Growth reforms and brighter prospects - TechSweden's analysis of the fall budget

Industrial policy

Government's fall budget receives a positive reception from TechSverige, especially for the investments in growth, productivity and education that are crucial to strengthening Sweden's competitiveness. However, we see a need for more aggressive reforms, focusing on digitalization, welfare, sustainability, and skills supply and cybersecurity. These areas are necessary to meet global challenges and drive innovation. In our analysis of the budget, we highlight both strengths and weaknesses that affect the tech industry and Swedish competitiveness.


On Thursday, September 19, the Government's budget proposal was submitted to Parliament. Most of it was already known after several weeks of presentations. The Finance Minister emphasized that growth is expected to increase and that the focus has shifted from fighting inflation to building a richer and more secure Sweden. Unemployment is expected to remain high and household consumption and housing investment weak. The international situation is affecting the economy, but inflation has clearly fallen back. Several central banks in Europe are cutting interest rates, and the Riksbank is expected to follow suit. The recession is protracted, but the Swedish economy is expected to recover towards the end of the year, providing stability and brighter prospects.

TechSverige has reviewed a number of the areas included in the budget bill below.

Pluses and minuses in the budget bill for the tech industry: 

More: 

  • Increased research budget. 
  • Reduced limit for expert tax. 
  • Increased level of the reform scope of SEK 60 billion, which will be invested in growth, productivity and education, among other things. 
  • Strengthened work on talent attraction in 2025. 
  • Study on resource allocation for higher education. 
  • Raising ambitions for information and cyber security. 
  • SEK 1.8 billion for security and resilience in electronic communications. 
  • Resources for free open geodata. 
  • Increased funding for the digitization authorities. 
  • Increased funding for Business Sweden to promote investment and remove barriers. 
  • Reinforcements to county administrative boards and courts to speed up environmental permit processes. 

Minus: 

  • Welfare investments address short-term problems rather than long-term investments and future-proofing with the opportunity of digitalization. 
  • The electronics tax remains in place despite criticism. 
  • No new investments in connectivity and digitalization pending new digitalization strategy. 
  • Cybersecurity measures are taken before a national strategy is in place. 
  • Few national initiatives in digitalization, with the EU as the main driver. 
  • Information and cyber security is only seen as part of civil defense, but needs a broader focus that includes the business community. 
  • Few links between digital solutions and the climate transition. 
  • "The 'screen-to-binder' approach risks hampering the development of digital skills, which are crucial for the future. 


Few Swedish initiatives for digitalization - Brussels sets the pace 

There is some news about the promotion of geodata, government e-identification and a digital identity wallet. The fact that Lantmäteriet receives SEK 60 million a year to provide open geodata free of charge is welcome. It is a reform that should have been done long ago by previous governments. It is EU rules from 2019 that force the government to provide access to these data sources. This too could have been done earlier, but this government has used an exception in the rules to delay making it available. This adds to the impression of digitization policy at the halfway point of its mandate: the EU is holding both the baton and the whip - the government is taking few initiatives of its own.  

One exception is the government's announcement that it is taking further steps to establish the next generation communication system (Rakel G2) for actors in public order, security, health and total defense. The potential of modern networks such as 4G and 5G is great in these areas and it is very positive that the government is pushing for the capabilities and resources of commercial actors to be utilized through procurement. Using the commercial networks not only provides a modern and efficient solution to the users of Rakel G2, it also contributes to the development of the commercial mobile networks, which benefits the whole of society.  

No new funds will be allocated for fixed or mobile connections, but the government intends to review the conditions for reallocating the funds available for broadband support to support the expansion of mobile coverage and capacity where there are no conditions for commercial expansion.  

The AI Commission is a positive initiative, but we are still waiting for both the Commission's proposal, which the government promises "to analyse", and this government's digitalisation strategy. Otherwise, there is nothing directly concrete about AI, except that the government intends to set up an inquiry to implement the EU's AI regulation while waiting for the AI Commission. In other words, nothing dramatic, except for some government assignments. 

The reinforcements for the National Post and Telecom Agency and Digg are also mainly related to EU affairs and preparedness. At this pace and with this budget, the government's impact on digitization will be few and mainly come from Brussels. It is now crucial that the government quickly completes the new digitization strategy and follows up with concrete initiatives so that Sweden does not fall behind in a tough global competition.  

