Moderates sceptical about project

DI sources indicate that the Moderate Party leadership is highly sceptical of the proposed high-speed rail link, concerned over the soaring cost of the project.

When the plans were presented in 2014, it was estimated the link would cost in the region of 140 billion kronor to build, now the price tag is estimated at between 190 and 320 billion.

According to DI, the Moderates are currently reviewing other, cheaper alternatives. Ulf Kristersson, the party’s spokesperson on economic policy, tells the business daily that a decision can be expected before the summer, and his belief is that “we are not the only ones in the alliance who are deeply concerned over the increase in the cost”.

Differing views on requirements

At a seminar held yesterday to discuss the banks’ capital requirements, Riksbank Deputy Governor Martin Flodén said a gross equity ratio requirement of at least 4% should be introduced.

Erik Thedéen, director general of the Swedish Financial Supervisory Authority (Finansinspektionen), said such a requirement could act as a safeguard, but also warned that it could result in Sweden’s banks holding riskier assets, which would be undesirable.

The Swedish Bankers’ Association (Svensk Bankföreningen) said it supported a review, but was of the opinion that there are risks associated with excessive requirements. “Swedish banks are well-capitalised,” MD Hans Lindberg remarked.

Expert warns of alternative

With a new high-speed rail track projected to cost between 190 and 320 billion kronor, the government is considering the possibility of upgrading the main railway lines instead, and has charged the Swedish Transport Administration (Transportverket) to look at alternatives to the high-speed project.

However, Bo-Lennart Nelldal, professor emeritus in rail traffic planning at the Royal Institute of Technology, warns that it will be more expensive to repair the existing tracks than to invest in a new main line.

FSA proposes climate change stress tests

The Swedish Financial Supervisory Authority (FSA) has proposed that the country’s banks should stress test their risk of major financial loss, which could result from climate change.

For instance, the banks should review how their borrowing and assets would be affected if there were a hike in the price of emission rights, or if fossil assets such as oil and gas could not be extracted as a result of tougher regulation.

Sweden pays second-highest amount

Following deductions for subsidies and benefits, residents of Sweden pay the second highest fee to the EU, according to a survey by europaportalen.se, which has found that each Swedish resident paid the equivalent of 2,600 kronor to Brussels in 2014.

Residents of the Netherlands pay the most; EU membership cost the equivalent of 3,600 kronor last year. Belgium ranks third, according to the website, with each resident paying just over 2,400 kronor.

Investments down in 2016

Investments in industry grew last year by 10% to SKr 66 billion, but this year will be down by five percent, according to a survey by Statistics Sweden.

However it looks brighter for construction, with planned volume increases of 17% and for trade in goods, at 12%.

Nevertheless the outlook remains bleak for mining as the fall in investments continues this year, minus 23%, according to the companies’ plans.

Construction companies issue warning

The gap to achieve the construction target is much bigger in reality than what has been highlighted in the debate, according to Lennart Weiss, commercial director of the construction company Veidekke.

According to (Boverket) 700,000 properties are needed by 2025. Last week Prime Minister Stefan Löfven said that the forecast of construction per year is 53,000 houses leaving only 17,000 until 70,000 are built per year.

However Weiss says the government is focusing on properties in which construction has been started, not finished. “The forecast for 2016 is around 40,000 houses and that is when capacity in the construction industry is at top… Furthermore construction is expected to go down again next year,” says Lennart Weiss.

Raised capital requirements for banks

Yesterday the Swedish Financial Supervisory Authority (Finansinspektionen) suggested further tightening of the requirements on banks’ lending to corporates, putting more pressure on the banking sector.

The new rules entail raising the risk weight for corporate lending, which will mean that the average risk weight is expected to exceed 30%. The risk weight determines how much capital the bank must have as a buffer for each krona loaned.

The news hit Handelsbanken in particular, whose shares closed at a minus.

Surge in Swedish economy

The Swedish economy grew by 4.5% in Q4 2015 compared to Q4 the previous year. Economist from SEB, Olle Holmgren, states the growth is due to public consumption growing faster than expectations, linked to increased spending for refugees. In addition exports increased by 2.5% in 2015.

The upswing was broad causing the krona to strengthen on Monday, which gives the Riksbank a dilemma, after it lowered the interest rate to -0.5% to boost inflation two weeks ago. Anna Breman, head economist at Swedbank, says, “It is less likely that the Riksbank will lower interest rates, but given that the krona has strengthened there is a greater risk of a currency intervention.”