Residents of the major cities, who were most in favour of joining the single European currency in the 2003 referendum, have in fact earned the most from the No vote.
If Swedes had voted in favour of the euro, the krona would have ceased to exist on 1st January 2006 and the euro would have become Sweden’s currency. The Swedish central bank, the Riksbank, would thereby have become a powerless subsidiary of the European Central Bank (ECB) in Frankfurt, Germany.
The cost of loans in Sweden would then have followed the ECB’s interest rate instead of the Riksbank’s rate.
During the whole of 2006, the Riksbank’s rate has been consistently lower than the ECB rate. The average difference is 0.5 percentage points, meaning significantly lower mortgage payments for Swedish homeowners – particularly those in the major cities.
“It’s quite interesting that a referendum result that city dwellers did not want has worked in their favour,” said Anna Bäcklund, economist at Nordea.
People living in Stockholm, Gothenburg and Malmö, Sweden’s largest three cities, have mortgages worth an average of 1.1 million kronor, according to Nordea. This group has benefited to the tune of 5,540 kronor in 2006 by not paying the ECB’s higher interest rate. Many city dwellers have significantly larger mortgages, meaning that the savings for some have been even greater.
The effect in sparsely populated areas, where support for the euro was low, has been less marked, as the average mortgage in these areas is smaller, at around 400,000 kronor. Nonetheless, people here have still benefited to the tune of 2,000 kronor in lower interest costs in 2006.
The average mortgage in Sweden is 800,000 kronor. People with loans of this size have saved about 4,000 kronor each. Given that there are around 1.4 million households with mortgages in Sweden, the total saving for people between 25 and 65 within this group was 5.5 billion in 2006.
The Riksbank’s interest rate is currently at 3.25 percent. The ECB raised its interest rate to 3.75 percent, meaning that Sweden’s rates are still 0.5 percentage points below those of the eurozone.
Politicians who campaigned for Sweden to join the euro have been some of the greatest beneficiaries. Former prime minister Göran Persson, who led the Yes campaign, has a 13 million kronor mortgage on his mansion in Övre Torp, south of Stockholm.
Leaders in the No camp, such as Left Party leader Lars Ohly, have also done well. His 2.5 million kronor mortgage has been less painful thanks to his side’s victory.