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Economic downturn hits Stockholm businesses

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16:02 CEST+02:00
The situation for businesses in Stockholm is now worse than it was following the bursting of the IT bubble, according to a report from the city's Chamber of Commerce.

The Chamber's Stockholm Barometer finds that industries which remained unscathed during previous economic downturns, including the computer industry, are finding themselves struggling to withstand the pressures associated with the current period of economic doldrums.

The labour market in the Swedish capital is also worsening at a rapid pace. Employment is now at its lowest levels since the turn of the century.

Employment numbers are expected to drop in several industries for the second quarter in a row, with auto sales, as well as the construction and manufacturing industries expected to be the hardest hit.

The construction industry has weakened considerably despite several ongoing publicly financed construction projects.

Nearly 70 percent of the companies in the industry are building less, mostly due to reduced demand for new housing.

The Stockholm Chamber of Commerce wants to see a new approach to paying for infrastructure projects which allows the private sector to co-finance certain instances.

So far, the recently reintroduced tax deduction available for construction services related to home repairs and maintenance (ROT-avdraget), hasn't had any noticeable positive effect on the industry overall, according the Chamber.

Daily retail trade, on the other hand, has resisted the economic slump relatively well, exhibiting strong growth during the first quarter.

Nearly 60 percent of companies marked an increased in sales volume at the start of 2009.

“People eat food even when the economy is weak,” said Chamber of Commerce analyst Johan Treschow.

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