  of  clean  energy  is  driving 
the green industrial transition in the north of 
Sweden.  The  many  energy-intensive  industrial 
projects currently being planned and implemented 
in northern Sweden will require more energy than 
is  currently  being  generated  in  this  region.  For 
green  job  creation  in  the  long  term,  especially  in 
the  northern  parts  of  Sweden,  it  will  also  be 
necessary to increase clean-energy generation and 
extend/upgrade grid infrastructure (see also Annex 
9) is also critical for green job creation in the long 
term, especially in northern parts of Sweden (345). 

In  green-transition  territories,  lengthy  and 
complex  permitting  procedures,  as  well  as 
issues with vertical coordination between the 
national  and  regional  levels,  hinder  both:  (i) 
industrial 
large-scale 
infrastructure  and 
investment  projects;  and 
(ii)  renewable 
energy investments. This slows down the green 
transition  and  hampers  regional  development 
especially 
in  the  northern  parts  of  Sweden. 
Enquiries  by  Sweden’s  national  government 
responsibilities, 
demonstrate 
regulatory  complexity,  vetoing  at  the  local  level 
and  inadequate  coordination  between  governance 
levels are resulting in national ‘silos’. This reduces 
regional  development 
the  effectiveness  of 
initiatives (346) (see also Annexes 7 and 8). Several 
new  initiatives  (including  a  review  of  permitting 

that  fragmented 

remain 

anchored 

processes by Sweden’s Acceleration Office and the 
new industrial strategy (347), seek to address these 
bottlenecks.  However,  many  decisions  and 
processes 
at  a 
firmly 
central/national  level,  hampered  by  challenges. 
Particular  issues  for  municipalities  include  a  lack 
of sufficient financial incentives and high financial 
risks.  For  example,  wind-energy  investments  have 
often  been  vetoed  by  municipalities  (who  retain 
powers in local planning decisions) due to a lack of 
clear benefits at local level. More than half of the 
wind-power projects proposed in Sweden in 2014-
2021 were struck down by municipalities (348). 

in 

issue 

is  becoming  an 
Sharing  financial  risk 
for 
important 
increasingly 
large-scale 
involved 
municipalities 
in 
industrial  developments,  particularly 
northern  Sweden. 
Smaller  municipalities, 
especially  in  northern  regions,  face  significant 
financial exposure when investing in infrastructure, 
housing or services to support the green industrial 
transition. Although these projects are vital for the 
national  economy,  municipalities  are  often  left 
bearing the full financial risk if investments do not 
proceed  as  planned  (349).  This  uncertainty  reduces 
the willingness of municipalities to undertake large 
and complex projects (350) (see also Annex 8). 

Sweden’s 
‘blue’  economy  faces  several 
regional  challenges.  The  poor  ecological  status 
of the Baltic Sea is one of the main challenges for 
the  blue  economy.  Degraded  fish  stocks  and 
eutrophication  undermine  the  viability  of  small-
scale  coastal  fisheries  and  harm  the  ecosystem 
services  on  which  coastal  tourism  depends  (351). 
Although  traditional  fisheries  and  emerging  land-
based  aquaculture  are  strengthening  domestic 
seafood  value  chains 
in  western  Sweden, 
fragmented  processing  infrastructure  and  low 
consumer  awareness 
in  blue 
biotechnology and aquaculture (352). 

limit  growth 

(347) Sweden’s Industrial Strategy, 2025.  

(348) OECD, 2023, ‘OECD Economic Surveys: Sweden 2023’. 

(349) Lindblad, H., Karltorp, K., and Janhäll, M., 2022, ’Finansiering 

av näringslivets gröna omställning’. 

(350) Tillväxtverket,  2025, ’Vem bryr  sig  om  oss?  -  Om  relationen 
mellan  kommuner  och  myndigheter  vid  större  företags-
investeringar’. 

(345) Utveckla Norrbotten, 2024, ’Industriomställningen och dess 

(351) European Commission, 2024, 

samhällsekonomiska effekter’. 

(346) SOU – Swedish government Official Reports, 2023:18 and 

https://fishreg.jrc.ec.europa.eu/documents/d/fishreg/2024_ms
fd_esa_se.  

2024:89. 

(352)BlueBioClusters, BlueBioClusters Regions. 

106 

 
 
 
ERTMS  on  a  further  1 134 km.  Decommissioning 
of the legacy signalling system remains a priority. 

