Sweden

Interest rate cuts will continue to help the economy

The Swedish economy in 2025 is set to continue its gradual recovery, driven by a recovery in household consumption. After a sluggish 2024, improving labour market conditions, higher real wages, and lower taxes are expected to provide much-needed support to spending. Additionally, declining interest rates and a stabilising housing market are likely to bolster consumer confidence, with wealth effects further reinforcing household demand. Additionally, public sector activity is expected to act as a counterbalance, with increased spending and investment, particularly in defence and infrastructure, providing stability to the broader economy.

Despite these positive domestic developments, external risks persist. A relatively weak Swedish krona should continue to support exports, but the global trade environment remains uncertain. American tariffs and a sluggish European manufacturing sector pose downside risks, potentially limiting the extent of export-driven growth.

Corporate insolvencies have grown for three consecutive years – and by double digits in 2023 and 2024 – and they are expected to remain high in 2025, as companies struggle with high labour and energy costs, but ease slightly over the year due to better domestic demand and lower interest costs.

Rising debt should not be an issue

Sweden's current account balance is expected to maintain its stable surplus in 2025, supported by continued strength in the balance of goods and primary income. Balance of services should see an improvement of its deficit in 2025 although it is still expected to remain negative (partly due to some intellectual property uses). The balance of goods may see some moderation, but improvements in services and primary income should help sustain a healthy surplus, keeping Sweden's external position resilient.

In 2025, Sweden’s public deficit is projected to narrow despite increased government spending and tax cuts. This is primarily due to higher tax revenues due to a better tax base, which will help offset the fiscal expansion. As a result, public debt is expected to rise slightly, though it will remain at very manageable levels, especially in comparison to other advanced economies.

Tighter immigration policy domestically and focus on defence spending

Sweden's political landscape is expected to be more policy focused with no elections in 2025, neither European Parliament or municipal, and the next general election not scheduled until 2026. The current government, comprising the Moderates, Christian Democrats, and Liberals, along with the support of the far-right Swedish Democrats, are just below 50% of votes in polls, with the Swedish Democrats and Moderates neck and neck as the largest party supporting the government.

Amid ongoing geopolitical uncertainty and Sweden’s recent accession to NATO, defence spending is set to rise rapidly, reaching an estimated 2.4% of GDP in 2025. Immigration remains a key political issue, with ongoing debates over stricter citizenship requirements, including proposals to extend the residency period from five to eight years and revoke citizenship from dual nationals convicted of serious crimes. Meanwhile, law and order continue to rank among voters' top concerns, shaping much of the domestic policy agenda.

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).

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: March 2025