LO economists in economic forecasts
No growth and a drastic increase of unemployment
The total unemployment is calculated to rise to 7,2 per cent next year and to 7,9 per cent the year after. GDP lands in 2009 close to zero and recovers only in 2010, as GDP increases by two per cent.
This is what the LO economists state in the economic forecast. A prerequisite is that the Central bank decreases the rent, so in March it will be about 3 per cent. Such a decrease is both reasonable and necessary as the burden of inflation is low and the utilisation of resources in the economy is very weak, according to the LO economists.
The inflation rate has been high during 2008, largely depending on increasing costs of interests and high food and energy prices. After this summer the prices of oil and other raw materials have fallen heavily and the inflation will therefore decrease. During 2009 inflation will be clearly beneath the inflation goal and will then rise up to two per cent at the end of 2010.
During the next two years the employment rate will decrease by 110 000 persons. At the same time the productivity within trade and industry will increase by 2 and 4 per cent during 2009 and 2010, after a decrease in 2007 and 2008.
This gloomy picture of the development of GDP is founded on the vision that the demand from the Swedish households as well as from the surrounding world is expected to decrease and that the investments will fall.
The liquid assets of the Swedish households will increase but their real wealth will decrease, due to the fact that house prices and the market capitalization fall. The LO economists consider that this situation will lead to an increase of the households’ savings and that the quota of savings will reach the maximum level, the highest since the middle of the 1990s.
The LO economists are critical of the government, due to its lack of a recession policy. The deteriorations of the unemployment insurance do not only affect the unemployed, this also means that the demand in the economy will not be maintained as efficiently as before.
The LO economists are also critical of the special fee of unemployment, introduced by the government. The fee varies from one unemployment fund to another, depending on the number of unemployed and it is constructed according to the assumption that unemployment depends on the wage claims for each wage-earner group respectively.
The fee of the unemployment fund was unreasonable when it was introduced, since great responsibility was assumed already in the wage formation process; now it appears even more clearly how absurd it is. Wage-earners are punished with higher fee to the unemployment fund due to an unemployment, which is a result of the fact that irresponsibility within the banking sector has led to a financial crisis. Does the government imagine that wage-earners shall reduce wages as a result of the financial crisis, the senior economist of LO, Dan Andersson, asks.