Response to interpellation 2023/24:506 on measures against the increasing number of bankruptcies
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
KD argues that increased raw material costs, high interest rates, inflation, and reduced demand are causing the bankruptcies 1 2. KD believes that the government counters this through simplification, strengthened competition oversight, and inflation fighting 1 2, and that previous policies regarding nuclear power have made Sweden vulnerable to price changes 3. KD also believes that companies should be able to rehabilitate themselves 4 and that Sweden needs competitive electricity production and sensible fuel prices 4. S argues that the bankruptcies are a tragedy for owners and employees 5. S believes that the government must support the construction sector through start-up loans and a tax on the banks' excess profits 6, prioritize wage earners over tax cuts 7, and take greater responsibility for those affected by the bankruptcies 7.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Energi- och näringsministern Ebba Busch (KD)
Madam Speaker! Ida Ekeroth Clausson has asked me what I and the government intend to take for measures to break the serious trend of increasing bankruptcies and whether I and the government have specifically analyzed the risks of more companies being forced into layoffs and, in the worst case, bankruptcies, and what the conclusions of the analysis are in that case.
There are many different reasons why companies cannot make the business work economically and therefore may be forced into bankruptcy.
In recent years, the business sector, just like the rest of society, has faced several challenges due to, among other things, the corona pandemic, energy price developments, and inflation. During the year 2023, several, primarily macroeconomic, factors have moved in a direction that implies an increased risk of bankruptcy for parts of the business sector, particularly in certain vulnerable industries.
Increased raw material costs and purchase prices and a cost increase for energy and rents as well as rising fixed costs and interest rates combined with reduced demand can be reasons for the increased number of bankruptcies. The Government notes that employment in the business sector grew strongly after the pandemic. It peaked at some point during the first half of 2023 and has since decreased, as a result of the recession.
Well-functioning markets are a prerequisite for countering price increases. Strengthened competition supervision promotes business life, and therefore the government has, on several occasions, provided funds to Konkurrensverket. Furthermore, the government has appointed an inquiry with a mandate to review new competition tools for Konkurrensverket and decided on a review of the rules on competition-restricting public sales activities, the KOS regulations. Unhealthy competition from the public sector primarily affects small and medium-sized enterprises.
It should be easy to start, run and develop companies in Sweden. The Government is therefore pursuing an offensive simplification agenda and has launched a comprehensive simplification package. The package includes, among other things, a simplification council that the Government intends to establish, which shall provide proposals for simplification measures resulting from existing Swedish legislation. Additionally, we are strengthening verksamt.se, a website for entrepreneurs that gathers services and information from a number of authorities.
This package, in combination with, among other things, the fact that a larger number of authorities in their regulatory letters have received reporting requirements or mandates to prioritize simplification work, will lead to real simplification and effects for companies, which will contribute to strengthening the Swedish economy and competitiveness.
In addition, the government has begun the work of establishing an implementation council, the purpose of which is to reduce companies' regulatory burden and administrative costs. The council shall provide recommendations during the implementation of EU directives in order to counteract unjustified regulatory burdens.
To promote employment within the construction sector so that competent labor remains within the construction sector when the economic cycle turns, the government proposes that the ceiling for the rotavdrag (maintenance deduction) shall be temporarily raised during 2024. The more detailed conditions are set out in the Council on Legislation referral that was recently decided.
Ida Ekeroth Clausson (S)
Madam Speaker! Thank you, Minister, for the answer!
In January, 1,110 companies went bankrupt, an increase of 57 percent compared to January 2023. It is the highest number of bankruptcies in the month of January since 1997. The following month, in February, the increase continued at an almost equally high rate. Restaurants, consulting firms, and the construction industry all show alarming figures. Additionally, many large car dealers went bankrupt.
It is the 19th consecutive month of negative development, and more industries are showing very dark figures. Furthermore, we see that significantly more employees are affected by bankruptcies every month. Today, Ekot reported that unemployment is increasing, and those who are already extra vulnerable are hit hardest.
Bankruptcies are, of course, most often a tragedy for the one who has built up and runs the company, but when companies with employees collapse, more than just that are affected. In times of high prices for food, electricity, and fuel, unemployment hits harder than before. We are reached by reports from people who are forced to move away from their homes and who do not even have the means to afford food. This is not worthy of Sweden, and it is something that the government should take seriously.
If the way in which individuals are affected is not enough for the government to act, it is also the case that the state treasury is hit hard when bankruptcies increase. This year, the state has lost a total of half a billion on deferred tax debts from bankrupt companies.
