Both praise and blame in the government budget

On Tuesday, November 8, the government's budget proposal was submitted to the Riksdag. The Minister of Finance warns that the Swedish economy is heading for a grim winter, but the situation is difficult to assess. The forecast for the Swedish economy is gloomy and is expected to be in a recession in 2023, while unemployment is expected to rise and inflation is high. The Budget Bill forecasts weaker GDP growth, which is expected to be -0.4% next year.

Several factors contribute to high inflation, such as supply disruptions, high energy and food prices and also high demand. It is not only individuals who feel price increases, but the entire Swedish economy risks being affected if we do not get a grip on inflation. High and fluctuating inflation increases uncertainty and makes it more difficult for households and businesses to plan and make financial decisions. Financial conditions are tighter, with central banks raising key interest rates to bring down inflation, and further interest rate increases are to be expected.

There is considerable uncertainty surrounding the forecasts in the Budget Bill, which are affected by developments in energy prices, how the war in Ukraine will develop and whether the increased policy rates will push down inflation. Tighter monetary policy also makes the entire economic system more vulnerable and could affect the housing and real estate markets. During yesterday's press conference, Finance Minister Elisabeth Svantesson (M) emphasized that it is important not to add to the current inflation, but that it is important to exercise restraint and described the budget as slightly contractionary. "We have a situation that we have not seen for a very long time, with high inflation at the same time as we are entering a recession.

TechSverige has gone through a number of the areas found in the budget bill

Limited digitalization in the welfare sector

To manage welfare both today and in the future, a progressive strategy is needed to use the power and opportunity of digitization. The budget bill mentions digital tools and digital care meetings as part of the strengthening of primary care - which is positive but also the only digital element we see in the welfare area. The clear proposal from the Tidö Agreement on the introduction of a digital infrastructure for healthcare - and which was also mentioned in the government declaration - is unfortunately conspicuous by its absence. Such a large-scale and important project needs both time and resources to be reasonably realized during the mandate period. We therefore hope that the government will return to the issue as soon as possible.

Green and sustainable development

The new government is clear - it does not intend to abolish the tax on electronics (the so-called chemicals tax). Instead, the government is proposing to implement the previous government's proposal to amend the tax. They are thus retaining a tax with no environmental benefits, despite the fact that both the Conservatives and the Sweden Democrats clearly opposed the tax when they were in opposition. Since its introduction in 2017, the tax has been heavily criticized and expert authorities have pointed out that the tax fails to meet its objective.

As in the Government's declaration, the budget bill points out that: "Swedish industry is a greenhouse for prosperity and innovation and a world leader in sustainability and green transition. By taking the lead with new innovative green technology, there are competitive advantages for Swedish business and entrepreneurship." It is proposed to retain credit guarantees for green investments and to introduce targeted electricity support for electricity-intensive companies. In addition, the government has previously announced a high-cost protection for the recent high electricity prices for households and businesses. The proposal is now being examined by the Energy Markets Inspectorate. The intention is that this compensation will reach electricity customers at the beginning of next year, and that it will be administratively simple to manage, legally secure and transparent. The current design is welcomed by the industry. The support for electricity-intensive companies, like the high-cost protection, is funded by off-peak revenues and thus goes outside the budget.

But there is a lack of understanding and connection to the fact that the tech industry's digital solutions are a prerequisite for the green transition of society as a whole. If the government is to achieve the overall goal of energy policy - to create the conditions for efficient and sustainable energy use - it must begin to steer towards the use of digitization opportunities for everyone's energy efficiency and reduced carbon emissions.

Broadband investment welcomed

As regards digital infrastructure, the government is presenting an additional SEK 600 million for broadband expansion next year. In total, around SEK 1.3 billion will go to support funds in 2023, which corresponds to this year's broadband support. "Continued support is important and welcome so that everyone throughout the country can have access to fast and stable broadband. However, we have previously pointed out that a longer planning horizon would be needed to enable market players to plan their activities instead of the current jerkiness in terms of what support funds are available.

