Swedish EU Council Presidency: “Europe needs a strategy for sustained competitiveness”

The Russian invasion of Ukraine leads to severe human suffering, an important security crisis and economic damage in Europe. How are Swedish companies affected by the war?

Swedish economy in general is not particularly dependent on Russia or Ukraine, for example approximately one percent of exports go to Russia and an even smaller percentage to Ukraine. At the same time, many companies are affected by the higher transport prices or because they do not get access to certain raw materials, such as metals, which are only available in these countries.

Russia's war of aggression against Ukraine has contributed to and highlighted the vulnerability of industry, Sweden and the rest of Europe in areas such as energy. Uncertainties about China's security and trade policy developments add to the uncertainty, as does climate change affecting transport systems in Europe. The disruptions in supply chains created during the pandemic, and to some extent persisting, are now further exacerbated by the war in Ukraine. Together, these factors are now creating high inflation and rising prices.

What do Swedish businesses expect from the EU to survive the crisis?

The Russian war of aggression against Ukraine, the ongoing energy crisis, rising rates of inflation and the pressure on Europe’s economies are all issues that will dominate the Swedish Presidency. Perhaps the most concerning issue for Europe’s companies is the ability to manage these crises.

A healthy and competitive European business community is a fundamental prerequisite to allow us to sustainably support Ukraine and to tackle these other crises. In the Swedish EU declaration on 16 November, Prime Minister Ulf Kristersson highlighted Europe’s competitiveness as the third vital area for cooperation along with security and the climate. However, it is important that these insights and ambitions are translated into concrete action. In the first place, this must be to deal with ongoing crises, but it should also reflect a longer-term strategy to build a more competitive Europe.

We have clear expectations: Secure Europe’s fossil-free energy supply and enable companies to cope with the energy crisis, reinforce the single market and strengthen Europe’s competitiveness. Let business drive the green and digital transition and create favourable conditions for them to do so. Also create well-functioning rules for European businesses to be able to compete on the global market regarding research and development. 

What are your organisation’s three top priorities regarding the Council Presidency?

1, Promote a green and digital transition

It is vital for our future that the green transition is managed successfully. To achieve the EU’s more ambitious climate goals – which the Confederation of Swedish Enterprise supports – future measures must be produced with a view to growth. Industry must be given the best possible conditions for continuing to drive technological development. Technological protectionism must be discouraged, with technological capacity being encouraged and the right balance being struck between innovation, integrity, and transparency.

2, Both strengthen and deepen the single market and take global leadership in free trade

European competitiveness is based on a strong single market that promotes coordination and transparency between Member States. One specific area where the single market has unexploited potential is the services sector. International trade is crucial for Swedish prosperity. For trade to work, we need predictable and transparent rules that guarantee openness.

3, Promote companies’ research and development activities

Research and development provide much of the foundations for competitiveness. However, investing public funds in research projects for future technologies selected for political purposes is not the way forward. Instead, the public sector should create well-designed rules that enable companies to compete – on a level playing field –  to produce the best possible technical solutions.

What is your organisation’s main expectation of Germany in terms of EU politics?

Germany recently overtook Norway as the largest market for Swedish exporters and there is a market for Swedish companies in Germany, with 1,800 operating in the German market. In 2020, German goods worth almost SEK 250 billion were imported into Sweden. German-Swedish cooperation spans hundreds of years and takes place at various levels.

As Europe's largest economy and the world's third largest, the German economy plays a major role in trade and development around the world and a strong and successful Germany could push other countries, and the EU, in the right direction. We would like to see Germany push for more free trade agreements with countries outside EU to diversify and to reduce our dependencies from a few suppliers around the globe.

Alongside crisis management, Europe needs a strategic agenda focused on the EU’s competitiveness. A strategy that is not only the reaction to outside developments here and now, but which focuses on the 5-10 year perspective. And while short-term decisions are necessary as part of crisis management, we rely on Germany to ensure such measures do not undermine longer term competitiveness. A strategy for sustained competitiveness in the EU can only be based on measures that serve to boost productivity. A productivity-enhancing agenda should serve as our guide, and we trust this approach will be supported by Germany.

What is your personal vision for the future of the EU?

The EU is Sweden’s biggest market for both exports and imports. The free movement of goods, services, people, and capital has meant that our companies, with a small domestic Swedish market, have been able to scale up in the larger ‘secure home market’ that in many ways the EU has become.

EU competitiveness is essential if Swedish companies are to be able to become established and grow, as well as for our welfare in Sweden. The Confederation of Swedish Enterprise has always been a strong advocate of European cooperation. Like many others we sense a certain unease over developments in areas where increased European regulation does not lead us in the right direction but instead creates greater administration and red tape, rather than clearing the obstacles faced by goods, services, people and innovation. There are also voices saying that increasing numbers of

Member States want to create a type of European protectionism, which in the long run would not benefit European competitiveness. Europe does not need to be protected by walls.

Europe needs to be made stronger. For the EU to work successfully, it is essential that France and Germany reach agreement, yet far too often dialogue with the other 25 countries only take place once Germany and France already have a joint proposal. Europe is characterised by diversity. That is part of the challenge when deciding which path the EU is to take in the future. But it can also be a strength if we allow this very diversity to exist, where it both enriches the EU and at the same time forms the shared foundation needed for the EU to develop.