* 45 bn SEK in budget to fight COVID, boost recovery
* Measures during pandemic total more than 400 bn SEK
* Sweden's public finances strong despite spending

Sweden's centre-left government said it would boost spending by 45 billion crowns ($5.31 billion)in its spring budget to fight the ongoing pandemic and support a shift to a fossil free economy as the crisis eases.

Sweden has avoided strict lockdowns periodically adopted across much of the continent and by Sweden's Nordic neighbours, helping soften the blow to the economy, which shrank a modest 2.8% last year.

But the pandemic has nevertheless forced the government into extraordinary measures to support companies and individuals, as well as meeting soaring healthcare costs.

‘Altogether expenses related to the measures taken since the pandemic began total more than 400 billion crowns,’ Finance Minister Magdalena Andersson said in a statement.

Many of the measures in the budget had already been announced.

A furlough scheme, allowing companies to put workers on shorter hours, has been extended up to the summer, as has support for small businesses and many other measures.

With Sweden in the grip of a third wave of infections - running at the highest rate in Europe with the exception of San Marino - many of the measures may need to be extended again and the current cost estimates may prove too optimistic.

The government still has plenty of fiscal space to boost spending, however.

Debt is expected to rise to around 41% of GDP at the end of this year from around 35% in 2019 - less than half the average level in Europe.

‘Responsible fiscal policies contributed to strong public finances before the pandemic,’ Andersson said. ‘Sweden therefore has a good basis to deal with the downturn.’

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