A new Scottish currency has been mooted a lot in the last few days, and a go-to comparison for many is that of Sweden. We have no opt-out from joining the Euro, yet it is inconceivable that we’d join the currency union. I wanted to write a background that people in Scotland may, or may not, want to read. It’s going to be long on background and probably very boring. But I try to inform, and maybe your debate can be better if I do.
Sweden held a non-binding referendum on membership of the Euro zone on September 14, 2003, and the result was decisive. 42 per cent of the voters wanted to introduce the currency, but 55.9 per cent wanted to keep the Swedish krona. 5.8 million of 7 million eligible voters turned out to vote.
Today the support for introducing the euro in Sweden is minimal. 68 per cent of Swedes now oppose introducing the currency, according to a poll conducted in seven countries by the European Commission in May this year.
The reason for this result was not, as you often read in the British press, a latent hostility toward the European Union. An exit poll after the referendum showed that economic reasons were the prime reasons Swedes voted against the Euro.
Bränt barn skyr elden, is an idiom we have. It means that a child who burns itself, stays away from fire. In 2003 there were a lot of people with scar tissue from recent economic burns (PDF) from the Swedish banking crisis, and none of us wanted to go near a fire again.
As a baseline Swedes have a Lutheran approach when it comes to money. Thrift and caution is celebrated in the culture, and excess is frowned on. There is a reason why IKEA is a Swedish company. Pragmatism, practicality, and caution is what the hundreds of years of strict Lutheranism have shaped us to be. Also, my pet theory, which I have no support for academically, is that individualism is a trait that cold weather cultures can ill afford during their formation.
There is a saying here in Sweden that underline this cultural asceticism, and it comes from a book written by the former Prime Minister Göran Persson. “Den som är satt i skuld är icke fri”. Or, in English, “The one who is burdened by debt is not free.” That ascetism is both a blessing and a curse. Yes, our national debt is about 40% of GDP, and we try to run a budget surplus, even though the cost is high youth unemployment. Go figure, but it’s difficult to shift this foolishness when pinching pennies is ingrained in the national psyche.
The Swedish banking crisis saw the country bail out its banks to the cost of 4% of GDP. It meant wage freezes, large cuts in social spending, and tax hikes. This crisis is the origin of Göran Persson’s saying above, and his book is about how he “rescued the economy” from this. The experiences during the crisis entered the political mythology of Sweden, and is generally seen as a bad time we were rescued from, thanks to thrift and caution and decisiveness of our leaders. Good old Lutheran values, although those terms were never used and would horrify atheist Swedes.
And that backdrop is what the 2003 referendum must be viewed in, and not later constructions about an innate EU hostility. We’re generally sceptical about the EU, but we’re not hostile to it like many British folk are. We’re a decentralised country which view centralisation with great suspicion. We don’t even want to give Stockholm more powers, because they’re a stuck-up arrogant bunch of ne’er-do-wells. I’m joking here. Sorry, Stockholmers. I love you, truly.
Sweden is not, and never has been, isolationist. Sweden is not, and never has been, particularly protectionist. Our entire modern existence from the 17th century and onwards is due to trade with (or trying to conquer) other countries. Even during the seventies, when social democracy was at its strongest, the country played with monetary policies like devaluations to further exports.
We want fewer barriers, less red tape, and more trade. Yes, even the socialists among us. In this country, even the unions favour TTIP! Let’s just move on, and accept that the fault lines between the left and right are very different here than in the UK, and that logic is sometimes lacking when you deal with cultural convictions that are never questioned. Ann Linde, the social democratic EU and Trade minister, wrote an argument against reducing free trade in one of Sweden’s largest dailies, Svenska Dagbladet, on August 23 this year.
To Sweden free trade is essential. Existential even. That has to be understood when thinking about the European Union and Sweden, and our currency. There is no chance in hell we’ll leave unless the EU actually falls apart, and then it’s likely we’ll quickly join whatever forms from the ashes of it. And this is why we’ll never give up our currency. And this is why the EU will never force us to do that.
It is not for me, who sit 1300 kilometres away in another country, to have any views about what Scotland should do. Just as I would be annoyed if foreigners tried to tell us Swedes how to run our country, I’m sure it would be annoying to Scots. I’m just trying to inform since Sweden and the Euro has been a part of the Scottish debate, and I see a lot of simplification and misconceptions about why Sweden isn’t in the Euro.
So, to conclude, the reason we keep our currency, and why we haven’t joined the Euro, is that it is important for us to have a currency that we can modify in changing circumstances. Joining a currency union means that we give up control of our exports, and our exports are what pays for all of us.
We are an export nation that sell things abroad, and everyone wants free trade. An independent currency is vital for a country that’s as oriented toward trade as we are. It just wouldn’t do to have a central ECB located far away dictate our interest rates and money value. A central bank far away wouldn’t care about the price of our lumber or the price of our fighter jets. That is the reason why we kept our currency. And that is the only reason.