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Why Sweden won’t join the euro

Despite a majority of the Swedes are in favour of the euro, Sweden is unlikely to join the EMU.

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As one of the EU members without the euro, public opinion in Sweden has shifted during the current financial crisis to a slim majority now in favour of introducing the euro. Despite the traditional benefits of a weak krona receding, experts agree that it will still take a long time for a new referendum – if ever at all.

Results of an opinion poll commissioned by public service broadcaster, Sveriges Television in April showed 47 percent are now in favour of introducing the euro and 45 percent of the 1,000 people polled are against.

Whilst Swedes aren’t fickle about their love for Ikea and ice hockey, the latest results mark a change from results of a statistics Sweden opinion poll released in November 2008 in which only 38 percent polled would vote ‘yes’ on the euro.

“Public opinion has shifted towards a more positive view on introducing the euro,” says Lars Jagrén, chief economist of entrepreneur friendly organisation, the Swedish Federation of Business Owners, “Our members perceive a lot more swing and vulnerability in the krona during a financial crisis.”

Despite the fact that the krona has hit a record low against the euro, which supports export companies, Lars Jagrén believes that the positive effects of joining the collaboration outmaneuver the positives of staying out. 

“Traditionally, general opinion was that a weak currency was almost seen as positive. We often heard that it’s easier to export with a low rate of krona” says Lars Jagrén, “But it’s under debate more and more as imports and exports are equal now and the cost of expanding internationally is increasing.”

Stefan Fölster, chief economist of the Confederation of Swedish Enterprise, Sweden’s most influential business federation representing some 54,000 companies, also claims that introducing the euro would be good for the country. 

“We’ve undertaken a lot of empirical research showing that countries participating in the euro have more trade and foreign investment, it would have a sizeable effect and outweighs the disadvantages,” he says. 

On the other hand, keeping the local currency and staying out of the EMU collaboration has its advantages as the Swedish central bank maintain power over the country’s macroeconomic control measures.  

“It’s a great advantage for Sweden to keep the krona. During economic crisis, it’s even more important to have a self-governed monetary policy”, says Peter Ericsson, leader of the Green Party. 

As collaboration between countries becomes more important in times of economic turbulence, more Swedes are willing to say farewell to the krona. It’s too early to tell if it’s a lasting shift in opinion or a short-term hop.  

“The opinion has grown stronger for the euro during the economic crisis but there are more people than me that know that it’s been a competitive advantage to stand outside”, says Gudrun Schyman, head of the Feminist party and former leader of the Left Party.

Despite current consensus, a referendum is likely to be a long way off. Sweden’s centre-right government will not hold another referendum during its current turn in office, which ends in September 2010. They have also made it clear that a referendum is not likely during the next four-year term, if they stay in office.  

If the main opposition, the newly formed red-green alliance win, it's highly unlikely that they will hold a referendum, as the Green Party and the Left Party have always been opposed to the euro. The Social Democrats failed to convince the voters in the 2003 referendum, with a resounding 56.1 percent voting against it, which was an embarrassing blow for all the pro-campaigning partys. This would then, depending on circumstances, put the date for a new referendum beyond 2014.  

“Both of the major parties, the Moderates and the Social Democrats, will keep away from a repeat of the last referendum about the euro which ended in a political fiasco”, says Gurdun Schyman who believes the question about joining the euro won’t be in fashion for a along time.   

Stefan Fölster and Lars Jagrén are optimistic that Sweden will eventually introduce the euro, although only time will tell when that will be. 

Swedes are notoriously indecisive and like a nosey neighbour peering over next doors fence, what happens in Denmark is likely to influence what happens in Sweden. 

“The political cycle comes around quicker in Denmark,” says Martin Ådahl, founder of Fores, a think tank dedicated to reforms, entrepreneurship and sustainability, “Swedes are more easily influenced by what happens in Denmark and it could be a domino effect if they have a referendum and say ‘yes’ to the euro.”

Keith Moore is a freelance journalist based in Stockholm

Last Updated (Wednesday, 08 July 2009 20:09)

 

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