Swedish Finance Minister Anders Borg said it would be a “big risk” for his country if the U.K. left the European Union because the Nordic nation’s banks and biggest companies rely on London for their funding.
“Swedish banks are refinancing in London and you can’t have one legal system for banking and one for industry,” Borg said today in an interview in the Swiss city of Davos with Bloomberg Television’s Francine Lacqua. “Our multinationals do most of their banking through London and for them to be competitive in the world market, and safe, it’s very difficult to have their banking business outside the EU and their main customers inside.”
U.K. Prime Minister David Cameron yesterday pledged a referendum by the end of 2017 on whether to leave the EU. Borg said last week that a U.K. exit from the union would threaten London’s status as a financial hub.
Sweden, which like Britain hasn’t adopted the euro, would also lose an ally should the U.K. decide to leave the EU. The two countries have been on the same side of the fence in opposing a financial transactions tax and are also the most vocal critics of a region-wide banking union.
Swedish Prime Minister Fredrik Reinfeldt said yesterday it’s of “vital interest” to Sweden that the U.K. stay in the EU. “We view the U.K. as a like-minded country in many of the important issues we are discussing concerning job creation and competitiveness and free trade agreements,” he said at a press conference in Davos.
Borg, who is pushing through stricter capital requirements for Sweden’s biggest banks than those set elsewhere, said in November that the government may limit bank borrowing in foreign currencies by introducing a levy. About 90 percent of short-term funding for Sweden’s biggest banks is in foreign currencies, Mattias Persson, head of the financial stability department at the Riksbank, said on Nov. 27.
Borg said today his push for stricter capital requirements at home has boosted investor trust in Sweden’s banks.
“That gives us a sign we need to continue in this direction,” he said.