Sweden

Still-resilient economy despite a challenging global environment

Despite growing global uncertainty, the Swedish economy continues its gradual recovery through 2026 and this momentum is expected to continue in 2027. Domestic demand is strengthening, supported by expansionary fiscal policy, rising real wages and a recovery in household consumption. As inflation pressures have eased from their previous peaks, wage growth is once again outpacing consumer price increases, helping to restore purchasing power. The labour market remains softer than before the downturn but is showing signs of improvement, supporting household confidence and spending. Government measures aimed at mitigating cost-of-living pressures, including tax reductions and targeted support to households, are also providing support to economic activity.

Monetary policy is expected to remain relatively stable during the rest of 2026, with the Riksbank likely to keep interest rates broadly unchanged. However, if economic growth continues to strengthen and inflationary pressures re-emerge, a gradual tightening cycle could begin during 2027. Meanwhile, the housing market appears to have stabilised after several years of correction. Improving property prices – as households have adjusted to the new interest-rate environment – are expected to bolster household confidence, with positive wealth effects further supporting private consumption. External risks nevertheless remain significant. While the recent appreciation of the Swedish krona has had only a limited impact on export performance, supported by the competitiveness of Swedish firms and the continued strength of services exports, the international environment remains challenging. Weak manufacturing activity across much of Europe, trade tensions, and continued uncertainty surrounding global supply chains could constrain export growth and business investment. As a result, Sweden's economic recovery is expected to remain primarily driven by domestic demand rather than external trade.

Corporate insolvencies, which reached their highest levels in decades during 2024, have begun to moderate. After stabilising in 2025, insolvencies declined by around 6% during the first half of 2026. However, the pace of improvement is expected to slow, particularly as weak regional demand and higher operating costs continue to affect certain sectors. Pressures remain evident in agriculture, transport and information and communications technology. Looking ahead, export-oriented and energy-intensive industries – including chemicals, paper products, automotive manufacturing and parts of the transport sector – are likely to face increasing challenges from subdued external demand, rising competitive pressures and persistent cost constraints.

Rising public borrowing remains manageable

Sweden's external position is expected to remain strong despite some moderation over the forecast period. The current account surplus is projected to narrow slightly in 2026 before stabilising in 2027, supported by continued surpluses in goods trade and investment income. While the services balance is likely to remain in deficit, partly reflecting payments related to intellectual property and business services, robust primary income flows and Sweden's competitive export sector should continue to underpin a solid overall external balance. Consequently, Sweden is expected to maintain a resilient international financial position despite a more challenging global trade environment.

Public finances are expected to weaken moderately in 2026 and 2027 as the government prioritises economic support measures, tax reductions and higher expenditure on public services and defence. Although an improving economy should broaden the tax base and support government revenues, this is unlikely to fully offset the impact of fiscal expansion. As a result, public deficits are expected to widen somewhat and public debt to increase gradually. Nevertheless, debt levels will remain low by international standards, providing Sweden with considerable fiscal flexibility compared with most advanced economies.

Political focus on defence, welfare and migration ahead of the 2026 election

The parliamentary election scheduled for September 2026 is already influencing the political and fiscal landscape. The current government has adopted a more expansionary fiscal stance, combining support for households facing higher living costs with increased investment in public services and infrastructure. Despite these measures and the improving economic outlook, opinion polls suggest a highly competitive electoral contest. Regardless of the election outcome, broad political consensus exists around supporting economic growth, strengthening welfare services and maintaining elevated defence spending, suggesting that fiscal policy is likely to remain supportive under either a centre-right or centre-left administration.

Geopolitical developments continue to shape policy priorities. Following Sweden's accession to NATO, defence spending has increased significantly and is expected to rise further over the coming years, reaching levels well above historical norms (defence spending should rise by almost 20% in 2026, reaching around 3% of GDP in 2028). Strengthening military capabilities, enhancing civil preparedness and increasing cooperation with Nordic and European partners have become central elements of government policy.

Migration remains another key area of political focus. Recent reforms have tightened requirements for residency, citizenship and labour migration, reflecting a broader shift towards a more restrictive immigration framework. Combined with lower net migration flows, these changes have contributed to exceptionally weak population growth, creating new challenges for long-term labour supply and economic growth.

Payment

Bills of exchange and promissory notes are neither widely used nor recommended as they must meet a number of formal requirements in order to be considered as legally valid.

Just as the rules for issuing cheques have become more flexible, the sanctions for issuers of uncovered cheques have been relaxed over the years. The use of cheques has subsequently become almost non-existent.

Conversely, use of the SWIFT electronic network by Swedish banks provides a secure, efficient, and cost-effective domestic and international fund-transfer service. Payments are dependent on the buyer’s good faith. Sellers are advised to ensure that their bank account details are correct if they wish to receive timely payment.

