The Council of the European Union has issued a recommendation urging Sweden to align its economic, social, employment, structural and budgetary policies with the 2026 European Semester review, including strict adherence to net expenditure growth limits and reforms in housing, energy, education and labour markets.
The recommendation, published on 3 July 2026, follows the European Commission's spring 2026 assessment of Sweden's medium-term fiscal-structural plan. The Council endorses the Commission's conclusion of 3 June 2026 that Sweden no longer experiences macroeconomic imbalances, though it notes that vulnerabilities related to real estate prices and high private debt persist. Sweden's general government deficit stood at 1.3% of GDP in 2025 and is projected to rise to 2.8% in 2026 and 2.5% in 2027, while public debt is forecast to increase from 35.1% of GDP at end-2025 to 37.7% by end-2027. Defence expenditure reached 2.9% of GDP in 2025 and is projected at 3.8% in 2026.
The Council stresses that Sweden must respect the maximum net expenditure growth rates endorsed in its medium-term fiscal-structural plan: 4.0% in 2025, 4.4% in 2026, 4.4% in 2027, and 4.6% in 2028 (cumulative from 2023 base). However, net expenditure grew only 2.2% in 2025 (below the ceiling) but is projected to grow 6.5% in 2026, exceeding the recommended maximum by 1.0% of GDP. The recommendation calls on Sweden to correct this deviation and keep expenditure within the plan's limits.
On energy, the Council notes that Sweden adopted untargeted energy price measures — excise duty reductions expiring 30 September and 30 November 2026, and cash support for January-February 2026 gas and electricity costs — costing 0.2% of GDP in 2026. It recommends phasing out such measures and using the savings to reduce the deficit. The Council also flags that Sweden's greenhouse gas emissions are not on track to meet 2030 EU targets and that power grid constraints hinder the deployment of renewables.
In the housing sector, the Council identifies high household debt and insufficient housing supply as key challenges, urging measures to address both. On education and labour, it points to declining educational outcomes and skills gaps, alongside persistent labour shortages in healthcare, IT and education. The recommendation calls for policies to improve education equity and attract workers to high-demand sectors.
The recommendation is part of the annual European Semester cycle and will feed into the Council's broader policy guidance for member states. Sweden is expected to report on progress in its next national reform programme.