SWEDEN Trends and Developments Contributed by: Niklas Sinander, Elin Carlsson, Axel Schelén and Björn Wendleby, Harvest Advokatbyrå
Macroeconomic Overview Sweden continues to deal with the effects of recent economic cycles. The temporary recovery observed towards the end of 2024 has subsided, and the econ- omy remains in a prolonged recession with weak growth in both GDP and employment. Although household margins have strengthened to some extent by rising nominal incomes and a grad- ual stabilisation in the corporate sector, real wages remain below the levels seen prior to the rise in infla- tion and interest rates. The combination of persistently high costs and weak demand has contributed to an increased level of bankruptcies. Meanwhile, geo- political tensions and the imposition of trade tariffs have heightened uncertainty within financial markets, resulting in the postponement of both consumption and investment decisions. Inflation has moderated over the past year, which led the Swedish Central Bank, the Riksbank ( Riksbanken) , to lower its key policy rate to 2.00% in June 2025. Nevertheless, borrowing costs remain comparatively high, credit growth remains subdued, and many bor- rowers continue to face substantial challenges in meeting their financial obligations. For businesses, current market conditions have led to an increase in corporate restructuring and reorganisa- tions. As lenders’ risk appetite has declined and credit terms have become more restrictive, demand for alterna- tive financing solutions has increased, particularly in respect of the refinancing of highly indebted compa- nies. The corporate bond market remains the princi- pal source of market-based funding for Swedish non- financial enterprises. However, the increased demand for alternative financing has also facilitated opportu- nities for direct lending credit funds to expand from low levels. Such funds frequently provide bespoke, secured, floating-rate loans, thereby complementing the banking sector where greater speed, flexibility or higher leverage is required. As for households, data from the Swedish Enforce- ment Authority ( Kronofogden ) indicates that an increasing proportion of the population is experienc-
ing payment difficulties. Swedish households remain among the most indebted globally, with total debt exceeding SEK5 trillion, of which around SEK1 trillion relates to non-mortgage debt. It is estimated that some 455,000 individuals are cur- rently over-indebted; of these, approximately 90,000 have had debts subject to collection proceedings for more than two decades. In light of this, the consumer credit market has been the subject of significant regu- latory reform, driven both by rising household over- indebtedness and by the increase in short-term and high-cost credit. The previous less stringent regulation of so-called consumer credit companies (also known as payday loan companies) has been revoked, leav- ing only banks and credit market companies – and, to certain extent, payment institutions, electronic money institutions and mortgage credit institutions – author- ised to broker or grant credits to consumers. The assessment has been that the former framework contributed to insufficient credit checks, the granting of loans at excessive rates of interest, and an undue focus on non-creditworthy borrowers than is typically the case for banks and credit market companies. The consequence has been that households with small financial margins have, in many cases, incurred debts far exceeding their repayment capacity. A Tighter Consumer Credit Market On 1 March 2025, amendments to the Swedish Con- sumer Credit Act (SFS 2010:1846) entered into force. These amendments introduced stricter rules on inter- est rate and cost caps, with the aim of counteract- ing high-risk lending and preventing individuals from becoming over-indebted by being granted loans that they are unable to repay. Under the new provisions, the credit interest rate or default interest rate on loans may not exceed the applicable reference rate by more than 20 percent- age points. The previous cap of 40 percentage points has thus been both lowered and extended to cover all credits under the Consumer Credit Act, with the exception of mortgage loans. The amendments also expand the scope of the cost cap, which limits the total cost of credit. It now applies
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