New torpedo order for Saab

Defence company Saab has received a SKr 1.5 billion order from the Swedish Defence Materiel Administration (FMV). The new lightweight torpedo system, which has been ordered for the Swedish Navy, will be able to be used by submarines, surface vessels and helicopters.

Defence Minister Peter Hultqvist (S) says, “This means that a project that was significantly delayed finally looks like it will be realised.” The system is expected to be complete and ready to go into service around 2022-2023.

Open hearing on Riksbank review

Every figure of significance for Sweden’s economic and monetary policy was present in the Riksdag yesterday for the open hearing on Marvin Goodfriend and Mervyn King’s review of the Riksbank’s monetary policy.

Lord King’s message was clear, “House prices have increased by 15%. Growth is 4%. It is not the time to be complacent.” Referring to the situation in which the Swedish Financial Supervisory Authority (FSA) has been given responsibility for a debt ceiling, but cannot act, he said it was “bizarre”. The authority needs clarification from the government about what further measures it can carry out to counteract household debt.

Finance Minister Magdalena Andersson said the Ministry of Finance is examining the issue. Mervyn King’s view is that the government ought to make the decision and then commission the authority to achieve the target.

“Riksbank not credible”

Kerstin Hessius, CEO for the Third AP fund, and former deputy governor of the Riksbank, has gone on the offensive against the central bank. “I consider the Swedish monetary policy that the Riksbank is conducting no longer to be credible,” she says, pointing out that we are living in a globalised economy and the Riksbank cannot bring up inflation in isolation.

“Minus interest rates have, most likely, a fairly large negative effect. A major disadvantage is that it contributes to assets in society being priced wrongly. Clearly property is one such area,” she says, and warns that when interest rates return to normal it could be a painful journey.

She believes the Riksbank ought to reconsider its interpretation of the target for price stability in Sweden immediately.

Negative interest rates criticised

According to a survey of 79 business figures that DI has carried out, 53 believe the Riksbank is wrong to keep interest rates in negative territory.

According to those questioned the negative repo rate sends out crisis signals, which creates uncertainty. Staffan Hansén from pension giant SPP says, there is a clear risk of a financial bubble and that the economy becomes dependent on low interest rates. Magnus Greko, CEO for Opus Group, says, “The signal from negative interest is simply not in agreement with the picture of the development of the economy.”

Furthermore Robert Bergqvist, head economist at SEB, says the policy has become counterproductive. Instead of leading to increased investment it has led to greater caution.

Stinging criticism of submarine

Sweden’s new submarine A26, of which the state has ordered two from defence group Saab, has been harshly criticised. The criticism focuses on a portal, fiercely marketed by Saab, which can release divers and special forces into the water. Former commander and head of the three Swedish Näcken-class submarines, Nils Bruzelius, says that the portal cannot be used in the situations it is designed for.

However Mats Eolfsson, from the Swedish Defence Materiel Administration (FMV), which has paid almost SKr 8 billion for the submarines, has dismissed the criticism saying the portal is flexible and could also be used for new weapons.

Vattenfall’s threat: we will close all reactors

Yesterday’s quarterly report from energy giant Vattenfall presented a rise in operating profits and profits after tax of SKr 6 billion, thereby granting CEO Magnus Hall some breathing space.

However write-downs for German brown coal, if the government approves Vattenfall’s sale, are expected in the next report and the company must make a decision to make new investments into nuclear power or decommission.

“Without investment… we will not be allowed to run the reactors after 2020. We are not going to make investments if the government does not remove the tax on nuclear power completely. That is a definite decision from us,” says Magnus Hall.

Meanwhile DN reports Vattenfall has no plans to scrap emission rights, as MEP Jytte Guteland has demanded. Magnus Hall says the rights are part of the deal with the buyer of the lignite operations in Germany.

Saab adjusts sales prognosis for Gripen

Saab boss Håkan Buskhe is revaluing the forecast for sales of the Gripen fighter jet over the next twenty years.

Last week Finland took a crucial step towards acquiring new fighter jets by sending out an inquiry to Sweden, USA, UK and France about what they have to offer. SvD reports that Finland’s plans for new aircraft is only one example of a number of countries looking to renew their air forces.

Saab had estimated selling around 450 Gripen fighter jets in the next twenty years. However Saab president Håkan Buskhe now says in addition to the coming 450 E/F versions to be supplied to Sweden and Brazil’s air forces starting 2019, there are current C/D versions that the company expects to sell. Buskhe considers Slovakia, Malaysia, Indonesia and Bulgaria as possible buyers.

Brexit will affect exports

According to a fresh report from Swedbank, if Britain decides to leave the EU it will likely lead to short term volatility on the world’s financial markets, which would strengthen the dollar and euro against the krona.

In the longer term Swedbank writes, “A Brexit will probably weaken the EU politically and economically. In turn this will affect Sweden negatively.” In particular the service sector, of which the UK is the third largest export market, will be sensitive. In 2014-2015 alone Swedish service exports increased by 44% to the country. Negotiating a new trade deal with the EU is also likely to take a long time, in the case of an exit.

Swedbank also considers there to be a risk that Sweden’s political influence in Brussels would fall. Sweden often votes with the UK and the bank deems that more power will be transferred to the eurozone in the case of a Brexit.

LO threatens to leave Nordea

Criticism against Nordea is growing after it was revealed that the Nordic region’s largest bank helped customers create mailbox companies in the tax haven Panama.

In Finland the three parliamentary parties decided to cease cooperation with Nordea, followed last week by the Finnish transport union, AKT, and then three days ago the industrial union, Team.

SvD reports that the Swedish Trade Union Confederation (LO) is now considering breaking off with Nordea. According to CFO at LO, Kjell Ahlberg, LO is first waiting to find out whether the bank broke any regulations.

AB Volvo’s convincing report

AB Volvo’s Q1 report carried a number of millstones: turnover fell by 4 percent, currency effects cost almost SKr 400 million in turnover, and truck production in North America was cut by a third.

Nevertheless operating turnover amounted to SKr 4.5 billion and the operating margin was 6.2% adjusted for capital gains and last year’s restructuring costs. Within sales, buses and Penta shone with 14% and 5% respective increases in organic turnover.

For the first time former Scania boss Martin Lundstedt revealed that service and reserve parts contributed 23% to the company’s turnover.