Jurekozuh

A bursting real estate bubble caused by inadequate controls on lending combined with an international recession and a policy switch from anti-unemployment policies to anti-inflationary policies resulted in a fiscal crisis in the early 1990s. Sweden’s GDP declined by around 5%. In 1992, there was a run on the currency, the central bank briefly jacking up interest to 500% in an unsuccessful effort to defend the currency’s fixed exchange rate. Total employment fell by almost 10% during the crisis. The response of the government was to cut spending and institute a multitude of reforms to improve Sweden’s competitiveness, among them reducing the welfare state and privatizing public services and goods. Much of the political establishment promoted EU membership, and the Swedish referendum passed with 52% in favour of joining the EU on 13 November 1994. Sweden joined the European Union on 1 January 1995.