20 The debate often disregards this distributional effect, as macroprudential policy measures are often assumed to be negative for borrowers in the short term, something I will return to later. The macroprudential policy measures in place today patch up the problems that have arisen but very little has been done to manage the fundamental reasons for why the housing market functions poorly. In some areas, regulatory amendments have been made, for example regarding subletting, investment support and permissible noise pollution levels around newly built homes. Essentially, however, no politicians have been willing to address the bigger issues, concerning the rent-setting system, property tax, tax deductions for interest payments and sales taxation of property, for example. The housing stock is not being utilised effectively Let me now develop my reasoning a little over how the housing market and taxation system could be contributing to rising housing prices and increased indebtedness, and thus to increasing risks in the economy. For example, tax deductions for interest payments and low property taxes are contributing towards lower housing costs for homeowners, which is increasing the incentive for households to take on  16 Swedish Trade Union Confederation (LO) (2014). 17  Swedish Union of Tenants (Hyresgästföreningen) (2013). 18 Among other things, Finansinspektionen has introduced a loan-to-value limit of 85 per cent (2010) and amorti-  sation requirements for mortgages (2016), as well as tightening the first amortisation requirement (2018). For a summary, see, for example, Thedéen (2017). 19 Insiders can also be affected if they choose to change their borrowing.
In my view, three main factors have been driving the recovery over the last year – a bounce back in business and consumer confidence, strong growth in Asia and other emerging markets, and the impact of policy stimulus. These three factors will also have a key bearing on future global economic prospects, and I will discuss them briefly in turn. Recovery in confidence A key factor which plunged the world economy into recession was the massive shock to business and consumer confidence across all the major economies of the world when the global financial system appeared to be rocking and reeling in late 2008 and early 2009. Since then, confidence has gradually recovered as the financial system has stabilised and the shock waves from the traumatic events of eighteen months ago have subsided. 3  See http://www.iata.org/whatwedo/economics/ for data compiled by the International Air Traffic Association (IATA). 4  The 8.5% increase relates to the seven-month period Q2 2009 to Nov–Jan 2010. 5  UK exports of goods and services grew in volume terms by 5.4% per annum from 1992 to 2007; exports of goods excluding oil and erratics increased by 4.5% over the same period. 6  This has been reflected in an upgrading of world growth forecasts for 2010. For example, the IMF forecast of GDP growth across the world economy this year has risen from 1.9% in April 2009 to 3.9% in its latest World Economic Outlook (January 2010).