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ECONOMY

Sweden’s central bank hits back at critics

Deputy Riksbank Governor Villy Bergström went on the offensive lat last week against detractors who blame the central bank for Sweden’s rising unemployment.

“I think it is weak of public officials, trade union economists and labour leaders to blame the Riksbank without any basis for tens of thousands of people being out of work,” said Bergström in a speech on Thursday.

“There is no clear link between monetary policy and employment.”

It was the third time in recent months that a member of the Riksbank executive board has hit back at critics who claim that the central bank’s high interest rate levels have cost up to 75,000 jobs.

Stricter rules on insider trading

8,000 top executives of Swedish listed companies may only trade shares in their own companies four times a year, according to a proposal from the Economic Crimes Bureau and the Swedish Financial Supervisory Authority to tighten rules on insider trading in connection with the release of interim reports.

The proposal came on the heels of an insider trading scandal at Alfa Laval, reported DI.

Insiders are presently banned from trading in shares a month prior to the quarterly report. Under the proposal, this prohibition is extended to two months prior to the release of an interim report.

Securitas report

Securitas beat market expectations when it posted a pre-tax profit of 626 million crowns for Q3, up 152 million crowns compared to a year ago. Sales rose 4 per cent to 15,182 million crowns despite a dull market.

“60 per cent of Securitas is now in full swing,” said CEO Thomas Berglund, who has managed to speed up growth in the company’s guarding business in Europe. However, he refrained from predicting profit for the problem-ridden cash handling operation in Germany. Securitas’ share rose 1.3 per cent to 98.50 crowns.

Sources: Dagens Nyheter, Svenska Dagbladet, Dagens Industri

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ALMEDALEN 2022

Swedish finance minister: voters may have to accept falling real wages

Sweden's finance minister had told The Local that this year's election will largely be about rising costs, but that his party is not planning to intervene to prop up real incomes and so worsen inflation.

Swedish finance minister: voters may have to accept falling real wages

Speaking at a seminar on Sweden’s economic situation hosted by Swedbank, Mikael Damberg agreed that the coming campaign would be a so-called plånboksval, or “pocketbook election”, where rising costs and falling spending power are the dominant issue, but he said he thought this would benefit rather than harm the Social Democrats. 

“Economic issues will be very important,” he told The Local, “and I think people will think about who will be best in charge of the public finances, and who has been in government and handled tough situations, and I think that Magdalena Andersson, as the Prime Minister with seven years as Minister of Finance, is the right woman to lead Sweden in these difficult times.”

His worry, he said, was that Sweden’s political parties would respond to inflation levels of close to eight percent by promising voters subsidies and cash transfers to make up for rising prices, which if implemented would then risk fuelling an inflationary spiral. 

“It might be |a problem] if the parties draw the wrong conclusion, and think that they can spend a lot of money right now. Because if they spend too much money, too broadly, not focusing on vulnerable groups, then inflation will go up, and interest rates will go even higher. And that would actually worsen the situation in the wallet for ordinary people.” 

Instead, Damberg said that people living in Sweden would ideally simply tighten their belts and tolerate a period of falling real incomes. 

“For 25 years in Sweden, we have had real wage increases for ordinary workers, and that’s kind of unique on an international perspective. So this year, there will be a drop in real wages because of inflation,” he said.

He said that he hoped that in next year’s negotiations between unions and employers over new collective bargaining agreements, unions were as responsible as they have been historically, and avoided calling for inflationary pay hikes. 

“It’s tough. The war has made us all less rich, and some groups will be affected very much. But I think, there’s no point in getting wage increases if it pushes inflation higher. The trick here is to get wage increase that are for real, and not just on paper.” 

In the seminar, he said that there was a danger that the huge emergency spending packages Sweden, like other countries, had put in place to soften the impact of the Covid-19 pandemic would set a precedent, leading voters and politicians to think it was possible for governments to spend their way out of the coming economic difficulties in a similar way. 

His intention, he said, if he was reappointed finance minister after the election, would be to keep the tax rate roughly level with where it is now, neither raising nor lowering taxes, in the hope that Sweden’s state finances go into a small surplus next year. 

He said it had been right this year to pass measures to increase the incomes of the poorest families and the poorest pensioners, and that his party would still seek to give aid targeted those least able to cope with rising prices. 

“Politics has a role,” he said. “But you need to be careful not to create too big a role, because if you think that politics can do everything, then we will start fuelling inflation. It’s a lot harder now than it was in the pandemic.” 

Shortly before the seminar, Ulf Kristersson, leader of the opposition Moderate Party, made a speech in which he accused the government of bringing in 46 new taxes over the last four years, and together in a “left-wing cartel” with other parties of planning a series of tax hikes, including a property tax, a tax on savings, a wealth tax, a tax on the highest incomes, and a reduced tax break on cleaners and other households services.

“I think they’re a bit desperate, because they’re not doing that well in the polls,” Damberg said. “So one way [of improving the situation] is to try to frighten voters. But I think our record speaks for itself, and I think Magdalena Andersson has got a lot of credibility when it comes to handling Swedish economy.” 

“She has not introduced a property tax, and she has not in the last period in government increased the tax burden on ordinary people. If you look at the tax burden in Sweden over the last period, it’s gone down, not up.”

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