Year
Inflation rate (average per year in per cent)
Year
Inflation rate (average per year in per cent)
1970-75
7.8
1991-95
4.2
1976-80
10.5
1996-2000
0.5
1981-85
9
2001-05
1.5
1986-90
6.2
2006-12
1.6
Table 1: Inflation Rate Sweden, 1970-2012, Source: SCB
The government’s economic policy of the 1980s, was dominated by the attempt to control unemployment and inflation by restraining the wage demands of employees and devalue the currency to restore company profitability. It was hoped that greater profitability would increase GDP, and finance real wage increases without inflation, while keeping the unemployment rate low. However, rather than boosting the domestic economy and employee wages/employment, restored profitability induced Swedish firms to increase their investments outside the country, and it increased the deficit in the current account (Ryner 1999, 60). In 1985, the government deregulated the capital and money markets, and in 1989 it deregulated the foreign exchange market, and pledged to maintain restrictive monetary policies to restrain the previous wage increase and inflationary policy (ibid., 62; Lindvall 2006, 254). The unions went in strong opposition to the government policies and continued to push for a ‘solidaristic wage policy’. Due to the now deregulated capital markets, Sweden subsequently suffered from enormous capital flight (cf. Table 2 next page).
Year