The Konjunkturinstitutet's statistics show a continued pessimism among both households and entrepreneurs. The brightening that many had hoped for during the spring and summer is not visible among the entrepreneurs, and much indicates that unemployment will increase even further this spring.
It is a tough and sad development we are now seeing, with many company bankruptcies. It is a tragedy for both owners and employees and the people who are affected. Add to that the uneasy economic situation that Sweden finds itself in.
I wonder again: What is the government doing for those whose companies have been declared bankrupt or who risk having to be declared bankrupt? What measures does the Minister and the government intend to take so that more do not have to meet the same fate?
Energi- och näringsministern Ebba Busch (KD)
Madam Speaker! I share Ekeroth Claussons assessment that it is an exceptionally tough situation. The pandemic and the recession in combination have hit many Swedish companies hard. If we additionally add the entire inflation situation, the energy crisis that we have seen and a war in our part of the world, we get a tough situation.
Sweden continues to have a serious economic situation, but we now see signs that we are beginning to succeed in getting a grip on inflation. It is too early to say that we are in port or at the finish line - we are far from that - but we see positive signals that what we have done so far is nevertheless heading in the right direction and has the desired effect.
Increased raw material costs and purchase prices, cost increases for energy and rents, and rising fixed costs and interest rates on top of this combined with reduced demand are clearly factors behind the number of increased bankruptcies.
I want to reiterate that the reason the government has presented a budget that rests heavily on fighting inflation, fighting inflation and fighting inflation is that it hits everything, and at the other end, we are making the regulatory simplifications that should have been made a long time ago.
It is easy to find broad political support in this chamber that the regulatory burden for companies should be reduced, but if we look at how the regulatory burden has developed in recent years, we see that governments of different colors have been guilty of only adding to it.
We in the current government also struggle with the same challenge: to combat crime where companies are used as a front or where one works through different companies. We are trying to regulate and stop this and at the same time ease the total regulatory burden for all law-abiding companies.
The basis of the policy that will make Sweden slowly but surely get itself out of the very tough situation that many entrepreneurs in Sweden find themselves in is, therefore, fighting inflation and simplified regulatory burden.
Ida Ekeroth Clausson (S)
Madam Speaker! Thank you once again for the answer, Minister, and for the analysis of what it may be due to that more companies are now going bankrupt. Regulatory simplifications can certainly be a way to go to make it easier for entrepreneurs.
The Minister mentioned in his previous contribution a temporary increase of the rot deduction to promote employment within the construction sector. I think it is positive that the government is thinking about the construction sector, because it is an industry that is very difficult to tackle. But the truth is that companies that carry out rot-jobs are laying off staff today. The increased rot deduction does not start to apply until July 1. Furthermore, it is not certain that just this measure creates more jobs without it instead becoming a larger job of a single renovation. This is something that is extra alarming right now when so many construction companies are going under. According to Byggnads a-kassa, unemployment is higher now than during the covid pandemic, and the curve points steeply in the wrong direction.
We can see a widespread housing shortage in Sweden. Despite this, the construction rate has come to a standstill. According to Boverket's forecast, fewer than 20,000 homes will be started during the year, which can be compared to 59,000 in 2022. There is no doubt that the government must do more to support the construction sector and increase the pace of housing construction in Sweden. The need for financial support to get started and maintain the construction rate is great, both for economic reasons and for housing supply reasons. There are proposals here, and they are very urgent. We actually have the means in Sweden for some measures. It is a question of priorities within the framework of a balanced economic policy where one continuously fights inflation and brings it down.
We Social Democrats have proposed starter loans for first-time buyers. We have proposed production support to municipalities such as Skellefteå and other growth municipalities where more housing is needed. We have proposed state credits to keep costs down. So, there are three clear proposals here that we can get started with in purely economic terms. There are thousands of people within the construction industry in Sweden who have lost their livelihood, and here we can see that the government stands helpless.
We also have a concrete proposal to let the banks take a greater responsibility for the economy by introducing a tax on a portion of the banks' excess profits - not all the excess profits but a portion of them - so that the money that the banks have earned from their bank customers can be returned to those who truly need support right now.
Alongside the difficult economic hurdles that the Minister for Enterprise mentioned, there is something else that makes things difficult for entrepreneurs today. Fraud with taxes, fees, and public procurement distorts competition and makes things difficult for serious, hard-working entrepreneurs. I would therefore like to take the opportunity to ask the Minister for Enterprise what she and the government are doing to promote healthy competition and combat crime in the working life.
