2006-07-21

top ten Persson (4) fiscal responsibility

The era of Göran Persson will be remembered as an era when public spending was brought under control.

Life used to be easy for the Social Democrats and in particular their finance ministers. Few if any Swedish politicians in recent years have been more overrated than Gunnar Sträng (Minister for Finance 1955-1976) who presided over a booming post-war economy and had but one solution to any budget challenge: raise taxes, always raise the taxes.

When Persson took control of the finances, much of the renovating groundwork and many painful decisions were already taken care of by the Bildt government. But interest rates had skyrocketed, the markets were suspicious about our fiscal discipline and raising taxes was generally not an option any longer in the global era of open, competing economies.

Throughout his years in government Göran Persson has maintained a procedure where the parliament stipulates in advance a ceiling on government expenditure. The discipline has been far from perfect. Instead of further cuts in spending the government has tried, year by year, to balance the budget through one-time efforts like selling state-owned companies or sometimes postponing expenditures from December to January. We haven’t reduced the foreign debt the way we should and we’re not prepared for the looming crisis where fewer Swedes in active years will have to take care of a growing number of elderly.

Still, interest rates bear witness to the fact that the markets have recognized the fiscal responsibility of the twelve-year Persson regime.

ten reasons to appreciate Göran Persson
3 ...
4 fiscal responsibility
5 building on Bildt
6 the Survivor
7 a Stockholm less congested
8 pro-Israel
9
environmental awareness
10 an international defence
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