Sweden loosened the purse strings to unveil a £9.3bn spending and tax cuts boost for its economy after suffering a record slump despite its light-touch lockdown.
The Social Democrat and Green coalition turned on the spending taps with a “record-large budget to restart the Swedish economy” despite its controversial approach sparing it from the worst of the Covid-19 damage.
The coalition relaxed the country’s ultra-prudent fiscal policy with a package focused on creating jobs, boosting welfare and fighting climate change.
“Together we are going to work Sweden's way out of the crisis and build a more sustainable society,” said finance minister Magdalena Andersson.
Despite its light-touch lockdown, Sweden still suffered a record plunge in GDP in the second quarter, falling 8.6pc compared to the previous three months.
The controversial approach relied on voluntary social distancing, bans on large gatherings and table service in bars and restaurants in a marked difference from its Nordic neighbours.
After initially surging, Covid infections in Sweden have fallen to low levels and there is little sign of a second wave yet.
While businesses were kept open even as the rest of Europe went into draconian lockdowns, Sweden’s economy was still hurt by sliding global demand and a slump in household spending.
However, the tumble in output was much less severe than those seen in the eurozone and UK as it let the virus rip through the country. The government expects GDP to fall by 4.6pc this year as its recovery gathers pace.
“The Nordic countries including Sweden have performed better than the eurozone in aggregate and especially the southern European economies,” explained David Oxley at Capital Economics.
“It was not unscathed and it was far from business as usual, but the fact that businesses remained open means it was less than a sudden stop in activity as other places have seen.”
Mr Oxley said the spending boost was “not a huge gamechanger”, adding that fiscal policy was expected to tighten next year.