Energi- och näringsministern Ebba Busch (KD)
Madam Speaker! I will try to manage to change the cassettes in my head. But I will start with the interest rates which have truly skyrocketed through the roof and not all the way to space but almost. It is clear that it affects the construction sector enormously. Previously, one perhaps paid 1,000 kronor per million on construction loans. If one had 3 million in construction loans, one paid 3,000 kronor for it. Suddenly, one pays 12,000 kronor for it instead. One begins to wonder how it actually was at the beginning of the 1990s and how bad it can become. This has caused a huge setback in the entire construction sector because the demand and the purchasing power are not there.
One must remember that this has occurred at the same time as we have seen sky-high fuel prices and sky-high electricity prices. Some of that has to do with a miserable global situation. Putin's horrific and full-scale invasion of Ukraine has affected a lot when it comes to both electricity prices and fuel prices. But in addition to that, we pursued our own domestic policy where we removed nuclear reactors. We did indeed push for a lot of more power production, but principally exclusively weather-dependent such. That made us much more vulnerable to these price changes and to changes in our global environment. There is no government that can curb what Putin chooses to do. But we can decide how vulnerable we in Sweden shall be to this.
This is one reason why we have shifted the energy policy, that is to say that all types of good power are needed as long as they are fossil-free. We shall not choose the path that Germany has chosen and which shuts down nuclear power plants, is very satisfied with and markets wind power and solar power. But on the other hand, one extends one's dependence on coal and gas instead. That path Sweden shall not take.
This is what will allow us, in the long term, to have other prices for electricity and continue to be an attractive country to invest in and to live and reside in for ordinary households.
The second part concerns the reduction obligation. There, we have encountered some resistance in this chamber, even though the majority has been here to lower the reduction obligation. It is not possible to vaccinate fuel prices against things in the outside world or against world market prices. But it is possible to decide whether the policy, for example, should add 4 or 6 kronor, or whatever it may be, in a situation where the price was up at 26 kronor. Now we have chosen to go the other way, to use all available political means to contribute to lowering the price.
There is a reason why I highlight these parts. When prices risk skyrocketing as they have done with electricity and fuels, it hits the business community as a whole, and it affects everyone who runs a business. It is an important measure moving forward to do this homework, because there is no quick fix here.
When it comes to the question of the construction sector specifically, I want to emphasize that Housing Minister Andreas Carlson is rolling out a range of measures concerning regulatory simplifications there as well, to justify and facilitate the construction of even smaller homes, which in turn are a crucial part of the moving chain.
I realize that I have done what I hate politicians doing, which is not answering the new question that the member of parliament interjected about healthy competition. But I will gladly return to that. I became so engaged in the other parts and how we combat crime within the business community.
Ida Ekeroth Clausson (S)
Madam Speaker! This provides the basis for a new interpellation.
We can observe that in the SD government's Sweden, people stand in food lines, schools are striking, healthcare is in crisis, and the number of bankruptcies, which this debate has been about, is increasing. Very much is unfortunately going in the wrong direction.
What is required now is a policy that puts ordinary wage earners before tax cuts for high-income earners. Sweden needs a different economic policy, where, despite an inflation economy, we must see the opportunities we have. The fight against inflation should not primarily be borne by those with low or normal incomes, but this is something we must do together.
The Minister mentioned in his answer that it is important to retain competence within the construction industry. But the truth is that there are more industries that risk being drained of competence when companies disappear. And the starting distance risks becoming long when the economy begins to grow again.
The government needs to prioritize here and keep the companies running during the economic crisis we are currently in, so that they are ready to start up when the economy turns. But the government also needs to take greater responsibility for those who are affected by the bankruptcies that we can still see are occurring.
More needs to be done for Sweden to be the strong welfare state that we can be proud of, and that is where we are not right now.
Energi- och näringsministern Ebba Busch (KD)
Madam Speaker! I thank Ida Ekeroth Clausson for this interpellation. It sounds like I have succeeded in giving myself more work. One tries to answer a question and gets more questions.
I think it has been a rewarding discussion, where we have been allowed to point out the need to now not just put bandages on the wounds.
The previous government found, many times in cooperation with the Riksdag, profitable ways to mitigate the effects of the pandemic, which was right and proper in a situation where we had no idea how long the pandemic would continue. Now the situation is different, and we cannot keep things under wraps indefinitely; instead, it must be possible for people and these companies to rehabilitate themselves and be able to stand on their own feet again, or alternatively find another path.
Then the basis must be that we ensure Sweden has competitive and secure electricity production with power where it is needed when it is needed and that we have sensible prices on fuels. It should not be so expensive to be Swedish. We shall fundamentally have an economic policy that fights inflation and ensures that it always pays to work and to be a part of the building of society Sweden moving forward.
There are the entrepreneurs, our job creators, and I look forward to being able to return with further information regarding the simplification work. In that area, we have only just begun.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.