‘Sweden ready for euro entry’: report

A new report indicates that economic arguments against euro entry are no longer valid and concludes that in the wake of the finance crisis, it is now time for Sweden to join.

'Sweden ready for euro entry': report

The report from the Swedish Centre for Business and Policy Studies (SNS) argues that the situation had changed in Sweden since the 1990s and that the country would benefit from joining the European single currency.

A government report carried out in the 1990s came to the conclusion that on balance Sweden would be better staying out of the monetary union (EMU) and so, while the country joined the European Union, the Swedish kronor was retained.

Harry Flam for SNS, who was one of the architects of the original report, writes in an article in Tuesday’s Dagens Nyheter that the circumstances have changed.

“The report shows that Sweden has in practice had the same development of unemployment and inflation as if the country had been part of it (the single currency) from the beginning, but public finances would have benefited from the greater efficiency afforded by a stable cost base and increased trade.”

The report shows that base rates set by the European Central Bank (ECB) and the Swedish Riksbank have followed one another very closely over the period.

Flam writes that a stable exchange rate would benefit Sweden. Swedish companies would avoid losing competitiveness as a result of fluctuating rates.

Currently 40-45 percent of Sweden’s trade is conducted through the eurozone countries.