In a move to stop consumers racking up more debt, the government wants to see an interest cap on high-cost, short-term credit loans. It also wants to tighten the rules on the marketing of consumer loans and has drafted a bill to this effect.
Under the plan, the rate of interest on these loans should be a maximum 40% of the reference rate
Finance Minister Magdalena Andersson has turned on the financial elite who shop around the world in search of the lowest taxes and is prepared to toughen legislation.
“It is completely unacceptable that people spend so much … time and energy to avoid paying tax,” she says. However, “The problem is that if you are really going to make it difficult to tax plan then you need to go outside the EU and introduce capital restrictions. When companies actively exploit the possibilities, it means tougher legislation makes it more difficult for everyone who runs a company.”
“What the hell do I get for my money, not much,” were the words uttered by Leif Östling, chair of the Confederation of Swedish Enterprise, when asked by SVT about his tax arrangements in Malta and Luxembourg, revealed during the Paradise Papers leak in November.
He announced yesterday that he would leave his post as chair although would not answer any follow-up questions. The official picture is that he has successfully managed to launch a new power and decision-making structure within the Confederation. However Dagens Industri (DI) reports that a number of representatives from the board made it clear that confidence in him had been lost following his comment.
Another source tells DI that the relationship between CEO Carola Lemne and Leif Östling did not work. “From day one he tried to manoeuvre her out of the way, but failed,” says the source. The struggle between the chair and CEO also reflects a deeper conflict between industrial and service companies. The Association of Swedish Engineering Industries and the Swedish Association of Industrial Employers backed Östling after the revelations while criticism came from Almega – the Employers’ Organisation for the Swedish Service Sector and the Association of Private Care Providers.
There is a general understanding that the Confederation is in trouble and has been described as outdated and slow to change. The change of chair could also lead to a change of CEO, writes DI.
The Riksbank’s forecast indicates the krona will strengthen. The current weakening could be temporary and the market ought not to read too much into recent fluctuations, said first deputy governor of the Riksbank Kerstin af Johnick to journalists in Copenhagen on Tuesday.
She also said that Swedish house prices may cool down somewhat but the Riksbank does not believe there will be a major drop in house prices.
A new report from Mäklarhuset shows that the difference in how many years it takes to save up for a deposit for a house depends on the city and profession, reports SvD. The report shows that it takes the longest time in Stockholm, Gothenburg and Uppsala. For an auxiliary nurse in Stockholm it takes 22 years to save up the deposit.
Erik Wikander, CEO of Mäklarhuset, says that it is time for politicians to add stimulus to the threats. “When there is no functioning housing market and a balance between owned and rented property, it creates a pressurised situation for young people. The regulations that have been brought in over the past five years have focused on limiting debt. However there needs also to be stimulus so that the entire housing market is used,” says Erik Wikander.
The government’s budget is putting pressure on state finances and is leading to surplus targets being missed, says the Swedish National Financial Management Authority (ESV).
According to ESV, the surplus in the public sector’s financial savings will fall from 0.9% this year to 0.6% next year as a result of the government’s budget bill, which is expected to reduce tax revenue and increase expenditure. This means the government will not achieve the surplus target of 1% over a business cycle.
At their party conference this coming weekend, the Liberals will be calling for a change in labour laws, demanding that the Last In First Out principle be scrapped. New, flexible rules need to be introduced in order to encourage movement on the labour market and promote company growth, says the party.
It should be easier for employers to terminate employment for personal reasons, a higher number of employees should be excluded from job elimination and anyone who is made redundant should have a right to severance pay.
Central banks around the world are stumped as to why inflation is low and wage growth slow despite the fall in unemployment after the financial crisis. Federal Reserve chair Janet Yellen has even described the phenomenon as a “mystery”.
Sweden’s Riksbank, in particular, has failed to pay heed to one important explanation for the phenomenon, namely the outsourcing of high-skilled services to low-cost countries, claims Lena Hagman, chief economist at employer organisation Almega.
She believes Sweden’s central bank will be forced to delay the planned rise in interest rates and revise down its growth and wage forecasts, saying: “The Riksbank argues that the problem of finding staff will lead to an accelerated wage drift in the affected sectors, as we have been used to in previous economic booms. But that is no longer the case”.
The Association of Swedish Engineering Industries (Teknikföretagen) forecasts a 12% increase in manufacturing output in 2017, and a 5% increase in 2018. The high level of output is due to global demand, although the automotive industry is in a lull. In Sweden, however, the automotive industry is fuelling growth in the engineering industries.
The Swedish Financial Supervisory Authority, or FSA, said on Monday that all new mortgage holders who borrow more than 4.5 times their gross income must amortise 1 percentage point more of their mortgage per year than is the case at present. It will now be up to the Swedish government to decide what to do.
Opinion is divided, however. Housing Minister Peter Eriksson has openly expressed his doubts but Financial Markets Minister Per Bolund, who is the responsible minister, has warned of the consequences if the proposal is stopped.
The government intends to hold talks with the opposition, but Per Bolund is keen to stress that it will be up to the government rather than parliament to make a decision.
The opposition parties have in principle already said No to the proposal. Elisabeth Svantesson, the Moderate Party spokesperson on economic policy, argues that such a requirement would stop young people from buying a home and could fuel a downturn.