W. 16 Policy Watch
Swedens Spring Budget
On the 13th of April the Swedish Government presented its new spring budget which focuses on building a more secure and stronger Sweden in today's uncertain world.
As the Swedish economy begins to recover the government assessed that even though the international situation is very uncertain, Sweden is standing strong and has world-class public finances. To ensure economic growth the government is focusing on pursuing a tree-part plan: continuing to preserve public finances, make it possible to create more jobs and ensure that hard work pays off. This has been implemented through measures like reprioritising expenditures and lowered taxes.
To protect the Swedish economy the government has increased support to households in response to the growing energy prices and measures to strengthen both the total defence capability and the welfare system. To counter the rising prices of fuels, the government has proposed to temporarily lower taxes on diesel and petrol to EUs minimum level and prepare to take additional measures if necessary. On total defence, the government has made investments in civil defence and has since determined that further investment is necessary. The welfare system will get its boost through a proposed grant that will allow the regions to maintain capacity and staffing during the summer and reinstalling a focus on fundamental knowledge in schools.
Europe's entry/exit system (EES)
Last week the new EES system was fully introduced across 29 European countries which will modernise EU border security and immigration systems, reduce the risk of crimes and enhance the chance to identify security risks. EES will replace passport stamps with digitally recorded entries and exits along with a new right of refusal for non-EU short stay travellers. The EES applies to non-EU/Schengen travellers going to the region for short stays (up to 90 days in a 180-day period), regardless of whether the travels are for business or tourism. The new system includes UK citizens as well as visa-exempt travellers and people who own EU property but are without a residence permit.
For the next few months travellers should expect rather significant airport delays while the system is tested but it will soon speed up border checks and help border staff work more efficiently.
EU and CPTPP agree to progress with "historic" digital trade deal, Canada's international trade minister says
Discussions are progressing between the EU and members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), including the UK, on a potential large-scale digital trade agreement. The deal is expected to cover areas such as cross-border data flows, e-commerce rules, and digital standards.
If agreed, it would bring together economies representing roughly $35 trillion in output and around 1.6 billion people, making it one of the most significant digital trade frameworks to date. The talks reflect a wider trend of countries pursuing smaller, more flexible agreements, particularly as progress at the WTO level has stalled.
For the UK, involvement in these discussions supports its broader strategy of diversifying trade beyond Europe while still maintaining strong links with it. However, as with the CPTPP more generally, the practical benefits will depend on how quickly businesses can engage with and use these new rules.
UK regulators rush to assess risks of latest Anthropic AI model
UK financial regulators are taking a closer look at the risks linked to rapidly developing artificial intelligence systems. The Bank of England and the Financial Conduct Authority have begun assessing how newer models (such as those developed by companies like Anthropic) could affect financial stability, particularly if they are adopted quickly across markets.
One of the main concerns is that more advanced AI tools could introduce new vulnerabilities, especially in areas like automated trading, cybersecurity, and risk modelling. If widely used without sufficient oversight, these systems could amplify shocks or create blind spots within financial institutions. This has prompted regulators to move more quickly than usual in reviewing their potential impact.
At the same time, the UK is trying to maintain its position as an attractive place for tech investment. This creates a balancing act: encouraging innovation while making sure safeguards are in place. How regulators respond now is likely to shape both the pace of AI adoption and the UK’s credibility as a stable financial centre.
UK's Starmer says Iran conflict shows Britain must take a new path
Rising tensions linked to the Iran conflict are beginning to feed into the UK economic outlook, primarily through higher energy prices and increased market volatility. Oil prices have risen sharply in recent days as concerns grow over potential disruption in the Strait of Hormuz, a key route for global energy supplies.
For the UK, this creates a familiar challenge. Higher energy costs tend to pass through into inflation, affecting both businesses and households. Sectors with high energy use are particularly exposed, while broader price pressures may complicate the Bank of England’s efforts to stabilise inflation and support growth.
The situation also highlights the UK’s continued sensitivity to global shocks, despite efforts to strengthen domestic resilience. While the immediate impact remains uncertain, the risk of prolonged instability in the region could weigh on economic confidence and reinforce the importance of energy security in the UK’s long-term strategy.