Forecast: government misses target

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.

Minister uncertain about FSA requirements

Housing Minister Peter Eriksson is doubtful about the new amortisation requirement and believes other alternatives ought to be considered.

On Monday the Financial Supervisory Authority (FSA) is expected to make a decision about whether to introduce new tougher amortisation requirements. The issue is a difficult decision for the government as giving the go-ahead could entail risks, but stopping the proposal would undermine the FSA.

On Wednesday Financial Markets Minister Per Bolund (Green) criticised the opposition, calling its stance against the proposal “irresponsible”. However, party colleague Peter Eriksson expressed his uncertainty. “I think the amortisation requirement that was brought in recently has had mainly a positive effect. In the situation we have now it is more uncertain. I think that other possible measures ought to be considered,” he says. His main concern is that it would slow down housing construction.

Crisis of confidence threatening FSA chief

While property brokers are warning prices in Stockholm have already fallen by 15%, the issue of new tougher mortgage requirements is to be decided. On Monday the board of the Financial Supervisory Authority (FSA) is to make a decision, although director general Erik Thedéen has already said that he is prepared to go ahead with the proposal.

He has not only defended the proposal but accused critics of representing special interests and exploiting the uncertain market situation to postpone it.

The opposition has already stood against the proposal, so the government is alone. However, although formal approval from the Riksdag is not needed, it is not a good option for the government to make a decision that changes the rules of play on a rocky property market ten months before an election.

Annika Winsth, chief economist at Nordea, says that if the government opposes the new amortisation requirements, the judgement of the FSA is being put in question and Erik Thedéen ought to seriously consider whether he should remain in post.

Business world in two camps

The Paradise Papers leak has stirred up the Swedish business world. Chair of the Confederation of Swedish Enterprise Leif Östling is one of those who placed funds in the tax havens of Malta and Luxembourg, and has defended his actions. He says he has paid SEK 84 million in income tax and SEK 23 million in capital gains tax in Sweden, plus SEK 70 million in Germany and claims he is following rules with his funds in Malta and Luxembourg.

Now there are calls from within the business sector for Östling to resign. One source from within the confederation says there is a risk that businesses will leave the organisation. Maria Mattsson Mähl, CEO of Alpha CE and recently nominated to the confederation’s board believes Östling’s comments damage the organisation. “Most members are working hard to pay taxes and make ends meet,” she says.

However among one of the organisation’s heavyweight representatives, support is intact. “He is speaking as a private person, so our confidence in Leif is unchanged,” says Klas Wåhlberg, CEO for the Association of Swedish Engineering Industries.

Forecast boosts SAS

The board of the airline SAS gained authorisation to implement a new issue of a maximum of 66 million ordinary shares during an extraordinary shareholders’ meeting on Friday. This corresponds to almost 20% of the number of common shares outstanding. It remains unclear whether the board is going to use the mandate, and if so, when.

On Friday the airline’s shares climbed after SAS presented new forecasts for the 2017/2018 financial year. SAS expects profits before tax and one-off posts to be between SEK 1.5 and 2 billion. This would constitute steady progress from the recent financial year.

The forecast indicates the company is in a significantly stronger position than several years ago, says Jacob Pederson, aviation analyst at Sydbank.

Trade deficit between Sweden and US

Via Skype, US Secretary of Commerce Wilbur Ross participated in a lunch with the Swedish-American Chamber of Commerce in New York on Tuesday. The US is Sweden’s most important trade partner outside the EU, and Wilbur Ross says he is prepared to resume the paused TTIP negotiations.

Sweden’s Minister for Enterprise Mikael Damberg also participated in the lunch and will meet Wilbur Ross today, Thursday. He does not share Wilbur Ross’s views of TTIP but says, “even if we have different views, it is important for us in the government to develop a relationship with this American administration”.

Wilbur Ross points out the major trade deficit – last year Sweden sold SEK 87 billion worth of goods and services to the US but imported only SEK 37 billion worth – although says, “We share many of our values with Sweden and have huge respect for the technical knowledge in the country.”

Next recession will hit foreign-born

In a report based on new data from Statistics Sweden, which is presented today, the Liberals have looked at how the next recession will affect the most vulnerable on the Swedish labour market.

Writing in Dagens Industri (DI), economic spokesperson for the Liberals, Mats Persson, states that those who are currently unemployed come from two main groups: people born outside of Sweden and those who do not have an upper-secondary school education. The situation is particularly serious for foreign-born women; almost 30 per cent of women born outside of Europe of working age have no job.

The new report shows that in the past three recessions in Sweden since 1990, the employment rate among both groups has fallen by nine percentage points, which is around 250,000 people. Mats Persson writes, “A labour market that does not work for these groups during an economic boom is a labour market that knocks out many during a recession.” Political courage is needed to push through reforms for a labour market on which everyone is necessary.

Government proposes higher pension age

Minister for Health and Social Affairs Annika Strandhäll (S) is aiming to table a proposition to raise the pension age next year. “I am not ruling out a proposal before the coming election,” says Annika Strandhäll.

The changes being discussed include raising the earliest pension age from 61 to 63. Additionally, employers will not be able to give someone notice before 69 years of age.

Vattenfall working for green transformation in Germany

It is roughly one year since Vattenfall sold its four brown coal power plants and four open cast mines in Germany. The state power company was criticised in Germany for shrugging of its environmental and employment responsibilities and in Sweden for selling when brown coal was at its cheapest.

The company is working to abolish coal-powered energy by 2030. German Vattenfall is to invest over EUR 2 billion, around SEK 19 billion over the coming five years. “That is with growth within renewable energy and customer business, growth in distribution of power, gas and heating and redesign of our production park for heating,” says Tuomo Hatakka, head of Vattenfall GmbH, which is counting on the German government continuing to realign to greener energy. (

India wants Sweden’s help to grow

For the first time India’s government is arranging the business seminar, Make in India, outside of India, and it will take place in Stockholm. India’s Commerce and Industry Minister Suresh Prabhu is in Sweden together with a delegation of several hundred representatives of India’s government and business. He is meeting representatives of the Swedish government, such as Prime Minister Stefan Löfven and Trade Minister Ann Linde and will also participate in Make in India. The aim is to encourage companies within 25 specific industries to station their manufacturing in India.

Speaking to Dagens Nyheter (DN) he says, “We are trying to liberalise for foreign investment more and more. There are openings within all industries.”