SHARE
COPY LINK

COMMERCE

Swedish bankruptcies climb

Companies in Sweden are going bankrupt at a faster rate than last year.

Swedish bankruptcies climb

In August, 11 percent more companies filed for bankruptcy compared with the same month a year ago, according to business and credit reporting company UC.

A total of 354 companies went bankrupt in August, which is 35 more than the corresponding month last year.

Since the turn of the year, 3,301 Swedish companies have gone belly up, compared with 3,198 for the same period in 2007.

“A 3 percent increase doesn’t appear to create much concern, but on the other hand it is clearly a negative trend with an increasing number of bankruptcies than we saw last spring,” said UC’s Fredrik Polland in a statement.

“The weakening economy combined with what in many cases are overly crowded markets is beginning to show its effects.”

ECONOMY

Swedish economy to grind to a halt as interest rates kick in

Sweden faces an economic slump next year that will see economic growth grind to a complete stop, Sweden's official government economics forecaster, has warned.

Swedish economy to grind to a halt as interest rates kick in

Sweden’s National Institute of Economic Research, which is tasked with tracking the business cycle for the Swedish government, warned in its quarterly forecast on Wednesday that greater than expected energy prices, interest rate rises, and stubborn inflation rates, Sweden was facing a significant downturn. 

The institute has shaved 1.6 percentage points off its forecast for growth in 2023, leaving the economy at a standstill, contracting -0.1 percent over the year. 

The institute now expects unemployment of 7.7 percent in 2023, up from a forecast of 7.5 percent given when in its last forecast in June.

“We can see that households are already starting to reign in their consumption,” said Ylva Hedén Westerdahl, the institute’s head of forecasting, saying this was happening “a little earlier than we had thought”. 

“We thought this would have happened when electricity bills went up, and interest rates went up a little more,” she continued. 

The bank expects household consumption to contract in 2023, something that she said was “quite unusual” and had not happened since Sweden’s 1990s economic crisis, apart from in the immediate aftermath of the Covid-19 pandemic. 

This was partly down to a five percent reduction in real salaries in Sweden in 2022, taking into account inflation, which the institute expects to be followed by a further two percent fall in real salaries in 2023. 

If the incoming Moderate-led government goes ahead with plans to reimburse consumers for high power prices, however, this would counterbalance the impact of inflation, leaving Swedish households’ purchasing power unchanged. 

The institute said it expected inflation to average 7.7 percent this year and 4.6 percent in 2023, both higher than it had forecast earlier.

Sweden’s Riksbank central bank this month hike its key interest rate by a full percentage point, after inflation hit 9 percent in August, the biggest single hike since the 1990s. 

SHOW COMMENTS