While a weaker dollar would facilitate the necessary adjustment to a smaller current account deficit in the US, it would also be likely to delay economic recovery in Europe. A dramatic depreciation of the dollar cannot be ruled out either. In Europe, the strained budget situations in mainly Germany and France also constitute a source of uncertainty. Savings in the public finances and a weak labour market risk subduing consumption and thereby delaying a revival. The combination of imbalances in the US and the sluggish growth in the euro area risk derailing an economic upswing, and could perhaps even result in a decline. According to the Riksbank's assessment, the risks to Swedish inflation prospects posed by weaker international economic activity are balanced by the risk of higher inflation in Sweden. New collectivewage agreements will be negotiated at the beginning of next year for employees in the private and central government sectors. Wages are the single most important factor for inflation and are therefore always associated with inflation risks. But unlike the last big wage bargaining round, which was initiated during the final stages of an economic boom, these negotiations will be conducted when demand in the labour market is weak. Nevertheless, there are tensions in the labour market that could result in wage rises that increase cost and inflationary pressures. Furthermore, energy prices have not fallen as much as we expected during the summer, which means that the risks of contagion effects have increased somewhat.
One important factor was that many low-productivity firms went bankrupt in connection with the sharp economic slowdown at the beginning of the 1990s, while other firms implemented cutbacks of lowskilled labour that had less qualified tasks. When the economy began to grow again there was plenty of unemployed labour, and it was possible to attain high growth without inflation gathering pace. Another cause was the IT boom towards the end of the 1990s, which also contributed to productivity growth. In the years ahead, we can also expect to have good productivity growth in Sweden. Increases in productivity growth can be a solution for large parts of the corporate sector, but this is less often the case for parts of the public sector. Quality care and education often require a strong presence of human labour. Nevertheless, there is probably much to be gained by organising and financing the public sector in new ways. The contribution made by trade union organisations in this regard could prove to be a decisive success factor. Here, the Nordic countries have an advantage over others through a high degree of organisation and an established cooperation between employers and employees. The education sector also faces considerable challenges. When the current generation of teachers in Sweden retire, a substantial increase in new teachers will be needed. According to the National Labour Market Board, the number of new recruitments required to replace retired teachers is forecast to come to around 100,000 up to and including 2015.