Sweden to boost government spending next year

Sweden's government said Friday it would stimulate the economy next year through reforms worth 25 billion kronor (2.9 billion euros, $3.9 billion) in next year's budget.

Most of the stimulus would come in the form of tax cuts, Finance Minister Anders Borg said at a government budget meeting in Harpsund outside Stockholm.

The Nordic country bounced back quickly from the financial crisis, but Borg said he wanted to avoid over-taxing households as the European crisis continue to "weigh" on the economy.

"The reasonable starting point is to support growth and households, and we see their situation improving," he said.

The boost was "expected in view of the election" next year, Annika Winsth, chief economist at Nordea, wrote on Twitter.

The Swedish government raised its growth forecast for next year to 2.5 percent from 2.2 percent and left its prediction for this year unchanged at 1.2 percent.

The centre-right coalition has been in power since 2006 but had to form a minority government in 2010 after the anti-immigrant Sweden Democrats entered parliament, erasing its parliamentary majority, and is currently struggling in the polls.

Voters are especially concerned about the historically high level of unemployment in Sweden, which Borg expected to drop to 8.1 percent next year after averaging 8.4 percent this year.