Optimism among firms

The National Institute of Economic Research (NIER) published its economic tendency survey on Tuesday. The indicator climbed 1.6 points from 110.3 in December to 111.9 in January, with the manufacturing indicator rising sharply from 115.1 to 120.8.

Swedish firms continue to be confident about the economy. Consumers are more pessimistic than usual about the economy, but are more upbeat about their personal finances.

According to Nordea, the economic tendency indicator is at its highest in over five years, and on a par with a 6% rate of growth in the economy. However, Mats Dillon, head of NIER, says the strong manufacturing indicator, which pulled up the overall indicator, should be taken with a “pinch of salt”.

Higher unemployment forecast

Sweden may well have to live with an unemployment rate of over 7 percent in the longer term, warns the Swedish Public Employment Service (Arbetsförmedlingen). Describing the government’s unemployment goal as unrealistic, the agency says unemployment will fall in the next two years but then rise again as a result of immigration

FMV under attack

With 3,400 employees and an annual turnover of SKr 20 billion, civil authority FMV is something of a colossus. FMV says on its website that it provides the technology for Sweden’s security (ed.); structurally this means that FMV orders military equipment and the Armed Forces pay the bill.

Revelations earlier this week that FMV had failed to hedge an order for 60 Jas Gripen E fighter jets have led to calls that the civil authority should either merge with the Armed Forces or be closed down.

Anders Brännström, army inspector at the Armed Forces’ HQ, and responsible for placing orders with FM, believes a great deal of taxpayers’ money could be saved by such a move.

Sectra CEO dismisses Wallström’s claim

In an interview with Dagens Industri on Monday, Foreign Minister Margot Wallström claimed that Sweden’s diplomatic spat with Saudi Arabia last year did not affect trade with the country.

“That’s not true. It had a devastating effect in the months afterwards, but things are improving now,” says Torbjörn Kronander, CEO of medical IT solutions company Sectra, in Tuesday’s edition of the business daily.

“Orders we believed we would win just disappeared into thin air. We had a much better order intake in Saudi Arabia before this palaver,” he adds.

For example, prior to the row, Sectra had been in talks with the country about initiating a pilot project to screen women for osteoporosis, but afterwards the talks just petered out.

Liberals call for meeting

Following last week’s revelations that Vattenfall may close all its reactors early, the Liberals have slammed the government’s tax on nuclear power capacity and called for an emergency meeting to discuss what to do. The party has also said it will boycott the Energy Commission, if Vattenfall initiates further closures than those already announced.

The Moderates and the Christian Democrats back the Liberals’ call while Energy Minister Ibrahim Baylan refuses to comment the news.

Soaring cost of high-speed lines

A fresh assessment by the Swedish Transport Administration indicates that the construction of high-speed railway lines, linking Stockholm with Gothenburg and Malmö, will cost SKr 256 billion, which is SKr 90 billion more than first projected.

The news will come as a shock to politicians, who have said it will be difficult to find the funds to finance the project. Only yesterday Infrastructure Minister Anna Johansson said funding would require “ingenuity”.

Pending parliamentary approval in 2018, completion of the lines (in 2035) could see journey times between Stockholm and Gothenburg reduced to 2 hours, and between Stockholm and Malmö to 2 hours 30 minutes.

15 ways to keep Ericsson Swedish

In response to possible future plans by US company Cisco to buy Ericsson, DI outlines a fifteen-point action plan for the Swedish telecom network provider to increase profitability and live on as an independent Swedish company.
Among them, DI suggests Ericsson should launch a profitability target, learn from the strategic partnership with Cisco, but from other angles describes the US company as an unsuitable owner.

Thumbs up for green tax

Six out of Sweden’s top ten entrepreneurs and business leaders welcome a global carbon tax to limit greenhouse gas emissions, shows a fresh survey by Ipsos and Dagens Industri. Only one fifth of those polled consider it to be a bad idea. The transport sector is the most negative, with 43% against such a tax.
“They seem to think that it’s an advantage to have a global system rather than complex, regional rules,” says Ipsos’ analyst Johanna Laurin Gulled.
The Haga Initiative business initiative says the survey reflects an interest from industry to tackle climate change and sends a strong signal to politicians that they have a mandate to push hard for a carbon tax at COP21 in Paris.
The Ipsos survey also shows that a majority of Sweden’s business elite (7 out of ten) lack confidence in the government’s environmental and climate polices.

Currency intervention remains on table

Deputy Governor Per Jansson said on Monday that Riksbank policy is on track to meet the inflation target and the central bank will continue to take action to ensure the target is achieved. There is scope to cut the benchmark rate further but, in such an event, the Riksbank will most likely have to resort to currency intervention.

Jansson also said the IMF has shown more acceptance of currency intervention as a policy tool, and that it is important the krona does not strengthen too quickly.

Economists wary of Ingves’ plan

As a means of curbing soaring house prices and household debt levels, Riksbank Governor Stefan Ingves has proposed the introduction of a debt ratio ceiling, limiting the size of loans an individual household may take in relation to income.

A debt-to-income limit of 400%, tighter rules on mortgage repayment and a 50% cut in the interest deduction would slow the increase in the debt ratio, according to Mr Ingves.

Tor Borg, chief economist at SBAB, sees a risk in introducing all three measures at once, saying that such a move could trigger a recession.

Anna Öster, chief economist at Länsförsäkring, is also critical. She believes it is “unfortunate” that the focus is on trying to reduce the housing demand. Caution is vital since such a move could trigger a housing market crash and have a serious impact on the Swedish economy, she says.

Both Tor Borg and Anna Öster would instead like to see an increase in housing construction.