Sweden unsettled as UK plots Brexit path

Posted on September 6, 2016

epa05091745 The sun setting against Stockholm skyline throws a reflection off ice crystals in the air that looks like a giant searchlight pointing straight up, Stockholm, Sweden, 07 January 2016. After an unusually warm December, Sweden was hit by the coldest January in fifteen years with -42.8C in the far north and -15C in Stockholm. EPA/Henrik Montgomery SWEDEN OUT©EPA

Stockholm is concerned about the impact of losing a powerful non-eurozone, pro-business partner in the EU

One of the UK’s closest EU allies has warned the country not to jeopardise goodwill in the bloc by overly delaying the decision on how to leave it or by aggressively cutting taxes afterwards.

    Sweden is keen to achieve a good deal for the UK following its June 23 Brexit vote, with both countries sharing the position that free trade and the single market are key priorities.

    But ministers have told the FT they are concerned at reports suggesting Britain could slash corporate tax to as low as 15 per cent and by confusion over London’s proposed post-EU arrangements.

    “The signals I hear from London of big plans for tax cuts might affect the willingness of the European countries to work for a favourable trade agreement,” Magdalena Andersson, Sweden’s centre-left finance minister, told the FT. “The more signals we hear from London that there are plans for a more aggressive tax policy, the more negotiations will be affected.”

    Ann Linde, EU and trade minister, said: “This period [of waiting for the UK] can’t be too long. The uncertainty isn’t good for the political situation in the EU.”

    The comments underline the frustration in many European capitals with the UK’s seeming lack of a plan following the Brexit vote. They also signal that London cannot take its closest allies for granted in seeking to combat EU countries that are expected to take a tough line with the UK to dissuade other members from leaving the bloc.

    Ms Linde also warned Brexit could become all-consuming in Brussels, leading to other issues being ignored. “We can’t allow a big bunch of EU civil servants to concentrate only on Brexit, meaning that the other important things when it comes to jobs or climate are diminished,” she said. “That could be dangerous.”

    Sweden, home to numerous large industrial companies, stands to be significantly affected by Brexit as it loses a big and more powerful pro-business ally. Jacob Wallenberg, a member of Sweden’s most powerful business family, has described the Brexit vote as one of the worst moments of his career, believing it will tilt the EU’s focus away from open trade and business towards issues favoured by France and Germany, such as labour rights.

    Ann Linde Sweden's new Minister for EU and Trade attends a press conference after a government reshuffle on May 25, 2016 in Stockholm. / AFP / TT News Agency / Jonas EKSTROMER / Sweden OUT (Photo credit should read JONAS EKSTROMER/AFP/Getty Images)©AFP

    Ann Linde, Sweden’s EU and trade minister, said Brexit would make it harder for Stockholm to get its voice heard in the bloc

    Ms Linde acknowledged Brexit meant Sweden would have to work harder to make its voice heard on issues such as free trade and the single market, with the country having to become “mildly aggressive”.

    “The fact that our closest ally is going to leave is going to change our way of working in the EU,” she said.

    Public support for the EU in Sweden, as elsewhere, has increased following the Brexit vote. A poll by Novus in July showed 63 per cent of Swedes would back staying in the EU in a referendum, compared with 58 per cent a month earlier.

    But the Sweden Democrats, the populist anti-immigration party that is the third-largest in parliament, is determined to make EU membership an issue in the next elections, due in 2018.

    Although support for the Sweden Democrats has dipped in recent months, it remains well above the level reached in the 2014 elections.

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    KNUTSFORD, UNITED KINGDOM - MARCH 17: In this photo illustration, the European Union and the Union flag sit together on bunting on March 17, 2016 in Knutsford, United Kingdom. The United Kingdom will hold a referendum on June 23, 2016 to decide whether or not to remain a member of the European Union (EU), an economic and political partnership involving 28 European countries which allows members to trade together in a single market and free movement across its borders for citizens. (Photo by illustration by Christopher Furlong/Getty Images)

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    “A referendum is the only way to go. The people in Sweden have never had the chance to have their say on whether they want to give new powers to the EU or not. We are somewhere in-between a sovereign state and not,” said Paula Bieler, a Sweden Democrat MP.

    Ms Bieler expressed frustration that the EU was not a big political issue in Sweden: “It is never really on the agenda. They do things all the time but it never really reaches the public.”

    The party hopes the Brexit negotiations will be under way when Sweden next votes. “Maybe when it comes to the next election and the process of [the UK] leaving is taking place, it will be the proper time to say, look, it is nothing dangerous, just look at Britain,” said Ms Bieler.

    One of the questions facing Sweden is its status outside the eurozone and the EU’s planned banking union once the largest non-euro member of the bloc has left. The presence of the UK has helped protect the position of countries such as Sweden and Denmark, the ministers acknowledged.

    Ms Andersson insisted Sweden would not be forced to join the banking union, which is intended to co-ordinate the supervision of lenders and rules across the continent. “We have been very clear. Right now, we are not planning to enter the banking union,” she said.

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    Ms Linde observed there was already a multi-speed Europe, with not all countries in the euro or the Schengen passport-free travel area. But she expressed dismay that eurozone countries often met separately before some EU summits even when financial issues were not the main topic: “We don’t like that development.”

    But despite the talk of Sweden pushing its positions more forcefully after Brexit, it is clear that with a population of just 10m, getting its voice heard will be more difficult. ”It’s a fact that we are a small or midsized country,” said Ms Linde. “It’s harder than if you are one of the big countries.”

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