Previous research has predominantly analysed the retrenchment of the Swedish welfarestate from a long-term perspective, examining restructuring processes from thefinancial crisis of the early 1990s until recent years. This study instead takes a shorttermperspective and focuses on welfare state developments in the post-consolidationphase, after the recovery from the crisis. The aim is to investigate how the fiscalpolicy reforms introduced during the recovery years forced subsequent governmentsto continue on the path of “frugality”. Specifically, the paper focuses on the effectsof austerity politics on two policy domains: income redistribution through the benefitand tax system and the municipalities’ role as social service providers and employers.The analysis indicates that the Swedish model is showing increasing signs ofdualisation due to the gradual segmentation of prior universalistic welfare programmesand to the worsening of working conditions in the social service sector.