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Fredrik Reinfeldt, former Prime Minister of Sweden 2006-14, is renowned for his highly effective implementation of transformative economic and labour reforms, which made Sweden one of the most competitive countries in Europe. Despite the financial crisis, more than 300,000 new jobs were created in Sweden and it was the only country in the EU that actually lowered its national debt during that period. Renowned for his liberal and open stance on immigration, Sweden has been one of the few countries to open up its labour market without transitional rules.
How can Europe achieve greater competitiveness?
FR: Introducing a “make-work-pay” scheme, as my Government did in Sweden, would help many countries in Europe. There is a real need for a work first principle with regards to taxation and the social security systems. Countries with higher levels of competitiveness are the ones that have been more successful in responsible wage setting and cost control.
I still believe that there is great potential in the full creation of the EU single market and digital single market. However, there are still many trade barriers left and Europe needs increased mobility in the labour markets.
How can Europe be better prepared for future financial crises?
FR: The Swedish experience shows the importance of transparency and effective crisis management tools. Our legislation allows authorities to demand shares from owners of banks and financial institutions, as payment for support given by taxpayers’ money. This has decreased the will to seek support. Once confidence in the financial markets is restored the authorities can re-sell the shares to the market. From my point of view in a crisis the main concern should be with the people, not the institutions. Or to put it in another way: when in a storm, we should focus on saving the sailors, not the ship.
The banking union in the EU is needed to assure confidence in countries where the market disbelieves the messages given from banks, or where the control functions are perceived as weak and ineffective. Since financial crises are cross border, our control mechanisms need to be cross border as well.
What should we be doing in Europe to tackle the immigration issue and what is Sweden’s experience of opening its borders?
FR: Sweden is a relatively small country, but at the same time a successful example of what you can achieve with an open economy and attitude. I am proud of that. Many countries in Europe need to increase their population in order to meet their welfare ambitions. If you are open to the world, it will find you more attractive. Successful integration will create growth and jobs. Sweden is a mixed society with people from all over the world and this has been a driving force for innovation and entrepreneurship.
How has the world changed during your political tenure? How should we adapt to face these changes?
FR: The world has been reshaped by globalisation, digitalisation, rapid population growth and urbanisation. While this has laid the foundation for many growth opportunities, the increased freedom provided, has also mobilised enemies abroad. The world needs a strong EU and UN to counterbalance today’s sectarianism and terrorism.