When the rest of the EU formed the EMU in 1999 it was decided at the time that Sweden should keep the door open to future participation and that the issue should be put to the people. The Riksdag declared that Sweden should preserve its strong economic position and continue working on euro preparations at national level in order to allow a transition to the euro if approved by the people.
Although referenda are advisory rather than binding in Sweden it would be politically unthinkable to put this question to the nation in order to then ignore its response and so it is now likely that the Euro issue will not be pursued again for several years. The Swedish government believing that another vote would not be seen for around ten years.
Throughout the run up to the vote opinion polls clearly showed that the ‘no’ campaign was leading the way with most commentators predicting a lead of around 10 –15%, despite the fact that the ‘yes’ campaign was sponsored by political and business establishments and backed by the majority of newspapers and intellectuals, who all insisted that adopting the Euro would boost trade and employment. Hoping for more foreign investment, a boost in trade with the euro zone and more stable exchange rates, the vast majority of business leaders favoured joining the Euro. Now that the Euro has been rejected many companies are already seeking compensation.
“For Swedish companies not to be hit… we need a broad agreement on sizeable measures to boost growth, there is no time to lose.” Said Soren Gyll, chairman of the Swedish Confederation of Enterprises.
The death of Ms Lindh, one of Sweden’s most enthusiastic and well loved pro European campaigners two weeks before voting day threw all predictions into disarray, as many commentators wondered if her murder would produce a huge sympathy vote. In the end it seems that her legacy may not of persuaded people to vote ‘yes’ but may well of encouraged more people to simply turn out and vote.
For the majority of Swedish voters the perceived risks of monetary integration appear to have outweighed its advantages. The ‘yes’ camp failed to persuade voters through promised advantages of greater nominal exchange rate stability, reduced transaction costs, greater price transparency and a lower and more stable inflation.
Opinion surveys and exit polls have indicated four factors that contributed to a no result:
- Almost all voters who were sceptical about Sweden joining the EU voted against the Euro.
- A number of business leaders and academic economists, who are in favour of Sweden being an EU member but argue against the Euro, which led to a significant number of non – socialist voters casting a no ballot.
- The main arguments during the referendum campaign (i.e., democracy, the economy and social welfare) strongly favoured the ‘no’ side.
- The ‘no’ vote was to some extent a protest vote against the political establishment; surveys indicate that no voting and distrust in politicians were highly correlated.
EU leaders are putting on a brave face despite the result of the referendum result claiming that political integration and the development of the euro would continue, with or without Sweden. Italian Foreign Minister Franco Frattini said Sweden’s vote would not end European efforts to persuade it to join the euro.
“We must work to convince Swedish citizens that Europe is a great opportunity and that there is no risk of loss of identity” he said.
Nevertheless Sweden’s rejection of the Euro is a major setback towards a more unified Europe with many political experts believing that the impact will be felt throughout Europe countering efforts to strengthen the European Union before the planned expansion of 10 new members next year. Denmark and the UK are currently the only other two EU countries not involved with the Euro and it is now widely thought that anti Euro campaigners in these countries will be strengthened, further delaying efforts to hold referendums. This will therefore deprive the Euro of broader economic and political backing.
In the end the Swedish vote must be seen as a rejection of the political and economic terms on which the EU is being led.