.jpg)
The uncertainty in geopolitical and economic developments is high, and the risk of negative shocks is higher now than it was last autumn. At the same time, Swedish banks have large capital buffers and good profitability, which builds resilience. Financial firms, households and firms all need to be prepared that the uncertainty could persist for a while. These are some of the conclusions from FI's first stability report of the year.
Sweden is in the middle of an economic downturn, and at the start of 2025 the global uncertainty index reached record-high levels. This high uncertainty could lead to households and firms cutting back on consumption and investments, which could deepen the economic downturn.
At the same time, the Swedish financial system has high resilience to different types of shocks. We saw this, for example, in conjunction with the market turbulence at the beginning of April, which the Swedish financial markets emerged from relatively well even if there were large fluctuations on the stock market.
"The current state of affairs is highly unpredictable, and there is a risk that geopolitical and economic conflicts will escalate further. The financial sector needs to allow for the possibility that this uncertainty could persist for a while and that there could be more periods of financial stress in the future. We are naturally following the development carefully and are ready to act if needed," says Jon Thor Sturluson, the chief economist at FI.
Households continue to be cautious
Household finances improved during the year but weakened at the start of 2025 and are now noticeably weaker than normal. As a result, households are both consuming and borrowing less. FI makes the assessment that households are cautious and gradually decreasing their risks. But many households continued to have small margins due to the inflation and interest rate developments of the past few years.
Decreased indebtedness among commercial real estate firms, but vulnerabilities remain
The indebtedness of commercial real estate firms is decreasing gradually. At the same time, the weak economy has also led to lower rent growth and decreased demand for premises. Several commercial real estate firms continue to be vulnerable and still need to strengthen their financial position.
The major Swedish banks continue to be well-capitalised and profitable and also continue to have good access to financing. This constitutes key resilience in the financial system.
Financial firms could do more to prevent operating risks
Geopolitical uncertainty is still high and the security situation serious. This places high demands on firms in the financial sector to be able to protect their operations from different types of shocks and incidents, such as cyber attacks.
At the end of the year, the DORA Regulation went into full effect. The incident reporting required under DORA will give FI a better overview of the types of risks that firms are facing. How firms live up to the requirements set forth in DORA and otherwise strengthen their resilience to different types of operating risks is a highly prioritised topic in FI's supervision.
