Swedes' Debts Reach Record Highs Amid Spiking Interest Rates, Inflation

Swedes’ combined debts to the national Enforcement Agency soared in 2022, reaching record highs.

For the first time in history, the total amount of debt has exceeded the symbolic threshold of SEK 100 billion ($9.6 billion).

By the end of the year, the total amount of debt had increased by 7.4 percent, compared to the year before — indicating a growth rate of some SEK 20 million ($1.9 million) per day.

The majority of the debts are made up of what the authority classifies as "individual cases." These include consumer debts, loan and credit debts to banks and various types of subscription debts.

The number of Swedes indebted to the Enforcement Agency has also increased somewhat. However, the statistics suggest that those already indebted accumulated even more liabilities.

Enforcement Agency analyst Davor Vuleta attributed the debts to growing interest rates and inflation. In December 2022, the annual inflation rate in Sweden surged to 12.3 percent, the highest since February 1991, accelerating from 11.5 percent in November and exceeding market expectations of 12 percent.

"Those who suffer the worst are those who are already financially vulnerable," he pointed out to Swedish media. "Those living on the margin have had higher expenses due to inflation, which can be the decisive difference that makes it impossible to pay the bills."

According to Statistics Sweden, income gaps in the country reached their highest level in 40 years, spelling trouble for the disadvantaged. Overall, Swedes’ indebtedness has increased steadily since 2011, with a temporary respite in 2015 in 2016.

Enforcement Agency chief Fredrik Rosengren called it worrying that people pay their debts year after year without actually reducing them, because the payments only concern interest and not the principal debt itself.

As the global economy spirals into recession amid a rampant energy crisis, the conflict in Ukraine and the backfiring sanctions, Sweden appears to be among the worst-off. The Organization for Economic Cooperation and Development (OECD) expects Sweden's GDP to drop by 0.6 percent, the weakest performance among all 48 countries compared.

Pundits have at least partially attributed this to Swedes’ massive indebtedness, which will force them to shrink consumption and, in turn, drag down the entire country’s economy.

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