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Stockholm hopes for gains from Brexit – but still worries about the losses

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Stockholm hopes for gains from Brexit – but still worries about the losses
Brexit is a two-edged sword for Stockholm. Photo: Henrik Montgomery/TT
15:36 CET+01:00
Stockholm is at a Brexit crossroad. It's time for the Swedish capital to choose its path after its closest friend in the EU leaves the union. Alex Macbeth investigates in this article, also published in The Local's 'Brexit & You' newsletter.

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In the landscape of Sjöwall & Wahlöö's Martin Beck novels from the 1960s, Stockholm is a city mid-transformation: old houses are knocked down to give way to the needs of a new post-war economy.

Fast forward nearly 50 years later and Stockholm is once again at a crossroad, albeit businesses and not the city's terrain.

"Before the Brexit referendum, the UK was Stockholm's most important export market," Andreas Hatzigeorgiou, chief economist at the Stockholm Chamber of Commerce, told The Local. Germany and Norway are Sweden's.


Andreas Hatzigeorgiou, chief economist at the Stockholm Chamber of Commerce. Photo: Maria Agrell/Stockholm Chamber of Commerce

"Since the referendum however there have been fluctuations with trade. Businesses are worried about what will come next," adds Hatzigeorgiou.

The UK is an "extremely important" market for Stockholm-based and Swedish companies, he says. In manufacturing, pharma and financial services, Swedish companies work very closely with the UK.

Truck maker Scania exports heavily to the UK market; AstraZeneca, the UK-Swedish pharmaceutical giant, perhaps best illustrates the intertwined relationship.

While "no company wants to cut down on business in the UK," says Hatzigeorgiou, Brexit is a two-edged sword for Stockholm, with losses and gains to be made.

"Finance firms we are talking to say we are a good alternative to London," adds the chief economist at the Stockholm Chamber of Commerce. And UK companies are already relocating to Stockholm or are looking towards the Scandinavian financial services capital for the future.

"We have received, as an estimate, about 40-50 more requests per year from the UK since the Brexit referendum," Anna Gissler, CEO of Invest Stockholm – the investment promotion agency for the Swedish capital – told The Local.

"We are certain most UK-based companies are still contemplating and preparing in case the Brexit outcome is not beneficial to their type of organisation or business model, and that we will see more definite numbers after the UK has officially exited the EU," adds Gissler.

Stockholm however is not aggressively lobbying to lure UK businesses in the same way that Lisbon or Milan are. The city doesn't need to, claims Gissler.

"Our data centre industry is booming, we are home to some of Europe's leading fintech companies and we have been, for a long time, a world leader in gaming and music tech. All this creates a virtuous circle of growth that is very attractive to talents and investors", says Gissler. 


A conference for women in tech in Stockholm last year. Photo: Magnus Hjalmarson Neideman/SvD/TT

In 2017, the capital invested into Swedish tech startups doubled compared with 2016. More than 10.5 billion Swedish krona (€1,03 billion) were invested into 442 startups, according to Industrifonden's Swedish Tech Funding Report 2017. UK investors accounted for 32 per cent of all investments, more than from any other country and overtaking the US to claim top spot.

Sweden's 22 percent corporate tax rate is lower than that of Milan or Madrid, and the Swedish capital has the right mix of ingredients for companies caught in Brexit uncertainty and perhaps looking to relocate.

"Stockholm's DNA is symbolized by an open and permissive climate," says Invest Stockholm's Gissler, adding that the closeness to the UK, Swedes' familiarity with the English language and the cultural similarities make Stockholm an ideal location for British companies looking to bypass any potential Brexit fallout and keep a foot in the EU market.

While Sweden is the second-highest EU27 ranked country in the World Bank's Doing Business rankings, the city is also a victim of its own success. The founders of Sweden's best known tech startup, streaming service Spotify said in 2016 that a housing crisis in Stockholm, where prime office rents per square metre are nearly €700, is preventing the city's ability to attract foreign talent, reported The Local Sweden.

How will Brexit affect Sweden, Britain's closest partner in the EU, and the other EU nations? Sign up for The Local's 'Brexit & You' newsletter to get a full round-up of Brexit issues from across Europe. 

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