In  northern  Sweden,  enhancing  the  capacity 
of  the  priority  sections  is  crucial  to  ensure 
transports  of  raw  materials  from  the 
extraction  sides  to  the  ports  of  Narvik  in 
Norway  and  Luleå  from  where  they  can  be 
shipped  to  processing  sites  in  southern 
Sweden  and  central  Europe.  Furthermore,  the 
line  between  Gävle  and  Sundsvall  constitutes  a 
bottleneck  in  the  railway  system  towards  the 
north,  particular  given  the  fact  that  the  upgrade 
of  the  North-Bothnian  line  will  bring  additional 
traffic.  South  of  Stockholm  the  railway  lines  are 
fully saturated; thus, a new highspeed connection 
is  planned  between  Järna  and  Linköping  to 
alleviate  the  capacity  constraints  on  the  existing 
line.  In  addition,  the  Oslo-Gothenburg  connection, 
which  is  partially  a  single-track  line  and  a  major 
bottleneck  along  the  countries  TEN-T  network, 
does not yet meet TEN-T requirements.  

Planning  and  permit  procedures  for  large 
investments  can  be  improved  to  ensure 
implementation,  reducing 
timely  project 
projects  execution  time  and  costs.  This  is 
acknowledged  in  the  report  of  the  Swedish 
transport 
infrastructure 
the  2026-2037  period. 
planning 
However, the impact on the delivery of large-scale 
infrastructure projects remains to be seen, as the 
effects  will  only  become  visible  over  a  longer 
period of implementation. 

administration 
covering 

for 

Harmonising  technical  and  operational  rules  with 
the minimisation of national rules in line with the 
EU  directives  on  rail  interoperability  and  safety 
remains critical to ensuring seamless cross-border 
rail transport.  

Sweden  has  a  strong  industrial  base  to 
produce  sustainable  aviation  fuels  (SAF), 
with  an  abundance  of  forestry  residue  for 
advanced biofuel projects, as well as a  

ANNEX 19: TRANSPORT 

This  Transport  Annex  presents  the  state  of  play 
and  the  challenges  Sweden  faces  with  the 
implementation  of  the  trans-European  transport 
network  (TEN-T),  the  European  railway  traffic 
management system (ERTMS)  and the roll-out of 
Sustainable Aviation Fuels (SAF). 

(North 

–  Baltic 

Two  European  transport  corridors  cross 
Sweden 
and 
Sea 
Scandinavian  –  Mediterranean).  The  Swedish 
TEN-T  rail  network  is  5 240 km  long  (3 883   of 
which  are  on  the  core  network).  The  TEN-T  road 
network is 6 441 km long (3 012 of which on the 
core  network).  Sweden  has  671 km  of  TEN-T 
inland  waterways,  26  TEN-T  airports  (including 
three core airports), 27 TEN-T ports (including five 
core ports) and 18 urban nodes (353). 

Sweden’s rail network is heavily utilised and 
certain 
lines  especially  from  Stockholm 
towards  the  south  have  reached  their 
capacity limits. Furthermore, connections to the 
north  of  the  country  need  to  be  strengthened  to 
allow  the  transport  of  raw  materials  from 
extraction  sites 
the  area  and  ensure 
accessibility  for  the  general  public,  especially 
workers.  Another  priority  will  be  to  address 
capacity bottlenecks in the surroundings of major 
urban nodes such as Stockholm and Gothenburg. 

in 

and 

to  modernising 

The  ERTMS  is  essential  to  digitalising  the 
railways 
and 
harmonising 
railway  operations  across 
Europe.  The  ERTMS  ensures  the  safety  of  rail 
networks by providing a unified signalling system 
that  significantly  reduces  the  risk  of  accidents.  It 
also  provides  interoperability  between  national 
train 
rail 
movements. Finally, the ERTMS enhances network 
capacity and operational efficiency, increasing the 
competitiveness of the rail sector. 

cross-border 

improving 

systems, 

The  ERTMS  was  in  operation  on  11%  of  the 
railway  network  in  Sweden  by  the  end  of 
2024 (354). To meet its national plan’s ERTMS roll-
out  target  by  2035,  Sweden  aims  to  deploy 

(353) TENtec Information System, according to Reg. 2024/1679. 

(354) Based on ERTMS – Third work plan of the European 

coordinator Matthias Ruete. 

107 

 
 
 
 
 
 
Map A19.1:  TEN-T cross-border & national priority sections in Sweden. 

Table A19.1: ERTMS deployment in Sweden. 

Source: Based on ERTMS – Third work plan of the European Coordinator Matthias Ruete. 

growing share of renewable energy for eSAF 
(hydrogen-based). 
projects 
Targeted 
initiate 
support  would 
investment 
commercial-scale  SAF  deployment  in  Sweden. 
These  can  be  made  through  pilot  investment 
structures  (double-sided  auctions)  through  the  e-
SAF  Early  Movers  Coalition,  an  initiative  that 

help 

Sweden  could  join.  Making  effective  use  of 
existing  EU  revenue  opportunities  related  to 
aviation  transition  (e.g.  EU  ETS),  and  all  the 
penalty  revenue  generated  by  ReFuelEU  Aviation 
has an important role in supporting Sweden’s SAF 
projects.

108