Sweden’s crisis not only housing but also lost export market shareWednesday, 15 February 2012
We reported yesterday that the EU Commission is worried about a Swedish
mortgage bubble as such Sweden is being placed under close observation
which can lead to demands on the government for urgent action.
The EU Commission has reviewed member countries' economies in ten
areas, including exports, balance of payments, unemployment, wages,
debts and house prices.
Swedish household debt levels are among the five highest in the EU,
equivalent to 237 percent of gross domestic product. It also suggests
that property prices have risen sharply over the past fifteen years and
only recently have there been some declined...somewhat.
Finance Minister Anders Borg agrees with the Commission that household
debt is a problem, but he believes that the government has already
begun to respond.
“We have taken a wide range of measures to strengthen the robustness of
the banking sector and household sector,” Borg told reporters after a
parliamentary debate. He pointed to the tightening of capital adequacy
requirements for banks and the lending ceiling for house purchase to
EU commission warns also that Swedish exports has lost market share and
property investments are at a low level. At the same time Sweden is
criticized for the large surpluses in the current account, which the
Commission believes is partly due to a low level of investment.
Anders Borg does not agree with that aspect of the criticism but says
that it is countries with high deficits that need to strengthen their
The Commission will now make a detailed examination of the identified
countries with governments based on the latest developments. In May,
the Commission will decide which countries will received few direct
recommendations calling for action.
If the requirements are ignored, it can ultimately lead to decisions on hefty sanctions against designated euro area countries.
By Scancomark.se Team
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