Better conditions for research but limited investment in transition and skills development

Changes in the expenditure area of education and university research are mainly made in vocational education and training. The initiative is of no great significance to the tech industry, as the need for skills primarily concerns those with a post-secondary education. In the Budget Bill, the Government proposes that the number of places in higher vocational education should remain at a high level. TechSverige does not make any other assessment but lacks extra investment in "short courses and course packages" to strengthen the ability of professionals to adapt and develop their skills. We would also like to see the investment in this form of education made permanent. There is also a lack of investment in developing the range of courses for professionals in higher education.

Good conditions for research and development (R&D) are of great importance for Sweden to create growth in a globalized economy. TechSverige therefore welcomes the government's proposal to reduce employer contributions for people working in R&D.

Increased funding for the Swedish Migration Agency could reduce work permit processing times

The Budget Bill states that the policy direction for labor immigration is to safeguard and improve the rules for highly skilled labor immigration and foreign researchers and doctoral students. Among other things, the Government will allocate funds to the Swedish Migration Agency's administrative appropriation to enable the agency to handle the continued high workload in its examination and reception activities. This also applies to the examination of permit cases such as labor market cases. Processing times for work permits have increased sharply at the Swedish Migration Agency - from a few weeks to several months. This has hit tech companies and their employees hard. TechSverige welcomes the increase in funding for the Migration Agency, but it is important that the government ensures that the funds are used to reduce processing times.

Priorities for the Swedish EU presidency

Ahead of the Swedish Presidency of the Council of the EU in 2023, the key word for the government's priorities is "competitiveness", including through a greater focus on the green and digital transitions. Accelerating digitization is one of five priorities that TechSverige, together with the Confederation of Swedish Enterprise and several industry organizations, has highlighted ahead of the Presidency.

Boost Swedish competitiveness, reduce regulatory burden and increase cybersecurity

A new Productivity Commission will be appointed to conduct an overall analysis of the competitiveness of the Swedish economy and submit proposals on how productivity can be improved in both the private and public sectors. What this means more specifically is not stated in the budget, but TechSverige has a clear hope that the opportunities of digitization will be taken advantage of and that we will have a higher ambition in the field of digitization.

An implementation council will be set up in the Government Offices to reduce the regulatory burden and administration for businesses and to ensure that Sweden does not introduce stricter EU rules than necessary. TechSverige has pushed for legislation adopted, both at EU and national level, to be based on the "Think small first" principle.

Information and cyber security is a priority issue for TechSverige. The budget bill states that resilience to hybrid threats will be increased and cybersecurity will be improved. Information and cybersecurity is mentioned in several areas. The Swedish Civil Contingencies Agency and county administrative boards, for example, will be given resources for information security work. One sign that the government is beginning to realize that the issue is broad is the investment being made to protect against cyber threats in the financial system. A broader view is an important step in the right direction. The government has also announced that it will take a position on the National Cyber Security Center's activities in 2023. There are great expectations of the center to increase collaboration with the business community.

Abolition of tax relief for data centers

The government is scrapping the tax relief for data centers. This is despite the fact that the Minister of Finance in opposition promised to keep the tax reduction. This shows that the new government has not been able to review the previous government's very hastily written memorandum and is thus adhering to a proposal that leaves much to be desired. This applies to several important points - including the reasons for the proposal and the lack of an impact assessment. The proposal to abolish the tax reduction damages confidence in Sweden as a country for investment and counteracts digitization, something that is stated in TechSverige's consultation response. The proposal also received strong criticism in the consultation round.

In conclusion, it is it is a very cautious budget bill that is presented and which contains both good and less good proposals. It is a budget bill characterized by high inflation and a coming recession. Going forward, it is important to continue with the reform work to solve the future societal challenges and strengthen Swedish competitiveness. TechSverige has a clear hope that the government will move from words to action and that the opportunities of digitization will be taken advantage of and that we will have a higher ambition in the field of digitization - for the benefit of both the tech industry and society at large.