Prime Minister Fredrik Reinfeldt. Photo: Jessica Gow/Scanpix

Euro is not the problem: Prime Minister

Sweden is vulnerable to the economic turbulence caused by the eurozone crisis, Prime Minister Fredrik Reinfeldt told Swedish Radio on Saturday.

“We already see the affect in the drop in [consumer] demand. What’s happening in southern Europe now has an effect on the whole world,” he said.

But he would not be prepared to pledge Swedish support for a European bank deposit guarantee, which he said would simply punish countries that have managed their finances and reward those that have not.

“There are different views on this. Some [EU] countries want to cover bank losses entirely but Sweden has chosen another way. We have introduced charges to cover bank losses here,” he said.

“And as we have done that, we wouldn’t want losses from Spanish banks to be passed on to savers in Sweden.”

Asked about the feasibility of the euro as a common currency, the prime minister said it was a “good idea in the long term” and that it was not the euro that caused the current crisis but mismanagement of public finances.

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