EU trade ministers support European Commission plans to retaliate, if the United States decides to impose tariffs on European steel and aluminium, said Trade Commissioner Cecilia Malmström following a meeting of ministers in Sofia on Tuesday
Dagens Industri sources suggest that the European Commission will not assess Geely’s move on Daimler, even though the Chinese company holds a major stake in competitor AB Volvo. Commissioner Margrethe Vesthager does not wish to comment, but Maria Ulfvensjö, a spokeswoman for the Swedish Competition Authority (Konkurrensverket), has told the newspaper that EU anti-trust rules are not designed to deal with “this kind of potential conflict of interest, which many in the Swedish business world say Geely’s parallel ownership in AB Volvo and Daimler gives rise to”.
Geely, the Chinese owner of Volvo Cars, has acquired a USD 9.2 billion stake in Germany’s Daimler. Geely has being building up a holding of just under 10% through purchases of Daimler’s shares in recent weeks.
Dagens Industri (DI) has reported that Geely chair Li Shufu and Industrivärden’s Fredrik Lundberg, as well as CEO Helena Stjernholm, met on Friday to discuss future development of truckmaker AB Volvo. According to the business daily, AB Volvo’s chair and CEO also met Li Shufu on Friday. DI speculates that one of the topics of conversation likely concerned future cooperation between AB Volvo and Volvo Cars.
The defence budget should increase from its present level of SEK 53 billion to a level of SEK 75-80 billion by 2025, and to SEK 115 billion by 2035, according to the Swedish Armed Forces.
In a study of future requirements, the Armed Forces also say that staff numbers should increase, from 50,000 to 120,000 so that Sweden can counter different types of threat as well as an armed attack on the country.
Speaking at a press conference this morning, Rear Admiral Jonas Häggren said Sweden needed new brigades, new equipment, new capabilities and more staff in order to defend the country in 2035.
The perspective study identifies three “key capabilities”. They are: the capability to “sustained grey zone management”, the capability to “influence an attacker in all domains …” and the capability to “sustained defence operations on own territory”.
The study will form an important basis for the next parliamentary decision on defence policy, which will be taken in 2020, and which will be for the period 2021-2025.
At the start of the election year, the government and the opposition are competing to “take responsibility” for public finances and any reforms proposed should be financed under the mantra, “krona for krona”. The framework for the state surplus is that it should amount to one third of a per cent of GDP on average over an economic cycle. However, the framework has become an axiom, whose advantages and disadvantages are outside of critical review, writes Nordea’s head analyst Andreas Wallström in Dagens Industri (DI) today, which is surprising considering Sweden’ exceptionally strong public finances.
Internationally, Sweden has low debt, around 40% of GDP. The framework places a singular focus on debt in the public sector. But, no company builds success on reducing its debts. A strong balance sheet is not necessarily the one with the lowest debt.
The stabilisation argument of austerity during an economic boom does not take into account the cost of postponing investment to the future. Every year of poorly functioning public transport or damaging taxes entails a cost. These costs ought to be weighed up against the stability argument. However, he sees no opening for a review of the fiscal policy framework on the political horizon.
The Swedish economy remains strong although major injections will be needed to cope with welfare over the next few years.
In Finance Minister Magdalena Andersson’s latest forecast, most of the curves indicate a positive trend. Growth is high, unemployment is low and the strength of the global economy is helping fatten up Sweden’s finances. Only small adjustments have been made in the forecast since December and unemployment and GDP growth are at the same level.
The finance minister expects the big issue to be securing quality in welfare. “Our assessment is that SEK 20 billion in general state contributions will be needed to be able to meet the demographic challenge. In addition we have ambitious increases. We have presented five more billion for healthcare and six billion to education.”
The Moderates believe the government ought to have used the strong economy to prepare Sweden for the next recession. “We have a very strong economy but a weak government. There is now a reason to save even more for when things change,” says Elisabeth Svantesson the party’s economic spokesperson.
Writing in Dagens Industri (DI), Daniel Suhonen and Rikard Allvin from Katalys, address the Riksdag’s vote for a CETA agreement between the EU and Canada, which takes place next month. They write that the Social Democrats do not seem to realise that their proposal means that before long Sweden could be sued by Canadian investors.
“CETA is no regular trade deal. Lowering duties is uncontroversial but what is a cause of concern is the parts of the agreement that bind Sweden to maintain implemented privatisations, both existing and future. And if that was not enough, Canadian investors are given the opportunity to sue Sweden outside of the national courts if we, for example, legislate to boost climate efforts or reregulate education and welfare. Despite this, the agreement under the “free trade flag” has sailed by both parliamentary committees and newsrooms without an eyebrow being raised,” they write.
They urge the Social Democrats to rethink whether CETA is the right way forward.
Steelmaker SSAB’s shares gained the most on the large cap OMXS30 index (2.8%) on Monday. SSAB is benefiting from a strengthening market for heavy plate in North America. On Friday, SSAB announced a price increase of USD 50 per tonne of new orders of heavy plate.
The US authorities also announced several measures intended to limit imports of steel. Proposed duties of 53% would apply to imports from 12 countries including China, Brazil, India and South Africa. SSAB’s CEO Martin Lindqvist commented, “Even if the US Commerce Department has presented a proposal applying to section 232, no decision has yet been made.”
Negotiations over the EU’s long-term budget could be tough. Finance ministers meet on Tuesday and EU leaders on Friday and Brexit, refugee policy and controversial laws in Poland and Hungary are causing divisions.
Finance Minister, Magdalena Andersson expects the negotiations to be long and complicated. “We think that the countries that do not take responsibility for the decisions that we have made jointly, do not need support from structural funds,” she says.
Sweden is unlikely to get its wish for a smaller EU budget, as countries such as Germany have said they are prepared to pay more.
The government’s declaration of foreign policy from 2017 dedicates only 18 words to China. The new declaration, to be presented on Wednesday, coincides with a war of words between China and Sweden over the imprisoned publisher Gui Minhai and Sweden’s relationship with China is at a crossroads, writes DN’s Torbjörn Petersson.
In the most recent turn of events, Gui Minhai appeared in the Chinese media saying he was being used as a pawn by the Swedish government to create problems for China’s government. Previously, one of his colleagues, Lam Wing-kee has said that they were forced to read a script when they were arrested previously at the same time in 2015.
Foreign Minister Margot Wallström has sharpened her tone towards China recently. And since then, China has stepped up its attacks on Sweden. Petersson writes, “Challenging China is not without its risks. Norway experienced that when the Nobel Prize committee awarded the Chinese regime critic and author Liu Xiaobo the Peace Prize in 2010… China bullied Norway in all possible ways after Liu Xiaobo’s Nobel Prize.” He continues, “It is not unlikely that China could try and use the same kind of language of power if Sweden does not fall in line,” and adds that Sweden’s choice of direction may well be glimpsed in this year’s declaration of foreign policy.
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