Sweden suffered the same symptoms as everyone else during the financial meltdown, but since emerging from recession in Q2 2009, the nation has gone from strength to strength. Jörgen Haglund from PWC Sweden explains where it all went right.
NEE: How has Sweden’s participation in the Irish bailout affected the mood in financial circles? Do you expect it will have any impact on investor concern in the long run? Not as a stand alone activity. A more widespread crisis including more countries that need bailout will of course have an impact on investors. On the other hand Sweden is the country in Europe that has survived the financial crisis best with a very high GNP increase and a reasonably low unemployment rate.
Sweden’s economy is experiencing moderate growth, prompting talk of raising interest rates. How do you envisage this development will be seen by investors? Sweden’s economy his experiencing a very high growth (the figure for GNP in November was over 6%!). The basic fundamentals in Swedish economy are very sound. This together with a well educated work force, a very good infrastructure and low administrative burden and competitive tax regulations for companies should attract investors. At the same time Sweden, as a small exporting country with many global companies with operations around world, is affected by higher interest rates and a more widespread financial crisis in the financial system in Europe. But such a development will also hit other countries and Sweden’s current situation is stronger than most other countries. Thus Sweden should continue to be an interesting market for investment despite the international developments.
Britain’s Prime Minister, David Cameron, is to host a New Year summit with leaders of Nordic and Baltic countries in London. It’s being trailed as an opportunity to exchange ideas on issues such as the green economy, social cohesion and gender equality. Are these traits real, are they exportable, and how can investors benefit from the summit?
Sweden is probably one of the leading countries in all the above mentioned areas. Sweden has one of the “greenest” economies in the world both when it comes to handling pollution and the climate issues. Social cohesion and gender equality is also areas that have been in focus in Sweden for many years and Sweden is one of the more developed countries in that respect.
“For liquid bio fuels, the current possibilities of tax exemptions have contributed to large investments in production capacity. In this area there are also great opportunities for grant funding.”
The social cohesion quality is something that is really on the table in virtually all countries due to the financial crisis and huge deficits in many countries. The fact that we see globalisation effecting the way we work, communicate and do business, implies that also questions of social cohesion quality will be an important area for countries to attract a skilled workforce. Thus we will probably see that companies will tend to invest in this area in a more consistent way taking into account what other countries do, i.e. will see a more consistent social welfare system – at least in Europe. The summit will in that respect be an important event were different systems and ideas can be discussed and be brought up to light.
As the leading business adviser we see that manage talents is one of the most important future issues for the business community. This together with an increasing mobility of the workforce between countries implies that the gender issue needs to be managed. Many countries, companies and other organisations have already understood that keeping half of the population out from the labour market is extremely contra productive. An education and welfare systems that support women to educate and to be able to combine family and work in order to make it possible for women to take active part in the shaping of future businesses is vital for most developed countries. The question is not if this is exportable. Developments in this area will with certainty take place, it is only a timing issue. With this as a background investors should be able to benefit from the meeting just by it bringing this area up for discussion and thus put a focus on this very important issue. Sweden is a global centre for green energy. What incentives are available for investors wanting to take advantage of opportunities in this sector?
The electricity certificate system provides incentives for investment in bioelectricity. For example it has created benefits for investment in wind power, also many paper mills have invested in power generation facilities. The system has also led to significant investment by local energy companies in combined heat and power plants. The electricity certificate system is planned to be extended to also include the Norwegian electricity market.
From 2011 there will however be some restrictions on the right to tax reductions on low mix bio fuels. Investments in biogas – mainly for vehicle use – have more recently picked up speed. Probably because higher environmental requirements on landfills, but also because of changes in the tax regulations making it possible transport the biogas in pipelines together with natural gas . Biogas is at current tax exempt.
Taken from New European Economy