Over a short period of time, governments across the world have introduced comprehensive subsidies to mediate the economic effects of the coronavirus pandemic. In Sweden, the government has passed decisions on direct financial grants to firms exceeding 100 billion SEK. In addition, credit guarantees and loans amounting to over 230 billion SEK have been granted, as well as interest free tax deferrals of around 40 billion SEK. Sweden has thus allocated substantial economic support to the Swedish business community. The subsidy programmes have been designed and implemented under considerable time pressure.

At the time of publication, the pandemic is still ongoing and, accordingly, it is too early to determine what effects the subsidies may have had. In this study, Growth Analysis has mapped the existing analyses and evaluations of the effects of the support measures. The overview includes both Swedish and international studies.

We have identified some impact evaluations in an early stage, as well as a number of studies involving a theoretical discussion on the design of the subsidies and their potential effects. However, it is important to note that more time must elapse before rigorous evaluations of the support measures’ effects can be conducted. This is due in part to data availability, but also to the fact that the long-term effects of the subsidies can only be measured after the pandemic.

There are a number of recurring issues discussed in the analyses and evaluations identified in our study. A central question is how the subsidies can be designed to target viable firms, while avoiding subsidising firms that lack potential for survival in the long term. There is a balancing act between ensuring that sound and viable firms are given the support they need to survive the pandemic, while at the same time maintaining the impetus to necessary structural transformation. There are no easy solutions to this complex challenge. Another important issue raised in the analyses is a concern that fundamentally viable firms may find themselves in difficulty in the future as they may have depleted their financial assets and taken on an unsustainable level of debt - through loans or tax deferrals - during the pandemic. We have also observed a discussion that public subsidies should not be offered for too long a period of time, as this can also hinder necessary structural transformation. At the same time, some analyses indicate that further subsidies for some firms may be needed, especially for those that have been hardest hit by the pandemic and by the various restrictions implemented to slow the spread of the virus. There is a high level of heterogeneity in which firms have been affected. Thus, a policy of directing support to specific branches may be too blunt.

We also include a short description of ongoing work in Sweden’s neighbouring countries to study and learn more about the effects of the various subsidies. Finland, in particular, has initiated an ambitious evaluation plan.