The Mundus Brief: May 2018

The Mundus Brief: May 2018
The Mundus Brief is our monthly summary of Swedish news and current affairs

Politics – and the weather! – heating up

In March, we implied that Swedish news was to be dominated by election politics – all the way through to September. But, we hadn’t banked on the Swedish Academy imploding and the Nobel Prize in literature being cancelled for 2018. As that scandal disappears in the rearview mirror, the dominant force of election campaigning has descended again over Sweden. It’s almost as strong as the high-pressure system which has created an unbelievable run of sunny Spring days!

The 2018 vote – a watershed

While it’s not to suggest that Sweden has not faced critical choices in previous years, Mundus believes that the 2018 poll is likely to be a watershed, defining Sweden’s future for years to come, or even a generation. This is no longer a choice about romantic ideals. Immigration has happened, and the genie is not going to go back in the bottle. All sides of politics are arguing for their solutions to problems that they define quite differently.

The Sweden Democrats are against immigration in general, and in particular, for refugees and low-wage migrants that challenge their demographic, both in terms of job competition, and placing extra demands on the tax system. The SD position is clear and has been the defining prism of Swedish politics for several years. The Alliance approaches immigration from both human rights and labour market perspectives. While there are tensions between the four parties over the level of humane migration for refugees, the parties agree on an approach to integration that uses the jobs as both a vector of integration and a net positive to the economy.

But, the Government faces far deeper divisions, that are rupturing its support. The Social Democrats have undergone an almost complete 360° turn in their immigration and integration policies, since forming government, driven, apparently, by the fear of losing their working-class support to the Sweden Democrats. The official party position now attempts to argue that theirs’s is a humane approach, but that equity must be fought for with other EU countries. In addition, equity must be maintained with Swedes, and so the emphasis is placed far more strongly on immigrants who are told to integrate, or else. The problem is that this is far from a unified position within the party, or their traditional support base, and an open fight has developed between the party’s leadership and its’ grassroots. The position is even worse with their junior governing partner, the Greens, which maintains a more liberal view.

The problem for the Social Democrats is that current policies are apparently quite inadequate at driving the integration that they seek. It takes up to 8 years on average for immigrants to find a job, due to a range of problems – including language, cultural and skill deficits. The Social Democrats define it as a training issue, and want immigrants to continue their education until they can cope with the Swedish workplace, as it is. The Moderates however, anticipate a different sort of labour market, with salaries dropping until refugees can find work. This is anathema to the Social Democrats and the unions, who have fought for generations to create what Sweden has today. This is the reason why Mundus believes that the 2018 election is a watershed. The labour market model adopted by the next government can be even more important than the immigration or integration models. As the defining issue of the election campaign, this edition of the Monthly Policy Review (MPR) provides and in-depth analysis of Swedes perceptions on immigration, and the positions being taken by each party to the election.

Voters appreciate how much is at stake, which is becoming clearer and clearer in opinion polls. As we reported in Mundus News, support for the Social Democrats has dropped to what is perceived as crisis levels. And, following a poor party leader debate, Stefan Löfven is no longer the most popular leader, losing out to both Ulf Kristersson and Annie Lööf. The position is exacerbated in Sweden’s second city – Gothenburg, where S is supported by only 15% of voters, and it has allowed a whole new political movement to coalesce into a new party, that will probably see it thrown out of office in the city. The June Monthly Policy Review investigates what is going on both in Gothenburg, and in Sweden’s rural regions, where 18-year olds are leaving the countryside en masse, with further impacts on the voting base.

For those of you that are not yet subscribers, but interested in, or affected by the future of Swedish politics, we have put together a special Elections package with news and analysis which runs from 1 June – 30 September, 2018. Read more     

Swedish elections

A Fossil Free Sweden?

In May, we reported in Mundus News that Sweden’s 2017 emissions were down 1.4%, despite continued growth in GDP and also covered an article from Dagens Industri  which cited Martin Lindqvist, CEO of Sweden’s largest steel group SSAB, who is responsible for 10% of Sweden’s carbon emissions, “If we are first out with the technology then it will naturally lead to an enormous competitive edge, but also benefit the climate when we remove 10% of Sweden’s carbon emissions”. You can read our blog post on the topic here.

Business and Economic News

Earlier today, Mundus News reported that Sweden’s GDP grew by 0.7% in the first quarter (3.3% for the 12 month period), marking it the longest economic boom that Sweden has experienced since the 1980s. “I think in terms of growth figures that we probably have seen the best of it,” said Robert Bergqvist, chief economist at SEB, noting that with house prices and consumer confidence falling, and growth 1.5% above “normal”, it would probably moderate ahead. Growth was 0.2% above market expectations, and the Krona climbed against the Euro in response, further strengthening its position since the start of the month. Still, the Krona is down almost 5% this year, with the exchange rate being caught in the crossfire between low inflation and the negative interest rates. Our feature economic story in the Monthly Policy Review this month looks at the interaction between house prices, inflation, interest rates, the exchange rate and GDP growth.

This month’s main business story was iZettle’s abandonment of its IPO, as the owners decided to sell the company to Paypal for $2.2 billion. Meanwhile, Geely, the owner of Volvo Cars, is also exploring an IPO.

If you need to keep up to date with Sweden’s latest business- and start-up news, you can now purchase a one-month subscription to our latest product, Mundus Business Insights, in the Mundus Store

An endless summer?

Finally, we can’t let the weather pass without comment. For those of us used to Swedish summer being the nicest day of the year, May’s weather is a very welcome upside. While the final statistics are yet to be compiled, it’s clear that this is going to be the warmest May on record. As one meteorologist said, “When you look at the temperatures for May, it’s hard to believe your eyes”.

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Sean is responsible for Mundus’ strategy and commercial activities. He began his career in the oil industry Australia. After working internationally in commercial roles with BP in South Africa, the UK and Singapore he moved to Sweden with his family in 2009. He worked in business development and then as the Strategy and Growth Director for NASDAQ Commodities from 2009 to 2015. Sean holds an engineering degree from Adelaide University and an MBA from the Darden Business School at the University of Virginia.