Sept. 14 (Bloomberg) -- Swedes voted against adopting the euro, halting the expansion of the currency union in western Europe as the largest Nordic economy outperforms single-currency countries including Germany and France. Some 56 percent opposed joining the currency union in the vote marred by the killing of euro campaigner and Foreign Minister Anna Lindh, the election authority said. Forty-two percent voted in favor and 2 percent cast a blank vote. About 81 percent of the 7.1 million people eligible to vote took part.
The vote is a setback for Prime Minister Goeran Persson and companies including Ericsson AB, which led the campaign to make Sweden the 13th member of the currency union stretching from Lisbon to Helsinki. Swedes were concerned that joining would crimp economic growth and force the country to cede sovereignty. ``I interpret this as a vote of no confidence in the euro- zone's economy,'' said Rajeev Demello, who manages the equivalent of $5.8 billion in bonds at Pictet & Cie. in Geneva, Switzerland. ``This is another signal Europe needs to listen to.'' The $8 trillion-economy of the euro area shrank 0.1 percent in the second quarter as Germany, Italy and the Netherlands fell into recession. The economies of Sweden, the U.K. and Denmark, the three European Union members that haven't adopted the euro, will outpace the currency region this year, the EU estimates.
Jobs and Surpluses
Sweden's economy will probably grow 1.4 percent in 2003, about twice as fast as the single-currency area, the EU predicts. The jobless rate is 5.3 percent, compared with an average of 8.9 percent in the euro nations. The budget has been in surplus since 1997, while Germany and France are breaching EU rules limiting deficits designed to the euro. ``We will all take responsibility for this outcome,'' Persson said after the vote. ``This shows a deep skepticism for the entire euro project among Swedes. We could have picked a better time'' for the referendum, he said, citing Sweden's economic performance compared with its euro neighbors. The krona weakened to as much as 9.21 per euro in Stockholm today, from about 9.11 late Friday, according to Bloomberg data. The currency would have been pegged at about 8.8 per euro if Swedes had backed single-currency membership, traders estimated.
``It would have been nice if the opposite had happened,'' said Michael Treschow, chairman of Ericsson, the world's largest maker of wireless networks, in an interview with Sweden's TV4 television channel. ``Those whom I represent have an overwhelming belief that would be good for their companies.''
Staying Out
Anna Lindh, who died on Thursday after a knife attack in a Stockholm department store, appeared on posters urging people to vote to adopt the single currency saying, ``if we choose to remain outside, we'll be left behind.'' The foreign minister and Ericsson Chief Executive Carl-Henric Svanberg warned that companies may cut Swedish investment if the euro is rejected. Joined in his campaign by executives at companies including truckmaker Volvo AB, Persson said the euro would enhance Sweden's political influence and increase trade with the single-currency area. Forty percent of Swedish exports go to the euro region. Persson, who has said that a second euro referendum wouldn't happen before 2010, also argued that the euro region's lower interest rates would benefit consumers as well as businesses. The European Central Bank cut its benchmark refinancing rate to 2 percent in June. The key rate in Sweden is 2.75 percent.
``I voted `no' and it was an easy decision,'' said Kristina Mattsson, a 31-year-old business consultant, outside a polling station in downtown Stockholm. ``A currency union doesn't work in a region with so many different countries and economies.''
Health, Education
Persson's ambition to link the $301 billion-economy to the euro region failed on concern that it would lead to cuts in state funding for healthcare and education. Sweden has the world's third-highest level of development, according to a United Nations survey based on a combination of education, health and income indicators. Swedes aren't alone in their skepticism about the euro. In the U.K., Prime Minister Tony Blair decided in June against holding a referendum as polls showed a majority wanting to keep the pound. Among Danish voters, who have twice rejected the euro, support fell to the lowest in almost two years in a Monday poll for the Boersen newspaper. The Swedish outcome ``could offer support to claims that there is an alternative life outside the euro zone,'' said James Knightley, an economist at ING Bank NV in London. ``One that offers more to its citizens in terms of political freedom and prosperity.''
Defeat for Persson
The Scandinavian experience suggests Sweden won't hold a new vote on the euro anytime soon. Oil-rich Norway, which rejected the EU in 1994, has no plans for another referendum. Denmark probably won't hold a vote on the euro before 2006, economists said. ``This was about moving power to Europe and people don't like that,'' said Nils Lundgren, former chief economist at Nordea AB and an opponent of Sweden adopting in the euro, in an interview on Swedish state television SVT. Persson's defeat probably won't force him to step down, political analysts said. Instead, Swedes may rally behind him as they seek stability after Lindh was stabbed on Wednesday at a Stockholm department store, said Arne Modig, head of research at Stockholm-based pollster Temo.
`Statesmanlike'
The prime minister announced the death of Lindh, seen as his possible successor, at a press conference on Thursday morning and later that day held a televised speech to the nation saying, ``we have lost one of our most important representatives, our face to the world.'' ``He was sober and statesmanlike but with a touch of humanity,'' said Richard Schlasberg, a 30-year-old brand manager who voted for the single currency. ``Then you can ask yourself how he handled the euro question. He was a bit inflexible.'' //www.bloomberg.com