Sweden and the Euro: the silence is deafening

The facts are that Sweden is more or less committed to joining the Euro by 2017.

Despite an undertaking to join the Euro with its 1995 EU membership, Sweden has always found a legal loophole and political posturing to avoid its Euro commitment. The reason that Sweden doesn’t fulfil all the criteria to join is its own (convenient) choice!

Given that there is an election in September, why has there been no public debate? Since 1995 the Swedish government has tried legalistic means to avoid making good its promise with 2017 set as a decision year. Few citizens know or understand the actual position. Furthermore, government bodies, politicians and business leaders seem to have consciously decided not to discuss the issue and its implications. The continuing Eurozone crisis, changes in EU voting and fraying patience from Germany will force Sweden will need to make good its committment to join by 2017 (or find another fudge). 

Currency union is just one, but now essential, part of the EU’s Economic and Monetary Union. Sweden has always been hypocritical about the European Union and its currency. Britain has prevaricated; Denmark refused flat out. Sweden’s actions are time-tested and similar to those practiced during World War 2: technically neutral but somehow engaged.

Sweden has benefited enormously from this conscious delay. Just in economic terms it has been avoiding the huge costs of bank bail-outs as well as retaining independent control of its banking system. December 2016 seems to be the end of that road.

The pressure for Sweden to honour its commitment has always been the there from the German authorities, which is intensifying and will not be easily avoided. 

  • The Euro crisis has not been resolved – in fact it appears to be getting worse, after a short lull. Wealthy Sweden is an obvious source of much needed funds for the bankrupt Club Med members of the EU. The recent collapse of Banco Espirito Santo is just the latest. Greece’s position hasn’t improved.
  • Even Germany is beginning to feel the economic effects.
  • In addition the legal-regulatory-political political pressures have increased dramatically with a single supervision mechanism for banks on its way by 2015 and a 2016 date set for joining the Euro.
  • New EU regulations will exclude non-Euro members from all decision-making but not the costs.

It is unlikely that Sweden can ask for more time; it has had 20 years to consider matters.

None of the Swedish political parties have the courage to spell out the risks (and rewards) of Euro membership nor the implications of ECB supervision of Swedish financial institutions. Odd! Sweden cannot be that hypocritical to pursue national self-interest given its moral chastisement to the world on so many other issues. Being the EU’s seventh largest economy, wealthiest in terms of per capita GDP and having nearly 50 percent of its trade with the Eurozone demands a through debate. The Norwegian and Swiss routes seem inappropriate for Sweden. Scotland has been warned.

Voters and EU members beware!

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