(Bloomberg) -- The Swedish population has become less hostile to the idea of adopting the euro as the krona is trading near its weakest levels ever.
A poll published by Statistics Sweden on Wednesday showed 30.6% would vote in favor of adopting the euro. While 50.5% remains opposed to abandoning the krona, support for the common currency is now at its highest level since the beginning of the European debt crisis more than a decade ago.
A steady slide in the value of the Swedish currency has made imported goods more expensive and while it has boosted export industry profits, it has also raised concern that domestic manufacturers won’t have enough incentives to optimize and increase long-term competitiveness.
“I’m pleased to see that momentum is growing for Sweden to join the monetary union,” said Cevian Capital founder Christer Gardell, who has been among the most vocal business leaders backing euro adoption. “It is very obvious that marginal currencies get penalized with a huge discount in a currency world that is dominated by USD and EUR.” He added Sweden’s voice also won’t be loud enough to help “sharpening” the European Union, unless it joins the euro.
Still, the political appetite for the move remains limited, with only one party in parliament, the Liberals, actively pushing for a rethink. While the Liberals are a junior partner in Sweden’s three-party government coalition, their calls for an inquiry into a possible membership in the currency bloc have yet to gain any traction in the alliance.
So far, Finland remains the only Nordic nation that has adopted the euro, while Denmark has pegged its currency to the euro without joining the 20-member common currency area.
Seat at the Table
Karin Karlsbro, a Liberal lawmaker in the European Parliament, said her party mainly favors euro adoption as it would give Sweden a seat at the table as well as help strengthen European unity, while the floating exchange rate has also opened many Swedes’ eyes to the negative effects of a weak krona.
“In the situation we are now, with the current exchange rate, we need to have a discussion on what the solutions are,” she said. “We have reached a point where it is extremely clear what the costs are of being excluded, economically as well as in terms of influence.”
Swedish voters rejected adopting the euro in a referendum 2003 and public opinion has been decisively negative to joining the monetary union since a debt crisis gripped the continent in the early 2010s.
The nationalist Sweden Democrats, who underpin the ruling bloc even though they’re not formally part of the coalition, called for Sweden to leave the European Union as late as 2019, and remain staunchly opposed to adopting the common currency.
The recent weakening of the Swedish currency against the euro is only the last leg of a trend that has lasted for at least decade, and the krona is now more than 30% cheaper in euro terms than it was throughout most of 2013. As the currency has approached its weakest level ever against the euro, it has also raised concern at the country’s central bank, which is seeing its efforts to curb inflation partly thwarted by higher import prices.
(Updates with comment from investor Gardell in fourth paragraph.)
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