Cash not credit is the currency of recession in Sweden

As talk of the global economic slowdown gathers pace Swedes are turning their backs on fast credit to buy their consumable items.

The spending surge is starting to cool off in cities worldwide as the fall out of last summer’s credit crunch has begun to filter through into the real economy and Stockholm is no different.

Swedish consumers are more inclined to pay for their consumer items directly instead of putting off the pain by seeking in-store credit.

“We have seen a shift in how consumers shop and think more about what they actually have in their wallets,” said Fredrik Kolterjahn at the Swedish Retail Institute (HUI) to Sveriges Radio (SR).

Many consumers do not have a choice as credit conditions tighten and costs increase. Interest rates for short term credit have increased from 4.58 percent in the summer of 2007 to a current average of 5.5%, according to Statistics Sweden (SCB).

“There are quite a few that want to purchase on credit but can not get credit approval,” said Petter Karlsson at electronics chain OnOff to Sveriges Radio.

With rising interest rates taking their toll on household budgets, tougher credit conditions mean wallets are feeling a little lighter in the pockets of the Swedish consumer. The boom years experienced by electronics, DIY and furniture retailers could be coming to an end.

“As interest rates go up, it becomes more expensive to buy and it is therefore natural that sectors that sell consumable items such as electronics feel the pinch first,” said Mattias Danielsson at the Swedish Retail Institute (HUI) to The Local.