High household debt pose threat to Swedish economy

STOCKHOLM - High and rising household indebtedness and a poorly functioning housing market poses the biggest challenges to the Swedish economy and more measures are probably needed to dampen the development, the EU Commission wrote in a signed article on Friday.

Swedish house prices has risen throughout the financial crisis - fuelled by ultra-low interest rates and tax incentives - and household debt are among the highest in Europe.

In a yearly review of the Swedish economy the EU Commission concludes that much points to house prices being higher than can be explained by fundamental factors.

"This development increases the risk of a disruption that could affect housing prices and thus consumer spending negatively, which could trigger a general downturn in the economy," the Commission said in a article in Swedish business daily Dagens Industri.