The strained state finances
Sweden still has strong government finances compared to most other countries. But the next finance minister is still faced with a tricky task.
The Tidö government has allowed the state budget to run with a deficit. This year it is about 184 billion and the forecast points to the same level in 2027. Particularly controversial is that they have borrowed for tax cuts, something that has received harsh criticism from the government's own expert body, the Fiscal Policy Council. The debt is starting to approach the higher limit set out in the fiscal framework. Will the next government be able to maintain the budget rules?
Going forward, there is a big unresolved issue: the financing of defence. The parties in the Riksdag have broadly agreed to borrow SEK 300 billion for the rearmament. How it will ultimately be paid remains to be seen.
The dangerous outside world
Sweden is in the most difficult security policy situation since the Second World War. It's an oft-repeated phrase that unfortunately has some validity. A major war has been raging in the local area for just over four years. There are no signs of an early peace in Ukraine.
The Russian aggression is the reason why Sweden is equipping the defense at an accelerated pace, which is increasingly using society's resources. So far, all parties in the Riksdag are behind this, but will the next government be able to maintain unity?
The external pressures are exacerbated by Donald Trump, who has created uncertainty about NATO's future and made direct threats against Sweden's neighbor Denmark. His war against Iran and unpredictable trade policies have tangible economic consequences for households and businesses alike. Parrying this has been a daunting task for the current government and will certainly be so for the next one as well.
The disappointed voters
Before the election, the Tidö government, partly with the support of the opposition, offered households a number of financial reliefs. The tax on petrol and diesel has been reduced, the food VAT has been halved and anyone who buys a monthly public transport card gets an equal discount.
But, according to the Riksdag's decision, this only applies temporarily. Food VAT will return to 12 percent on 1 January 2028. The discount on public transport only applies until the turn of the year. Some of the tax reductions on fuel have an end date in the autumn.
The costly reforms have been motivated by the fact that households needed temporary supplements after the expensive times that have been. The parties still give vague answers as to whether these time limits will really be met. Increased costs are not a winning message in an election year. Will the next government be able to tighten the voters' belt?
The aging population
More and more must be supported by fewer and fewer. This has been the case for a long time and the problem is growing. Childbirth is down to historically low levels. The 2026 election campaign has offered countless promises about a better life for families with children, from increased contributions to lower taxes and sibling IVF. But the dynamics behind childbearing are complex and cannot be controlled from the Riksdag.
At the other end of life, the part of the population that has left working life is increasing. Life expectancy continues to tick upwards and is now almost 86 years for women and 83 for men. The proportion over 85 is expected to rise by another 60 percent until 2035, according to Sweden's municipalities and regions, which assess that elderly care needs to be expanded at a cost of SEK 60 billion.
The demanding climate goal
During the next mandate period, Sweden must meet the climate requirements set for 2030. The conditions to reach there have been worsened by the Tidö government, according to the independent expert body Climate Policy Council. Overall, over the last term, emissions are more or less unchanged, due to tax cuts making it cheaper to fill up the car with fossil fuels.
The government's own investigators believe that strong measures are now required, which include price increases for petrol and diesel. This is to make the alternatives, such as electric cars, more attractive. Some price increases are inevitable, but the Tidö parties promise to resist. It is also not a given how it will turn out with an S-led government. The Green Party is pressing on, but the Social Democrats are reluctant to raise fuel taxes.
Should Sweden miss the EU target for emissions, penalties in the multibillion-dollar range await.
The artificial intelligence
The latest step in digital development is already in the process of reshaping society. The politicians are groping for a stance that takes advantage of the advantages and at the same time stops the variants.
On the plus side, there are efficiency gains in the companies but also in administration, care and research. At the same time, no one can foresee the consequences on the labor market when more and more jobs are taken over by AI. Democracy also risks being undermined, according to the warnings, when disinformation becomes so advanced that it is hard, if not impossible to see through.
The government's AI strategy breathes optimism about Sweden's opportunities to assert itself in the competition. But Swedish politicians weigh lightly against the global tech giants. The question is whether even the EU can even out the balance of power.