Direct debits represent about 10% of non-cash payments in Sweden and are quickly growing in popularity. There are two types of direct debit in Sweden: Autogiro Foretag (AGF) for B2B transactions and AutogiroPrivat (AGP) for B2C payments. They can both be used for single or recurring payments.

Debt Collection

Amicable phase

Amicable settlement aims to recover the debt without transferring the case into a trial procedure. The debtor is informed (either orally or via writing, with written correspondence being preferred) about the debt, the payment deadline, and the consequences of not paying the debt. If debtor agrees to pay the debt, both parties may settle on instalment payments through an official document that sets out the contractual terms of the agreement.

When there is no specific interest clause in the contract, the rate of interest applicable since 2002 is the six-monthly benchmark rate (referensräntan) of the Central Bank of Sweden (Sveriges Riksbank), plus eight percentage points.

Under the Swedish Interest Act (räntelag, 1975, last amended in 2013), interest on damages is awarded from the 30th day following the day on which the creditor addressed a written claim for damages to the defendant, if the plaintiff so requests. In any event, interest may be awarded from the date of service of the summons application.

Legal proceedings

Fast-track proceedings

Where claims meet some basic requirements (e.g. payment is overdue, mediation was attempted), creditors can obtain an injunction to pay (Betalningsföreläggande) via summary proceedings through the Enforcement Service. The application has to be made in writing and clearly express the grounds of the claim. No further proof needs to be submitted.

This Enforcement Authority (Kronofog–demyndigheten) orders the debtor to respond within a period of ten days to two weeks. If the debtor fails to reply in time or acknowledge the debt, a verdict will be rendered on the merits of the original application.

While formal, this system offers a relatively straightforward and quick remedy in respect of undisputed claims, which has greatly freed up the courts. Creditors are not required to hire a lawyer but, in some circumstances, would be well advised to do so. On average, the process takes two months from application to decision. The decision is immediately enforceable.

Court proceedings

If the debtor contests the debt, the creditor has the decision of either turning to the District Court (the first instance, Tingsrätten) or to terminate the process.

Proceedings involve a preliminary hearing in which the judge attempts to help the parties reach a settlement after examining their case documents, evidence and arguments. It is up to the parties themselves to decide what evidence they wish to submit.

If the dispute remains unresolved, the proceedings continue with written submissions and oral arguments until the main hearing, where the emphasis is on counsels’ pleadings (defence and prosecution) and examination of witnesses’ testimonies.

In accordance with the principle of immediateness, the court bases its decision exclusively on the evidence presented at the trial. Barring exceptional circumstances, the judgement is customarily issued within two weeks thereafter.

As a general rule, the Code of Civil Procedure requires the losing party to bear all legal costs considered reasonable, as well as the attorney fees incurred by the winning party beyond a given threshold claim amount (about SEK 23,800, approximately EUR 2,390).

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It takes up to twelve months (in exceptional cases more) to obtain a writ of execution in first instance, bearing in mind that there is a widespread tendency in Sweden to appeal against judgements.

Enforcement of a Legal Decision

As soon as a domestic judgment becomes final, it is enforceable. If the debtor does not comply, the creditor can request the court’s enforcement authority to seize and sell the debtor’s assets.

For awards rendered in an EU member-state, special enforcement conditions are provided. When the claim is undisputed, the creditor may apply to the European Enforcement Order, or when the claim does not exceed €2,000, the creditor may start a European Small Claim Procedure. For awards issued in non-EU countries, the Svea Hovrät Court of Appeal must recognize an award in order to enforce it, provided that a recognition and enforcement agreement has been signed between the non-EU country and Sweden.

Insolvency Proceedings

OUT-OF COURT PROCEEDINGS

Swedish law does not formally regulate out-of court arrangements. Nevertheless, creditors and debtors can enter into voluntary negotiations in order to negotiate the debt and reach an agreement.

RESTRUCTURING

The aim of restructuring is to find a financial solution for an insolvent company that is deemed to have sustainable long-term business prospects. It can apply for a restructuring with the local court. If approved, the court will appoint a rekonstruktör to manage the restructuring. The latter will investigate the financial situation of the company, before establishing and implementing a restructuring plan under which up to 75% of the debt may be written off.

BANKRUPTCY

Bankruptcy proceedings are initiated as a consequence of a company becoming permanently insolvent. They aim to wind down an insolvent company by selling its assets and distributing any income to creditors. Either the debtor or the creditor can file a petition before the local court. After the court has declared a company bankrupt, it appoints an administrator that independently takes control over the company’s assets with the main task of realising such assets and repaying the debts of the bankruptcy estate in accordance with the creditors’ statutory ranking.

Last updated: July 2025