Lack of progressive reforms and proposals for health care 

Swedish healthcare faces major challenges in the future in terms of demographics, skills supply and accessibility throughout the healthcare system. Together with previously announced initiatives, the Government is allocating a total of SEK 18 billion, of which the Government's initiative to increase healthcare capacity and shorten healthcare queues is SEK 7.5 billion in 2025. This may seem like a large amount, but there is a risk that these funds will be used to solve financial challenges in the short term and that it will be difficult to put these funds into operational capacity with the current skills supply problems. Here, we would have preferred to see this type of appropriation used for investments and future-proofing of healthcare with the support of digitization and welfare technology. Otherwise, the same fires will have to be extinguished in the coming years with even larger sums and an even more challenging skills supply situation. 

However, there are small grains of gold. Supporting the Competence Center for Welfare Technology in the coming years to create continuity in their work is good and that we have the already decided investment in the digital infrastructure for health care. However, the funding for the latter will be phased out as early as 2027, which we believe is premature for Sweden's perhaps largest soft infrastructure project of all time to land in the right way. 

Several initiatives in the field of skills  

TechSverige has pushed the issue of the importance of education, research and innovation policy promoting and supporting continued digital development. It is important to look ahead despite and given the international situation if we are to ensure Swedish productivity, competitiveness and exports, not least for the tech industry. It is therefore welcome news that the government is proposing an increase in the research budget to SEK 40 billion in 2028, which means a permanent increase of SEK 6.5 billion. The focus of the investment is on cutting-edge research and innovation in strategic technology areas such as artificial intelligence (AI), quantum computers and biotechnology. The fact that the government is significantly increasing investment in research, with a focus on strategic technology areas such as AI, is positive. What the proposed investments mean in concrete terms remains to be seen in the research and innovation bill that will come later this fall. 

It is also very welcome news that the government has announced that it will appoint an inquiry to develop governance towards priority areas and review the resource allocation system for education at universities and colleges to enable greater efficiency in the resource allocation system. An increased level of remuneration for IT education and an inquiry to review the current division of remuneration levels is an issue that TechSverige has pursued. Strengthened collaboration with the business sector and the link between education and working life is also an important aspect. This will be an important investigation to have a dialog with! 

The government highlights the importance of working from an early age to strengthen mathematics subjects in school and to promote girls' and boys' interest in science, technology, engineering and mathematics in general. This is positive, even if there are no major innovations in this year's budget. It remains to be seen whether the ambition will be further concretized when the government presents its STEM strategy, which is said to span the entire education system, from preschool to postgraduate education. One new measure is that the government intends to set up a STEM delegation. Previously it has been announced that the STEM strategy is planned for the end of 2024, however, the timing of the strategy is not mentioned in the budget bill so it remains to be seen.  

The government also announces a reduction in the salary level for the expert tax from 2 to 1.5 price base amounts. The reduction means that more international experts can be covered by the rules, which makes Sweden more attractive and helps to make it easier to attract top talent to Sweden. This is positive news and a measure that TechSverige and its member companies have worked for.  

The Government announces that it intends to strengthen its work on talent attraction in 2025 by allocating SEK 8 million to the Swedish Institute and Business Sweden for information initiatives in tech clusters in other countries. There is a great need to strengthen Sweden as an attractive technology nation and it is positive that the government is investing funds to increase talent attraction, although the current promotional efforts must be considered to be of a limited nature that needs to be supplemented with the broader perspective: How does Sweden become an attractive talent node? This requires a talent attraction strategy, an issue that TechSverige still sees a need to pursue. 

Schools have a responsibility to prepare students for the future 

The budget states that schools should go back to basics and that we should move from screen to book. Being able to read and count are important foundations for life and for further studies. At the same time, we see a growing need for a tech workforce, and around 18,000 additional tech specialists will be needed annually between 2024 and 2028. We believe that schools have a responsibility to equip students for the future, where digital literacy and digital skills will be essential. In addition, there is great potential in using digital solutions for students' knowledge development in general and not least great administrative gains for teachers if digital tools and AI are used correctly. Increasing digital literacy should not necessarily hamper literacy, on the contrary, it can go hand in hand. It is rarely either/or, but often digital solutions are used in combination with analogue learning materials to personalize learning. However, governance is needed for the responsible and equitable development of digital literacy and digitalization in schools.    

Cybersecurity out of step 

The Government proposes an increase in ambition in information and cyber security, including reinforcements to develop the National Cyber Security Center and CERT-SE, Sweden's Computer Security Incident Response Team. The government believes that information and cyber security is the foundation of modern civil defense. TechSverige welcomes the increase in ambition, but there are concerns.  

