Swedish Lessons

23/05/2012

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Swedish Lessons

If we want to avoid a long hangover caused by high public debt we should look at the example of Sweden, says Prof. Núria Mas. Sweden went through a crisis similar to Spain’s with public debt reaching 78 percent of GDP but through a policy of transparency, balanced budgets and a productivity adjustment to get better results from less income, it has made a remarkable recovery.

In the 1990s, Sweden experienced a major economic crisis similar to the one EU countries are facing today, notes Prof. Núria Mas of IESE's Department of Economics. Following a real estate boom and bubble, the country's public debt skyrocketed from 40 to 78 percent. But Sweden rebounded and today is a top economic performer.
 
The country's comeback strategy included balancing the budget, setting a surplus target and imposing a productivity adjustment. It also created a system for allocating surplus funds to government projects in a much more effective way.

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