Study: more women lead Swedish companies

An increasing number of women in Sweden are running businesses, according to a new study, although some measures indicate Sweden still lags behind compared to other European countries.

Study: more women lead Swedish companies

A total of 800,000 people own or manage their own businesses in Sweden, according to the Confederation of Swedish Enterprise (Svenskt Näringsliv), and an increasing number of them are women.

In the last decade, the number of women running businesses in Sweden has increased by 36 percent, well above the overall 22 percent increase in people running businesses.

There are now 238,000 women responsible for running businesses in Sweden, according to the study.

In compiling the figures, the confederation included registered sole proprietors, co-owners of trading companies, as well as CEOs and board members in active joint-stock companies.

According to Carolina Brånby, a business climate expert at the Confederation of Swedish Enterprise, reforms carried out by the centre-right Alliance government in recent years go a long way toward explaining recent growth of women-run businesses in Sweden.

“I’m convinced that the government’s policies played a significant role in encouraging more women to start their own businesses,” she told The Local.

Brånby pointed to two reforms in particular – a 2009 law allowing municipalities to open up publicly financed activities – particular health services – to private contractors, as well as changes to tax laws making it less expensive for people to pay for cleaning and other household services.

“The new laws created incentives and opened up new markets for small business owners,” she said.

Previously, Swedish municipalities managed publicly-financed old-age and home care services, effectively shutting out private actors, according to Brånby.

She cites the Act on the System of Choice in the Public Sector (Lagen om valfrihetssystem – LOV), which came into effect in 2009, as a contributing factor to the recent increase in women-run businesses in Sweden.

Following the changes “there was suddenly a new sector available for people who wanted to run their own businesses”, said Brånby.

In addition, Sweden’s household services tax relief (RUT-avdrag), which provides tax breaks that result in households saving up to 50 percent on a range of services including babysitting and cleaning, has also spawned a number of new businesses, many of which are run by women.

Despite the figures from the Confederation of Swedish Enterprise showing a steady increase in women managing businesses, other measures show that Sweden still lags behind many other countries in Europe when it comes to women in business.

Only 3.8 percent of Sweden’s working female population run businesses on a full-time basis, according to figures from Eurostat, while the EU average is 5.5 percent.

“While the figures don’t correspond exactly to ours, it shows that Sweden still has a ways to go in terms of encouraging women entrepreneurs,” said Brånby.

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EXPLAINED: Will Swedish housing prices plummet as interest rates rise?

The Swedish financial supervisory authority warned on Wednesday that rising interest rates could lead to house prices falling "quite sharply". How likely is it that this will happen?

EXPLAINED: Will Swedish housing prices plummet as interest rates rise?

What financial circumstances might make it difficult for borrowers to repay loans?

With an increase in the cost of living, including rising interest rates and rising electricity prices, there are plenty of circumstances that may make it difficult for borrowers – especially those holding large debts in relation to their income – to repay their mortgages.

Households with large debts are therefore more sensitive to an increase in interest rates, according to the Swedish financial supervisory authority, known in Swedish as Finansinspektionen (FI).

The agency published its annual Swedish Mortgage Market report on Wednesday.

“Large debts also mean a higher sensitivity if you were to suffer unemployment during an extensive recession,” said Henrik Braconier, the authority’s chief economist.

Other factors that could stretch borrowers’ finances include rising energy prices, higher food prices, and growing inflation.

“Apples, oranges, tomatoes have gone up by 30 percent,” said Américo Fernández, a household economist at SEB. “Wheat is coming from Ukraine and it’s getting harder and harder to get hold of.”


Will homeowners become unable to repay their mortgage loans?

Not according to Fernández.

“One of the last things Swedish households will fail to make their payments on is their mortgage and their houses,” he said. “They would rather decrease their spending on vacations abroad, or restaurants.”

The FI report noted that most new mortgages include margins that allow for fluctuations in the borrower’s finances. This means that mortgage holders have a cushion that allows them to handle financial changes.

“Our stress test shows that they can handle increases in the interest rate and also loss of income,” said Magnus Karlsson, FI’s director of macroanalysis. “New mortgages have margins in them calculating discretionary income, and will be able to absorb increases in interest rates and loss of income.”

SEB foresees an interest rise of up to three percent over the next two years, Fernández said,an increase that can be absorbed by most households.

Both Fernández and Karlsson agreed that if homeowners have to cut back on spending, those cuts will not come from debt repayment, but from their disposable income – the money they might ordinarily spend on entertainment, eating out, or travelling.

So while household spending may have to change, financial stability is not at stake for most households.

What’s going on with the housing market?

Right now, a record number of mortgage-holders have loans that are worth more than 4.5 times their income. This year, more than 14 percent of new mortgagors took on such large loans, compared to 6.3 percent last year.

A “low interest rate, increase in housing prices, increase in disposable real income and a housing market that is not functioning well” are all factors in the large debts that homeowners have incurred today, Karlsson argued.

Fernández noted that there is an imbalance between the low supply of housing and the high demand for housing, which is in part responsible for the high housing prices we see today.

He said a decrease in price of a few percentage points would not be surprising: “We’re coming from two years of exaggerated prices.”

Will housing prices begin to decrease after two years of increasing prices?

Calculations for three different scenarios tested by FI show that housing prices will decrease, Karlsson said.

While the agency does not predict housing prices, its report shows that under three different scenarios – the first an increase in mortgage interest rate, the second an increase in energy prices, and the third a combination of the first two with a reversal to pre-pandemic housing preferences – prices will decrease.

The Local Sweden reported last year about increasing housing costs in Sweden, spurred on in part by a desire for bigger homes further away from urban areas during the COVID-19 pandemic.

Fernández called the two years of increasing housing costs “surprising.”

“10-12 percent two years in a row, that’s historical in these uncertain times,” he said, noting that prices were still increasing in figures for March this year.

What sorts of housing will see the largest price decrease?

The FI report also included various scenarios of how the price of different types of housing may fluctuate based on changes in the interest rate.

One scenario assumed a 1 percent increase in interest rates this year and a 0.5 percent increase next year, and predicted that while the price of apartments owned in a cooperative – called bostadsrätter – would fall only slightly, the price of detached houses would fall by 10 percent.

Another calculation that accounted for rising electricity prices and a decline in new housing purchases found that the price of bostadsrätter and detached houses risked falling by an average of 30 percent.

Is there a plan to let borrowers end their mortgage terms early?

“We believe it needs to be simpler and more inexpensive for households to repay their mortgages early,” FI Director General Erik Thedéen is quoted as saying in a press release published by the agency on Wednesday.

To that end, Thedéen said at a press conference that the agency had sent a request to the government to change the calculation model for how banks are compensated when mortgages are terminated early.

“When you terminate a loan agreement and the bank incurs costs, it must be reimbursed,” Thedéen said. “But at present the banks are overcompensated, that is what our calculations show. If the government follows our line and changes the model and follows our line, then the banks must simply adapt.”

When asked about the likelihood of this request being granted, FI recommended reaching out to the Ministry of Justice for comment.

What does this mean for foreigners in Sweden?

If you’re already a mortgage holder, then as Karlsson and Fernández assured, mortgage calculations include a cushion that allow for changes in your financial circumstances.

If homeownership is in your future, housing prices may begin to decrease in the near future, so it’s worth keeping an eye on your local real estate listings.

By Shandana Mufti