“We’ve got a very turbulent situation on the financial markets,” Borg told the TT news agency, commenting on the tumble that many of Europe’s major stock exchanges took as business opened on Friday morning.
Europe’s major stock exchanges plummeted as business opened on Friday morning.
“We’ve got a very turbulent situation on the financial markets,” he added.
“I’ve been in touch with the Swedish central bank, Riksbanken, the Financial Supervisory Authority, and the Ministry of Finance, to ensure that they are all following developments closely so we can be sure to have our bastions in place.”
There’s a risk of a messy autumn on European markets, according to Borg, who underlined that Sweden can’t help being affected by this.
“It affects us through stock markets, and through households and companies becoming insecure,” he explained, recommending caution.
The finance minister did not give any direct answer to questions about the shaky financial situation affecting the fifth stage in the centre-right government’s in-work tax credit programme (jobbskatteavdraget), planned to be presented in this autumn’s budget proposal.
Instead, Borg discussed the need for a careful monitoring of developments, and the need to make sure to state finances remain secure.
“Markets don’t always work rationally,” he pointed out.
“There’s an insecurity, and a buffalo herd stampedes off across the world, creating storm winds. It’s not part of my job to speculate about what’s motivated and what isn’t, but the problem is that there are several imbalances, weighing down the recovery that should be occurring now, and that is something we should take measures against,” said Borg.
At the same time, Borg said that financial worries can have an effect on Sweden, and on budget plans in the Ministry of Finance.
“This is negative for Sweden’s economic situation, it’ll have an effect on investment incentives and on households’ consumption,” he said.
“We’re still getting signals of strong developments from the Swedish economy, but the risk is looking grave. It looks to be getting more severe as the autumn approaches, and we should continue our work to keep Sweden outside the eye of the storm, by being careful in our own actions.”
When asked about advice for Swedish households, the finance minister continued to recommend cautiousness.
“Be careful, don’t incur large debts, and don’t put all savings into stocks,” he said, adding that the situation looks fairly stable for Swedish households.
Borg also noted that this is a serious situation, with a significant stock market drop, and that financial recuperation will be damaged.
One conclusion drawn was that the government will have to be cautious in their autumn budget proposal for 2012.