OPINION “If the Swedes had said ‘yes’ to the euro in 2003, they would have been much richer than they are now”, Dutch macro-economist and author Edin Mujagic writes.

In 2003 the majority of the Swedes refused to replace the krona for the euro. Three years earlier, in 2000, the Danes did the same. Had the history been different and had Sweden and Denmark introduced the euro in 2003, both countries would have gained a lot.

The gains, or the loss of saying ‘no’ in 2003 as it were, would have been equal to the across-the-board reduction in trade costs of 5 percent. Meaning: Swedish companies that export their products could have made 5 percent more profit on their trade and almost everything Sweden imported would have been 5 percent cheaper. That is the conclusion three Italian economists have reached in their recent research.

Given the volume of the Swedish gross domestic product and the number of inhabitants, the loss per person up to 2008 reaches some 25,000 kronor (€2,500, $3,570).

Other countries that use the euro would have also seen some gains from the introduction of the euro in Sweden and Denmark, but those gains would not have been very large.

So Sweden would have gained, Denmark would have gained just like the euro zone. Win for all? Not quite. There is one eurozone-country that would have lost had Sweden and its neighbour Denmark said yes to the euro: Finland.

Finland, that has been a euro-member since the inception of the euro in 1999, is the odd one out. The reason is that because of the fact that Finland is the only Nordic country that uses the euro, Finish companies have an important advantage compared with their Swedish competitors when they trade with for example Germany, France or the Netherlands. Had Sweden and Denmark introduced the euro in 2003, Finland would have lost that edge, resulting in a net loss.

Together with United Kingdom, Denmark is the only European Union member that has the right to remain forever outside the eurozone. For all other member states, and that includes Sweden, it is compulsory to let go of their national currencies and switch over to the euro as soon as they fulfil all of the criteria concerning the inflation rate, government deficit, national debt, long term interest rate and exchange rate stability.

Sweden uses a loophole to keep its krona. The government fails on purpose to meet all the criteria. European Commission has indicated that it will tolerate that, but only in case of Sweden. For other EU member states that loophole, at least officially, is closed.

According to latest polls, a slight majority of the Swedes would now vote ‘yes’. The most probable reason for somewhat increased popularity of the euro is the economic crisis. The krona has lost quite some ground against the euro, as all Swedes who have visited Paris or Amsterdam have noticed (for us visiting Sweden from the eurozone, the fall of the krona has been welcome, as it puts some 15 percent extra kronor in our valets every time we come to Sweden).

However, another referendum has not been planned. For the time being, euro will be the king in many shops in Stockholm as well as in Haparanda and Höganäs, two cities that have adopted the euro. Elsewhere in Sweden the krona rules. The question is: for how long, as it seems that Sweden will be one of the latest European countries to emerge from recession. When the euro zone recovers earlier, the love for the euro in Sweden could very well increase even further.

Edin Mujagic
Macro-economist, economics editor at the Dutch weekly business magazine FEM and author of the book “Ten years of the euro: a biography of a young world currency”