Top Swedish execs less keen on the euro

A number of prominent Swedish business leaders have become more sceptical towards Sweden joining the euro in the near future, but stressed their belief in the currency's viability in the long term.

Top Swedish execs less keen on the euro
Nordea CEO Christian Clausen

The euro faced its toughest challenges yet in 2010 with debt-ridden members Greece and Ireland forcing other euro and EU countries to come to the rescue with a massive loan package, newspaper Svenska Dagbladet reported on Monday.

“It is maybe more important for large countries like England to take a position and join so that it becomes a more stable area. It is not good with an unstable currency area,” Ericsson Chairman Michael Treschow told the newspaper on Monday.

Treschow underlined however that in the longer term he still believed that Sweden would gain from having a currency that followed “more stable” rules.

As the 16-member currency prepares to welcome its newest member, Estonia, on January 1st, the debt crisis in the eurozone this year has deterred many who were previously positive to Sweden joining the euro.

Many economists believe that the crisis has proved that monetary union is not optimal and predict that poor countries may be forced to leave, the report said.

At the same time, the Swedish economy has rocketed past eurozone growth rates. While Finance Minister Anders Borg has insisted that Sweden would have done well even with the euro as currency, he has not been as proactive as Liberal Party leader Jan Björklund in pushing for a new euro referendum, SvD reported.

Sweden voted against 56.1 percent a 2003 referendum that would have determined accession on January 1st, 2006.

Swedish business leaders do not have a Swedish euro accession on their minds at the moment, with Nordea CEO Christian Clausen stating that Swedish support does not seem to be of immediate importance.

“A new referendum would probably result in a very clear answer from the people,” Clausen, a native of Denmark, told SvD.

He added that there is no clear answer as to whether Sweden would be better off in joining the eurozone.

“If one joins the eurozone, there might be a little more leeway – for example, having a slightly larger deficit. However, the problem is that some countries gave themselves too much space,” cautioned Clausen.

SEB CEO Annika Falkengren agreed.

“The crises this year show that one must have a tight fiscal policy given that one does not have the interest rate weapon the same way countries outside the euro do. Sweden has shown that it has fared very well on its own merits on the outside,” she said earlier this year.

However, Swedish business leaders remain confident that the euro will survive in the long term.

“Some countries may possibly be forced to leave, but on the whole, it will stay together. I am European and I believe in the project. We live in an open democracy and it takes a bit longer to implement things,” Atlas Copco CEO Ronnie Leten, a native of Belgium, told SvD.

“The euro and the dollar are the world’s two reserve currencies and there is no doubt that the euro will survive. The question is how long it will take to solve these acute problems,” added Clausen.

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Volvo profits plummet on rising material costs

Swedish automaker Volvo Cars said on Thursday that rising raw material costs and inflation had driven down profits in the third quarter.

Volvo profits plummet on rising material costs

The group posted a net profit of 665 million kronor ($61 million) in the July-September period, a drop of 71 percent compared to 2.3 billion kronor during the same quarter a year ago.

The figure was far below analysts’ forecasts of between 2.15 and 2.19 billion kronor, according to Bloomberg and Factset.

The company’s share price was down by around seven percent in midday trading on the Stockholm stock exchange.

Chief executive Jim Rowan said the company was hit hard by rising raw material prices, record inflation, higher interest rates and the war in Ukraine.

“The macroeconomic uncertainties around the world weighed on our third quarter performance”, he said in a statement.

Revenue meanwhile rolled in slightly higher than analysts’ expectations, rising by 30 percent to 79.3 billion kronor, boosted by “robust” demand for the company’s SUVs.

Analysts had predicted third quarter sales of between 78.1 and 78.7 billion kronor.

Retail sales declined however in some markets, including its main markets Europe and the United States, where the number of vehicles sold fell by 14 and 32 percent respectively.

The carmaker insisted however that its order book remained solid.

Volvo Cars, which aims to have an all-electric fleet by 2030, also reported “sharp pick-up” for its fully-electric vehicles at the end of the quarter, especially in September.

It said sales of fully-electric cars soared by 87 percent in the third quarter, accounting for seven percent of its total sales during the period.

The company, a subsidiary of Chinese group Geely, said manufacturing output continued to improve in the third quarter, but “unforeseen factors” such as power outages and Covid-19 related lockdowns in China “slowed down the pace of normalisation”.

It expected production, wholesale and retail growth in the second half of the year.

“For the full year 2022, we expect slightly lower wholesale volumes than 2021, assuming no further major supply chain disturbances. Wholesale and retail volumes will be on similar levels”, it said.