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EUROPEAN UNION

Swedish PM swats aside calls for EU renegotiation

Sweden’s prime minister, Stefan Löfven, said on Friday, that it had been “totally irresponsible” for the Left Party to bring up the question of a Swedish EU renegotiation at a time when the EU was in such need of stability, after the UK had voted to leave the community.

Swedish PM swats aside calls for EU renegotiation
"Sweden will now lose an important partner in the EU," Löfven said. Photo: TT

The Left Party leader Jonas Sjöstedt, who cooperates with the Social Democrat-led government on budgetary matters, said earlier on Friday that the British EU exit meant a golden chance to renegotiate Swedish membership.

“We want to reduce the EU's powers and to be able to have the Swedish collective agreements. It is also important that the EU budgets properly so that the membership fee goes down and not up. We also want to abolish the common agricultural policy,” he said.

Sjöstedt’s suggestion was shot down flames by Löfven who called the comment “totally irresponsible”.

The prime minister continued, “It is easy to be populist in this situation. It is not the time now to demand renegotiation as we have before us five or ten years of insecurity in the EU and we need long-term perspective and stability.”

“In Sweden, membership of the EU is firmly anchored,” Löfven said. “I have spoken with the other party leaders this morning.”

Earlier the prime minister had released a statement expressing sadness at the result of the UK vote.

“It is now clear that the people of the United Kingdom have voted to leave the European Union. We respect their decision, but it is a serious one – primarily for the people of the UK, who had a great deal to gain by remaining, but also for the EU.”

“Sweden will now lose an important partner in the EU. We have often pursued issues together, not least important trade issues. The UK will remain an important partner for Sweden in its new role outside the EU.”

“The fact that the UK is leaving the EU will have major repercussions.”

“But we remain convinced of the importance of European cooperation. Our need for effective European cooperation has never been greater. This is particularly true for Sweden, which is a small, export-dependent country.”

“The EU offers us greater opportunities to resolve the problems of our time, but it also enhances the conditions for more jobs and higher growth. And it safeguards peace and security.”

But Löfven cautioned that the EU could not ignore the ramifications of the UK vote.

“The debate and campaigning in the run-up to the referendum should serve as a wake-up call for Europe. They elicited stark polarisation and disturbing nationalism. This shows that EU cooperation must be developed and improved.

“We must be able to demonstrate that our cooperation is actually capable of tackling our common challenges in the way that people expect it to.

“We must have fair conditions in the European labour market. Climate and environmental challenges know no borders. And all EU Member states must take responsibility for the refugees fleeing to Europe.”

In recent polls, more than 70% of Swedes have signalled that they prefer to stay within the EU.

ENERGY

How European countries are spending billions on easing energy crisis

European governments are announcing emergency measures on a near-weekly basis to protect households and businesses from the energy crisis stemming from Russia's war in Ukraine.

How European countries are spending billions on easing energy crisis

Hundreds of billions of euros and counting have been shelled out since Russia invaded its pro-EU neighbour in late February.

Governments have gone all out: from capping gas and electricity prices to rescuing struggling energy companies and providing direct aid to households to fill up their cars.

The public spending has continued, even though European Union countries had accumulated mountains of new debt to save their economies during the Covid pandemic in 2020.

But some leaders have taken pride at their use of the public purse to battle this new crisis, which has sent inflation soaring, raised the cost of living and sparked fears of recession.

After announcing €14billion in new measures last week, Italian Prime Minister Mario Draghi boasted the latest spending put Italy, “among the countries that have spent the most in Europe”.

The Bruegel institute, a Brussels-based think tank that is tracking energy crisis spending by EU governments, ranks Italy as the second-biggest spender in Europe, after Germany.

READ ALSO How EU countries aim to cut energy bills and avoid blackouts this winter

Rome has allocated €59.2billion since September 2021 to shield households and businesses from the rising energy prices, accounting for 3.3 percent of its gross domestic product.

Germany tops the list with €100.2billion, or 2.8 percent of its GDP, as the country was hit hard by its reliance on Russian gas supplies, which have dwindled in suspected retaliation over Western sanctions against Moscow for the war.

On Wednesday, Germany announced the nationalisation of troubled gas giant Uniper.

France, which shielded consumers from gas and electricity price rises early, ranks third with €53.6billion euros allocated so far, representing 2.2 percent of its GDP.

Spending to continue rising
EU countries have now put up €314billion so far since September 2021, according to Bruegel.

“This number is set to increase as energy prices remain elevated,” Simone Tagliapietra, a senior fellow at Bruegel, told AFP.

The energy bills of a typical European family could reach €500 per month early next year, compared to €160 in 2021, according to US investment bank Goldman Sachs.

The measures to help consumers have ranged from a special tax on excess profits in Italy, to the energy price freeze in France, and subsidies public transport in Germany.

But the spending follows a pandemic response that increased public debt, which in the first quarter accounted for 189 percent of Greece’s GDP, 153 percent in Italy, 127 percent in Portugal, 118 percent in Spain and 114 percent in France.

“Initially designed as a temporary response to what was supposed to be a temporary problem, these measures have ballooned and become structural,” Tagliapietra said.

“This is clearly not sustainable from a public finance perspective. It is important that governments make an effort to focus this action on the most vulnerable households and businesses as much as possible.”

Budget reform
The higher spending comes as borrowing costs are rising. The European Central Bank hiked its rate for the first time in more than a decade in July to combat runaway inflation, which has been fuelled by soaring energy prices.

The yield on 10-year French sovereign bonds reached an eight-year high of 2.5 percent on Tuesday, while Germany now pays 1.8 percent interest after boasting a negative rate at the start of the year.

The rate charged to Italy has quadrupled from one percent earlier this year to four percent now, reviving the spectre of the debt crisis that threatened the eurozone a decade ago.

“It is critical to avoid debt crises that could have large destabilising effects and put the EU itself at risk,” the International Monetary Fund warned in a recent blog calling for reforms to budget rules.

The EU has suspended until 2023 rules that limit the public deficit of countries to three percent of GDP and debt to 60 percent.

The European Commission plans to present next month proposals to reform the 27-nation bloc’s budget rules, which have been shattered by the crises.

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