Concerns raised over tax proposal

Earlier this year a government-commissioned inquiry proposed that real estate sales in so-called packaging companies should no longer be tax exempt. The CEOs of Swedish property companies, who were asked to comment the proposals, have now submitted their findings to the Ministry of Finance and the general consensus is that a tax hike of some SEK 17 billion on the sector would curb construction, create financial unrest and cause rents to soar.

Disagreement over coal-powered plants

Negotiations to revise the EU’s emissions trading scheme have reached a deadlock after the European Parliament rejected a bid from member states that would have seen EU funds being invested in the modernisation of coal-powered electricity plants.

While disappointed over the standoff, Jytte Guteland, a Social Democratic MEP and member of the European Parliament’s environment committee, is relieved that a responsible decision was taken.

One of the key points of debate is how to fund industry’s shift to cleaner power. Guteland says MEPs agree that EU funds cannot be used to “lock Europe into a fossil-fuelled future”.

SEK 10 million extra to drug approvals

When the European Medicines Agency (EMA), which is headquartered in London, receives applications from drug makers seeking marketing approval for new treatments in Europe, it passes on the applications to national drug agencies.

Since the summer, and as a result of Brexit, the EMA has stopped all complicated drug approval processes in the UK. Instead a number of these applications are now being passed on to the Swedish Medical Products Agency which is to receive an extra SEK 10 million from the government so that it can recruit a number of experts.

Government plans to sue Danish state

The Swedish government is planning to sue the Danish state over a breach of the PostNord shareholder agreement, reports Dagens Nyheter.

There is a statutory requirement in Denmark that citizens must be able to receive digital post from the authorities. This has led to a 90% drop in letter deliveries in Denmark since 2000 and the Danish subsidiary of PostNord has seen revenues drop accordingly. With more than 3,000 employees entitled to three years’ severance pay in the event their jobs are axed, the carrier could be facing costs of SEK 6 billion. PostNord has asked the Danish and Swedish governments for a capital injection of SEK 3 billion, but Swedish Enterprise Minister Mikael Damberg has said “this is a Danish problem”. The lawsuit is seen as an attempt to force the Danes to back down

High-speed rail investment

Sweden’s centre-right alliance parties promised investment in a new high-speed rail network prior to the 2014 general election, but afterwards the Moderates and the Liberals abandoned the project. The pendulum now appears to have swung back, however, with a number of senior Moderates, including Catharina Elmsäter Svärd, the former infrastructure minister, calling on party members to back a new financing plan for such a network.

Similar calls are also being heard among Liberals; Anita Jernberger, from the Östergötland region, says politicians must dare to believe in the project, which would allow Sweden to connect to the planned Denmark-Germany undersea Fehmarn tunnel

Strengthening ties with Russia

Despite conflicting views on a number of issues, EU Affairs and Trade Minister Ann Linde recognises that both Sweden and Russia share an aim to work towards realising the huge potential in bilateral economic relations.

Writing in Dagens Industri , ahead of her visit to Russia on 12-13 September, the minister points to areas of cooperation between the two countries, including trade, organised crime, culture and student exchange, and underlines the fact that Sweden is the fifth largest direct investor in Russia, discounting tax havens. By way of example, one Swedish company has invested close to SEK 60 billion in Russia since 2001.

Trade between Russia and Sweden amounted to some SEK 48 billion in 2016 and there is potential for Swedish exports to grow. The Russian government’s aim is to invest in energy efficiency and environmental protection, and Linde looks forward to discussing ways to boost cooperation in these, and other, areas with her Russian counterpart.

Plans to scrap tax on advertising in periodicals

On 1 January 2017 the government cut the tax on advertising in periodicals from 3 to 2.5%, costing the Treasury some SEK 20 million annually. It now plans to scrap the tax entirely as of 1 January 2018.

The cut will apply to daily newspapers and other publications that are issued at least four times a year. The move is expected to cost the Treasury a further SEK 15 billion.

Finance Minister Magdalena Andersson motivates the abolishment of the tax, saying a free and independent press is a vital component in a healthy, democratic society and stresses the importance of an independent press in this age of fake news.

Gothenburg losing out

Container volumes at the Port of Gothenburg collapsed by 22% during the first half of the year and in June fell by 60%. The catastrophic figures are due to the conflict between the union and APM Terminals. Magnus Kårestedt, the CEO of the Port of Gothenburg, is warning that the conflict will affect Swedish business and jobs.

“This is a tragedy. Volumes which gradually and arduously have been built up over more than a decade and a half have disappeared in a very short space of time,” says Kårestedt. He adds that the conflict is affecting business throughout Sweden since the Port of Gothenburg is Sweden’s largest port and is linked to vital markets.

The Port of Gothenburg considers the Swedish Dockworkers’ Union to bear the brunt of the blame for the damaging conflict as the union will not accept members’ proposals for a solution.

Swedish data surprised on the upside

The Swedish krona weakened 5 öre against the euro when Prime Minister Stefan Löfven announced his Cabinet reshuffle on Thursday, although a number of economic indicators surprised on the upside.

Statistics Sweden reported that the employment rate, not seasonally adjusted, was 7.4% in June; analysts had forecast a rate of 7.5%. The seasonally adjusted employment rate was 6.4%, compared to 6.6% in May.

The National Institute of Economic Research (Konjunkturinstitutet) said its economic sentiment index had increased in July to 112.4, from 112.2 in June. Sentiment in the manufacturing industry had increased unexpectedly. However, consumer sentiment fell to 102.2, from 102.6.

The Institute reported labour shortages, which prompted SEB bank to question how long the Swedish central bank could ignore this trend.