Sweden is latest European country to lower rates

The Swedish central bank has slashed interest rates by 1.75 percent, which is the biggest reduction for over 15 years, ahead of the nation’s slip into recession in 2009.

Interest rates have been lowered to 2 percent by the Stockholm-based Riksbank prior to the forecast that the economy will shrink by 0.5 percent next year.

There has been an unexpected and rapid decline in the state of the economy, since the beginning of the fourth quarter and inflation is expected to continue to fall through to next year.

Finance Minister Anders Borg said last week that it will be a long hard winter as gross domestic product may fall by 1.2 percent in 2009.

Over the next year unemployment is expected to increase by 7.8 percent from the current 5.7 percent.

Following the downturn, Sweden’s largest builder, Skanska AB announced that they will have to cut jobs and that followed on with a series of similar announcements by drug maker AstraZeneca Plc and Sandvik AB.

The Public Employment Services said last month that the number of people who have been notified of their impending redundancy is at its highest level in over 16 years.

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