Sweden heads for clash with EU

Chinese investment in the EU increased by 75 per cent in 2016 and amounted to EUR 35.1 billion, according to the Rhodium Group. Concerns that China could gain control of assets affecting national security have led heavyweight nations such as Germany, France and Italy to urge a rethink of foreign investments in the EU, and in a speech today, Wednesday, European Commission President Jean-Claude Juncker is expected to lay out plans for a more robust screening of trade.

The Swedish government is opposed to more thorough vetting of foreign investments, with EU Affairs and Trade Minister Ann Linde describing the move as “protectionist”. “I believe the opportunities the WTO agreement gives Sweden and other EU member states are adequate,” she says.

In contrast, Thomas Lagerqvist, chair of the Sweden-China Trade Council, welcomes a discussion on tighter screening, saying: “It is naïve of Sweden to believe there is no risk”.

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.

Andersson disappointed

Social Democratic Finance Minister Magdalena Andersson said she was disappointed to hear the news of Nordea’s move to Finland but saw no reason to review government policy. The government has a responsibility to ensure financial stability and provide a sound environment for companies, she commented, pointing out that Nordea had posted a profit of SEK 40 billion in 2016.

Green Financial Markets Minister Per Bolund said there was broad political unity in Sweden not to join the banking union for the time being. However, the government had now decided to analyse the advantages and disadvantages of Swedish membership.

Ulf Kristersson, the Moderate economic policy spokesman, commented that the government, with its plans for extra regulation and a bank tax, had “undermined confidence that Sweden is a country with stable long-term regulation”.

Green investment

At a meeting hosted by pension manager Alecta in Stockholm on Wednesday executives in the financial sector discussed the EU’s forthcoming sustainable finance agenda with Minister Per Bolund and FSA director general Erik Thedéen.

Alecta’s CEO, Magnus Billing, who is the only Swedish member of the European Commission’s high-level finance group, gave a summary of the group’s work. A final report is to be presented at the beginning of 2018. He also announced that Alecta will be investing SEK 800 million in NN-FMO Emerging Markets Loan Fund, which is managed by Dutch development bank FMO, and which invests in job creation, mainly in finance, energy and agribusiness.

Challenges face Sweden’s high streets

The Swedish Property Federation (Fastighetsägarna) reports that retail sales increased in town centres by 2.5% in 2016, while total sales increased by 5%. High streets now account for just 20% of the annual value of all retail sales while malls and out-of-town retail parks have a market share of almost 40%.

In a study of 52 town centres, the federation finds that food stores, tobacconists, Systembolaget and restaurants and cafés increasingly account for the small rise in high street sales and that new strategies are needed, as online sales take a greater share of the market. If town centres are to thrive, priority must be given to the construction of new housing and workplaces.

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.

Politicians need to act now

Politicians must guarantee Sweden’s research competitiveness, otherwise Huwaei’s R&D in the country is at risk, warns Kenneth Fredriksen, the CEO of the Swedish unit of the global ICT solutions provider. Stockholm risks dropping out of the list of the world’s best digital cities within five years if politicians are unable to guarantee universities of excellence, housing and efficient infrastructure.

Fredriksen believes 5G will fuel economic growth as the technology can resolve dilemmas such as the environment and transport but society must invest. However, he, like many others, does not envisage any real growth in the telecoms sector in the next few years. Nevertheless, he believes 5G will create 50-100 billion new connections within a decade, which will fuel growth in one way or another.

Telia hikes landline prices

The operator Telia has announced that it will increase landline rental charges for households by 24% per month, starting 19 September. Its basic landline package will increased from SEK 165 to SEK 205 a month.

The hike is said to be due to falling demand for copper landlines as consumers switch to mobile or fibre-optic solutions.

Merger created negative value

Intrum Justitia’s board, the banks and short sellers are the only ones to have gained from the debt collection company’s merger with Lindorf, reports Dagens Industri (DI). The board’s fees have been raised by 20% while shareholders have seen the value of their holdings fall by as much in the past ten weeks.

In order to meet EU regulation, Intrum Justitia is having to divest a number of units. “It’s a buyer’s market – everyone knows that Intrum has just six months in which to sell the units. And they have paid excessive fees to their advisors, while short sellers love the share,” say experts to the business daily.