Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTMelissa LawfordSat, June 13, 2026 at 7:15 AM GMT+2 8 min readLEAD 1306 UK v Sweden DebtBritain’s debt pile is snowballing. It is rising by £650m a day and is on course to hit £3tn by September. It feels like an impossible problem to fix.Yet, it has been done before.In the early 1990s, Sweden went into financial meltdown. “We had a foreign exchange crisis, we had a banking crisis, we had a cost crisis. And on top of that, when everything blew up, of course, we also ended up with a fiscal crisis,” says Stefan Ingves, who was governor of Sweden’s central bank from 2006 to 2022.The Riksbank raised interest rates to 500pc. Unemployment soared fivefold to hit a record 11.2pc. The Swedish economy plunged into a deep three-year recession.By 1995, Sweden’s general gross government debt was equivalent to 68.9pc of the country’s GDP. Yet, by 2024, it had plunged to 33.9pc.Meanwhile, Britain has gone in the opposite direction. Between 1995 and 2024, UK government debt has surged from 43.5pc of national GDP to 102.3pc.Sweden provides a roadmap to halt this upward surge. The only problem is, it will go against many of Rachel Reeves’s instincts.Still, there is much to learn from Sweden’s experience. The country was once in a dire position.As the crisis unfolded in the 1990s, Sweden’s finance minister Göran Persson flew to New York to convince investors to keep buying Swedish debt.“He had to debate with 25-year-old traders. That was his ‘Liz Truss’ moment,” says Ingves. “He said this should never, ever happen again. If you are in debt, you are not free.“The bottom line was that we either had to fix it or go to the International Monetary Fund (IMF). There was a political consensus that we need to get this under control, because we need to be able to decide for ourselves the destiny of our country.”The shock forced economists and policymakers across all parties to rethink their philosophy and approach to economic management, says Lars Jonung, who was chief economic adviser to Carl Bildt, the prime minister at the time.“We understood that we had to find a new type of fiscal strategy to solve our economic problems, and that change in thinking paved the way for a fiscal policy framework that has restrained growth in government debt.”Bildt appointed the Swedish economist Assar Lindbeck as head of a commission which in 1993 produced a landmark list of 113 recommendations.These included establishing a much tighter budgetary framework. “We moved from a bottom-up approach to a top-down approach,” says Lars Calmfors, who was chair of the Economic Council that advised the ministry of finance from 1993 to 2001.Terms and Privacy PolicyPrivacy & Cookie SettingsMore Info