SWEDEN’S minority Social Democrat-Green coalition government unveiled an anti-austerity budget today.

Prime Minister Stefan Lofven’s government plans to raise taxes on earnings above 600,000 kronor (£52,000) in order to boost unemployment and sick-leave benefits.

An extra 25 billion kronor (£2.2bn) in public spending will also be directed to building new primary schools to reduce class sizes and infrastructure investment in the state-run railways.

More spending to tackle climate change and reduce unemployment is among other measures announced yesterday, alongside 2bn kronor (£170m) for increasing the number of care-home staff and higher maintenance payments for single parents.

The defence budget will also grow, an expected move even before this week’s scare over an alleged foreign submarine intruding upon Swedish waters.

The country’s deficit is expected to grow to 2.2 per cent next year, which is still lower than that of most European countries.

Finance Minister Magdalena Andersson said the deficit would grow not because of spending increases but as a result of unfunded tax-cuts by the previous right-wing administration.

And she defended the decision to raise spending to address long-standing problems such as gender inequality.

“Greater cohesion and gender equality are crucial for development,” she explained.

The budget faces opposition from right-wing parties, who have said they will propose their own.

Since the coalition lacks a majority the far-right Sweden Democrats could end up with the power to bring the government down.

If the budget is rejected and the Swedish Democrats throw their weight behind the four-party opposition coalition’s version it would force a re-election.