We talk about the general public, regions and municipalities - but less about business. Here, the money goes to the EU's NIS2 information security framework, which is being expanded and increases requirements for private actors, among others. Furthermore, the government intends to develop and prepare a new information and cyber security strategy "within the framework of NIS2". How work on these issues is best organized and can be developed in the direction that is most effective for society "will be reviewed". The budget bill still gives the impression that the government's information security policy is out of step. Halfway through the term of office, important announcements and initiatives are being made - even though the government has not presented the new national information and cyber security strategy.  

The government wants to strengthen the security and reliability of the digital infrastructure. This involves both the resilience of the infrastructure and the sector's preparedness work, to "secure Sweden's ability to communicate nationally, internationally and digitally in all situations." It is not yet clear how far the new level of SEK 1.8 billion will go towards such ambitious goals, but it is a welcome increase of SEK 1.6 billion that has been announced. 

Strengthening cooperation between business and the public sector 

In the government declaration, the Prime Minister emphasized that "the government wants to see more of Team Sweden". The Government is now making a substantial increase in the allocation for export promotion and investment promotion activities, primarily to Business Sweden. The aim is to strengthen the work of Team Sweden, which is a network of authorities and organizations working to promote Swedish exports and investments in Sweden. It is emphasized that the cooperation will continue to be further developed in consultation with the business community and chambers of commerce and to a greater extent actively capture business opportunities and position Swedish solutions in strategically important areas such as green and digital transition in digitization, AI and life science. There is international demand for Swedish solutions - but support is needed for companies to be able to reach out. It is emphasized that service companies in fully digital environments should also be included and that startups and scaleups play an important role in our future economy, competitiveness and labor market. According to the Government, investing in Team Sweden can provide better conditions for Swedish companies to take advantage of the global business opportunities that, among other things, the green and digital transition entails. Let's hope that this will be the case - the initiative is in any case welcomed by TechSverige as the tech industry accounts for a large part of Swedish exports but can become even larger.  

Digital technologies and skills - the basis for sustainable development 

The government is investing in research, innovation, access to skilled labor, increased export opportunities and reduced regulatory burden. These are important elements for the tech sector to contribute to the green and digital transitions. But more is needed to accelerate it. TechSverige contributed to the government's climate policy action plan with concrete measures to be taken in connection with the potential of digital solutions to contribute to reducing climate impact broadly. However, it can be noted that these have not been sufficiently addressed in the budget bill. There is still time for the government to implement the proposals, but it does not look like it will happen this year. 

We also note that the government is retaining the unsustainable electronics tax, despite the knowledge that it has increased significantly, that it has no environmental benefit, that it does not affect the production of electronics, that it has led to large price increases, not least for the economically weak, and that it is weakening Swedish competitiveness and reducing jobs in Sweden. This is nothing but deeply regrettable.  

Reduce the regulatory burden for businesses
The Government notes that it is a problematic development that the total regulatory costs for businesses continue to increase. The Government has previously set up an implementation council linked to issues concerning the introduction of EU directives that are of particular importance to Swedish businesses and a simplification council to identify simplification measures arising from Swedish law and to produce concrete proposals. 

In the budget, the Government states that it will strengthen the county administrative boards' ability to facilitate companies' contacts with the authorities and the submission of information. The Government is therefore allocating funds to the County Administrative Board of Västerbotten to disseminate and for the county administrative boards concerned to implement new, more efficient working methods. 

TechSverige welcomes simplification measures. Good conditions for companies to build knowledge and conduct their business are a prerequisite for Swedish competitiveness and sustainable social development. TechSverige has a clear hope that current legislation adopted, both at EU level and nationally, will be based on the 'Think small first' principle. 

In summary, it is an autumn budget that emphasizes that we are still in a recession, but the recovery is just around the corner and the main focus is on reforms for increased growth, productivity and education. This is a direction we welcome. Sweden faces major structural challenges such as an ageing population, skills shortages and a failure to make better use of the opportunities offered by digitalization.  

The tech industry has rapidly evolved into a key piece of the Swedish economy, with solutions and services generating growth and productivity across all sectors, and much of the digitalization, its contribution to society and value to the economy is still ahead of us. But given the fluidity of the tech industry - and especially its global nature - it is impossible to sit back.  

The Government needs to continue along this path with more concrete reforms and a high pace of reform processes to solve the major societal challenges and strengthen Swedish competitiveness. We are already halfway through the mandate period! We look forward to taking part in several concrete initiatives in, among other things, the upcoming research and innovation bill and as a result of the AI Commission and the upcoming digitization strategy so that we can continue to keep up with the rapid development in other countries.  

Press release: TechSweden's Chief Economist on the budget: Reforms to boost growth, productivity and education welcome