Sweden is famous for many things – but not exactly for a particularly liberal worldview. All the more surprising it was when pictures emerged of smiling people sitting in cafés across Stockholm, at a time when the rest of Europe is confined to the apartments. What will it mean for the country’s economy?
Brazil’s president, Jair Bolsonaro, is probably a little envious: instead of sealed off and deserted beaches, it is full restaurants, open schools and a sense of relative normalcy that prevails in Stockholm. Sweden for sure is pursuing its own course in this pandemic. A risky adventure, but one that is less damaging for the economy.
At home in Brazil, Bolsonaro – who unlike the Swedes is downplaying the dangers from the virus – is facing a lockdown that has been implemented by local governments, and even more poignantly, by the criminal groups that hold poor neighborhoods hostage.
Different Interpretation
The Swedish government is also telling citizens to stay at home, but hasn’t enforced a lockdown. This approach goes against the recommendations of epidemiologist that most governments have implemented. Their prime aim is to stop the health sector from being overwhelmed by issuing radical bans on public live.
An interview with Sweden’s King Carl XVI Gustaf pushlished Sunday shows that the government has had enough time to think about its response. The king told «Dagens Nyheter» newspaper that he and the government had held thorough talks about the upcoming crisis as early as February 12.
Both Sweden and Switzerland Rely on Exports
Today Monday, restaurants in Sweden are allowed to serve clients, the public school system and even the ski resorts are still open. It is obviously too early to say whether it is worth risking a higher and faster infection rate for a lesser economic harm. Comparing Sweden’s way with the one taken by the rest of Europe is akin looking into a crystal ball – nobody knows how deep and long the slowdown will be.
But an analysis of the different approaches will be keenly expected, not least in Switzerland. Switzerland and Sweden are pretty similar in terms of their economic structure – a strong but small domestic market, a dynamic services industry and, above all, a strong dependence on exports. The latter won’t obviously be affected by keeping open restaurants and ski resorts.
A New Swedish Way?
But the costs for the economy by a less dramatic surge in unemployment benefits and loans for struggling companies may be lower. This is pretty much the point that led to a first taste of political dissent about the handling of the crisis over the weekend in Switzerland.
Politicians close to business have voiced their support for a step-by-step easing of the regime to keep the damage to the economy as low as possible. The centrist and left-leaning groups countered their arguments by speaking in favor of maintaining a strict lockdown for months – which is ironic, given that the Swedish government is led by a left-of-center coalition.
Not the Chinese Path
The underlying philosophy behind the Swedish way to deal with the pandemic isn’t too dissimilar from the Swiss approach of course. In both countries, citizens are independent and mature and fully capable of conducting themselves in a manner seen as conducive to fighting the virus. After all, the Swiss government has always stressed the distinction between issuing a specific order and the behavior of us all. An order as such won't beat the virus.
But Sweden is far more radical in enacting on this conviction and stands out in particular when compared to countries such as China and Singapore – often viewed as exemplary in their handling of the crisis. The Asian governments don’t hesitate to enforce their measures with dramatic measures and electronic surveillance.
Voluntary Delay of Dividend Payments
The Swedish way at least has worked out well in respect to the discussions about dividend payments. Handelsbanken, one of the Swedish banking giants, has delayed the payment of its dividend. Rivals SEB and Swedbank have delayed the annual general meetings until the end of the second quarter and therefore also put the dividend policy up for renewed scrutiny.
The financial market reacted to the pressure from politics and the regulator. They urged the banks to moderate the dividend payments, much like Marc Branson did for Finma in Switzerland last week.
But unlike the Swedish companies, Swiss banks have failed so far to rescind on their dividend promises.
