Swedish PM Says Draghi Report Falls Into Common-Debt Trap
(Bloomberg) -- Former European Central Bank President Mario Draghi’s proposal to strengthen European Union’s competitiveness by taking on joint debt is a risky strategy that could divert attention from the more consequential reforms that the bloc needs, Sweden’s Prime Minister Ulf Kristersson warned.
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While the premier welcomed the report as an important contribution to a discussion on long-term economic prospects that Sweden pushed for during its EU presidency last year, he reiterated the Nordic nation’s long-held aversion to issuing common debt.
“European reports tend to boil down to the fact that you need to jointly borrow lots of money to do things,” Kristersson said in an interview in Stockholm. “On that issue we, along with other countries, are skeptical. Every time you want to accomplish something, it cannot end with us having to take on more debt.”
Draghi’s report, published last week, urged the EU to invest as much as €800 billion ($890 billion) extra a year and commit to sales of joint bonds to help make the bloc more competitive with China and the US. It also called for the bloc to reduce the regulatory burden on companies, and to take effects on innovation into account when probing mergers, which could open up for more consolidation in sectors such as the telecommunications industry.
Such proposals are more likely to gain approval from Sweden, which has long been aligned with countries like the Netherlands and Germany in opposing joint EU borrowing.
With free-trade policies often championed by Sweden under pressure from geopolitical tensions and state subsidies, EU member states will make a decision on whether to move forward with extra tariffs on Chinese electric cars next month. Kristersson said that after abstaining in the initial vote on the move, his government is now reexamining the issue in detail.
“There is probably a rather pragmatic trade-off that has to be made, within the framework of making trade as free as possible,” he said. “It literally is free trade that has built the wealth of this small country, and I find it hard to believe that something other than that would suddenly become what could make Sweden, with its 11 million inhabitants, do well.”
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