National Debt

Sweden's National Debt – Historically Low but Increasing in Uncertain Times

Today, July 1, 2025, the Swedish Central Bank (Riksbanken) presented new figures showing that Sweden's national debt now amounts to SEK 1,146 billion, which corresponds to 19.16 percent of the country's GDP. Although this is a slight increase compared to previous months, the debt remains at low levels when viewed over the past decades. But what does this really mean for Sweden – and for you as an individual?

The National Debt in a Historical Perspective

For those who remember the economic crisis of the 1990s, today's figures may seem almost astonishingly low. During the years around 1995, the national debt was over 70 percent of GDP. In 1996, it peaked at 71.5 percent, and as recently as 2000, it was over 50 percent of GDP. Since then, Sweden has managed to reduce its debt ratio through a combination of strong economic growth, disciplined public finances, and budget surpluses, achieving levels that few other European countries can match.

However, recent years have brought new challenges. Following the economic ripple effects of the pandemic and increased expenditures, the debt has begun to rise again, albeit from a low level. A year ago, in August 2024, the national debt was SEK 1,007 billion, representing 16.83 percent of GDP. Now, a year later, it has increased by just over SEK 139 billion and constitutes a slightly larger share of the GDP pie.

Why Is the National Debt Increasing Right Now?

According to the Swedish National Debt Office (Riksgälden), the increase is expected. In their latest government borrowing report, they point to several factors: subdued tax revenues, increased government expenditures, and a large capital injection to the Riksbank of SEK 40 billion. Additionally, economic growth has been weaker than usual, which has reduced government income.

Riksgälden's Director General, Karolina Ekholm, commented earlier this year: "Public finances have developed strongly after the pandemic, but now we see signs of weakening, with subdued tax revenues and higher government spending."

What Does the National Debt Mean for You?

The national debt is a measure of how much the government borrows to finance its expenditures. A low debt level means the government has greater room for maneuver in crises and can invest in essential societal functions without needing to raise taxes drastically. For households, this translates into more stable interest rates, less risk of sudden tax hikes, and, ideally, investments in welfare and infrastructure.

However, a growing debt can, in the long run, mean that the government has to allocate more money to interest payments instead of schools, healthcare, and social services. Currently, Sweden's interest costs on the debt are relatively low thanks to international confidence in the Swedish economy and low interest rates. But if interest rates rise, borrowing costs could quickly become more expensive – which could impact the national budget and, ultimately, household finances.

International Perspective – Sweden at the Top

Despite the recent increase, Sweden's national debt remains well below the EU average, where many countries have debts exceeding 60–100 percent of GDP. This provides Sweden with a strong position should new economic crises occur.

Having a low national debt is also a signal to the outside world that Sweden is a stable and creditworthy country. It makes it cheaper for the government to borrow money and creates security for both businesses and private individuals.

What Lies Ahead?

The Swedish National Debt Office expects the national debt to continue increasing slightly during 2025, but to remain at a historically low level. The forecast is that the debt will reach 18 percent of GDP by the end of the year, which is far from the levels seen in the 1990s.

The Swedish economy is expected to turn upward in 2026, with a stronger labor market and higher growth. This could, in turn, slow the debt increase and give the government better opportunities to rebuild its finances.

The Role of the National Debt in Daily Life

For most Swedes, the national debt is something they rarely notice directly in everyday life. But it affects us all indirectly – through interest rates, taxes, and the government's ability to act in crises. A controlled and low debt level provides security and stability, while a rapidly growing debt can create concern and future financial demands.

Overall, Sweden's national debt remains low despite recent increases. It is a sign of strength and gives us room to face future challenges – but it is important to keep an eye on developments, both for the country's and our own financial well-being.

Did You Know…

• In 1997, the national debt was nearly 70 percent of GDP – today it is under 20 percent.
• Sweden's per capita national debt is among the lowest in Europe.
• The national debt increased temporarily during the pandemic but has since been kept in check thanks to strong public finances.