Speaker: Lars Jonung, Adviser, DG Ecfin, European Commission

On 14 September 2003 Sweden decided by referendum not to adopt the euro as their new currency, thus keeping the Swedish krona.   
Lars Jonung, advisor to DG for Economic and Finance Affairs of the European Commission, described the referendum as a “unique event in Swedish history”, since for the first time, the population was asked to decide on a purely monetary matter, i.e. either to hold on to a floating exchange rate and the independent Riksbank, or to become part of a monetary union. In analysing how the issue was perceived by the public, Jonung noted on the basis of exit polls that there existed stark differences in Swedish society concerning the issue. Blue collar workers, farmers and women were more prone to reject the euro, while white collar workers, academics and men were more likely to prefer adopting the new currency. Jonung also argued, however, that due to Sweden’s complex societal structure and the political dimension, it was difficult to draw immediate conclusions.
 
It is interesting to note that although the issue was not a political one as such, both sides added political arguments, thus altering the nature of the referendum. The ones who favoured the euro cited the microeconomic efficiency gains, while those opposed feared a loss of autonomy and possible instability. Hence, people had the impression to be forced to decide between efficiency and stability.
 
Jonung also cited a study of the Swedish economy as an OCA (Optimum Currency Area), which tried to predict
the outcome of the referendum. It tried to identify the winners and the losers of a possible membership of the monetary union, introducing a distributional dimension to the decision. The result of the study was that richer people involved in international business, as well as those with university degrees, employed in the private sector were the ones most likely to vote for the euro. The ones who say “no” where most likely to be less educated, poorer, active in the public sector or dependent on social welfare. The exit polls clearly supported the results of the OCA theory. Danderyd, Sweden’s richest municipality, had the lowest share of no-voters. In addition, those who depended on welfare strongly opposed the euro, fearing a loss of security. Swedes who had travelled to abroad had been less critical to joining the euro zone. Jonung also adduced geography as an explanation for the referendum’s outcome, citing the example of Haparanda, a border town with neighbouring Finland, where one third of the working population depends on welfare, people favoured the adoption of the euro. Searching for more general reasons why his country had rejected the euro, he remarked that the government’s indecisiveness on the matter may have been a “decisive mistake”. In conclusion, Jonung drew parallels between Sweden, Denmark and the United Kingdom, whose populations have been loath to the adoption of the euro. He cited various similarities between the three monarchies, being all firm and peaceful democracies with a system that has delivered long-term stability.