On Wednesday munitions group Saab provided a status update for the next generation of submarines, A26, being built at Karlskrona.
Planned delivery for the submarines, which are to have a multi-mission portal in the hull for divers and underwater vehicles to enter and exit the boat, was 2022. However Saab now believes it could be earlier.
The contract is worth SKr 7.6 billion although Allan Widman (L), chair of the parliamentary committee on defence, reported defence minister Peter Hultqvist to the committee on the constitution for not releasing information about an export condition attached to the contract and criticised him for not informing them that the price could change. However Saab’s head of submarines, Gunnar Wieslander, is confident they will remain within budget.
Governor of the Riksbank, Stefan Ingves, says that Sweden is living dangerously, and he is still concerned about household debt. “Debt has gone up over a long period and great numbers are borrowing with variable rates and little amortisation. These are all the classic signs that it could be really troublesome,” he says.
Measures such as interest rate deductions, the rental system and house construction have so far been focused on new mortgages not the entire lending stock. It is too early to say what the effect of the new amortisation requirement will be but Ingves does not believe it is enough. He also considers there to be risks associated with the European banking system, which is not completely stable after the crisis.
Defence company Saab is expecting a dramatic lift if Donald Trump wins the US presidential election and frightens NATO countries into increasing their military spending. Even Hillary Clinton is clear in her election campaign that European NATO countries should contribute more.
“When you look at the countries that do not meet NATO’s target and what that is of their GDP then you can quickly see that the defence industry in Europe, and to some extent the USA, does not have the capacity to deliver in the case of sudden demand and a fast increase,” says Håkan Buskhe, CEO of Saab.
Donald Trump has said that countries that do not pay their part in NATO, two percent of GDP, cannot expect the USA’s support in the event of an attack.
Border controls are an obstacle to growth and increase commuters’ journey time by over half an hour every day, which is affecting the labour market in the Öresund region negatively, comments Skåne county council in a report for the government.
Large companies, such as Ikea, view the controls as an obstacle to future growth. They “affect not only journeys across the bridge but delay other rail travel… We need to recruit in Malmö, Helsingborg and Älmhut and recruitment is affected negatively by the checks,” says Sara Paulsson, from Ikea.
After discussions with Ericsson’s chair Leif Johansson, minister for enterprise Mikael Damberg chose to activate a crisis group for handling potentially huge redundancies.
The news that telecoms giant Ericsson plans to move all manufacturing from Sweden, which would cost 3,000 jobs, was met with surprise and dismay by employees, politicians and unions.
Mikael Damberg spoke directly to chair Leif Johansson on Thursday and says that he has been given confirmation that there is no closure decision. However the conversation did not provide any further reassurance as the minister decided to activate a crisis group of several state secretaries afterwards. “It is a group that works with large changes in business, which is now being activated to be able to act if a decision in that direction comes from the company,” says Mikael Damberg.
The centre-right alliance introduced a 50 per cent cut in payroll charges for young people when they were in government and the Centre Party intends to expand this reform in its coming shadow budget, announce Centre leader Annie Lööf and the party’s chief economist Martin Ådahl in Svenska Dagbladet today.
The party proposes to shelve all payroll charges for those aged between 19 and 26 and to introduce a so-called “entry deduction” (ingångsavdrag). This means that payroll charges will be axed for all young people for the first two years of employment, for the first 16,000 kronor of the monthly salary.
The Swedish government has proposed that certain companies in the financial sector, such as banks and insurers, will not be able to deduct interest expenses on some subordinated debt.
The country’s central bank, the Riksbank, welcomes the proposal, saying it will probably improve the quality of the capital base, which will in turn improve financial stability.
The Swedish Bankers’ Association (Bankföreningen) disagrees, saying it will be harder to safeguard financial stability, and tougher and more expensive for companies to borrow money.
Added to this, there are plans to levy a new bank tax, a new crisis management directive is in the pipeline as is Basel IV. “If you add all of this together, it could have a quite dramatic impact on the Swedish economy,” warns Bankföreningen’s MD Hans Lindberg.
A PMP Marknadskonsult survey shows that 65% of Sweden’s listed companies are unhappy with the centre-left government’s fiscal policies, saying they have done little or nothing at all to contribute to growth and job creation. They also say that the government will need to up its game if it is to win the vote of corporate leaders in 2018.
The poll also showed that companies want to see lower payroll charges and taxes. This would allow them to invest in research and employees, which in turn would boost the economy. Highest on the companies’ wish list is better integration of new arrivals on the labour market.
Following on from the cross-party energy agreement in the spring, Sweden’s coalition government is planning tax cuts of some SKr 10 billion. The output tax on nuclear power will be phased out over two years, starting in 2017, while the property tax on hydropower will be reduced over four years, from 2.8% to 0.5% of the taxation value. In practice, Vattenfall, Uniper and Fortum will each receive a share of the cuts, with households footing the bill. Taxes on electricity for an average household will rise by SKr 800 per year, say experts.
Authorities in the USA and the Netherlands want Telia Company to pay 1.4 billion, around SKr 12 billion, in a settlement for the Uzbekistan deal.
Telia’s management estimate the proposal covers all ongoing investigations in all countries, including Sweden, although not criminal accusations against individuals in the Swedish preliminary investigation.
CEO Johan Dennelind says that it is difficult to make detailed comments before the proposal has been gone through in detail. “Many times before I have said that Telia Company went into Uzbekistan in an unethical and wrong way and we are prepared to take responsibility for that,” he says.
The authorities are investigating transactions Telia made whilst establishing a presence in Uzbekistan in 2007. Swedish TeliaSonera, Russian-Norwegian Vimpelcom and Russian MTS are suspected of having bribed Gulnara Karimova, daughter of Uzbekistan’s then president Islam Karimov.