Sweden’s Reinfeldt warns EU against ‘creative accounting’

Frederik_Reinfeldt.jpg

Ahead of yesterday's EU summit, Swedish Prime Minister Fredrik Reinfeldt criticised both the 'project bonds' and the 'Eurobonds' that were put forward as a way to relaunch the European economy.

Reinfeldt was particularly critical of projects bonds that were launched as an experiment to boost investment in large-scale infrastructure projects.

"It's a classical attempt to do creative accounting by using money which should be found available on a well-funded market and then you come up with a financial construction to make it look like there's lots of money," Reinfeldt told Sveriges Radio.

"But there is a backside to this. There are many who have high expectations that these bond markets will give investments to them, and fewer expect that they eventually will have to pay," he added.

The Swedish prime minister also believes that proposed Eurobonds, supported by France and Italy, would lower the borrowing costs of some euro zone countries to such a level that they would no longer reflect the real economic situation there.

"The rates will probably increase in Germany, and what would probably be even more dangerous; it will be too low in many countries, which in that way will see the pressure from the markets disappear. They will suddenly have access to what could be considered cheap money and start investing though they actually don't have the resources to do it," the prime minister said.

Sweden is an EU member, but has not adopted the euro. To improve the EU's economy, Reinfeldt instead favours free trade agreements and boosting competition within the EU especially when it comes to services and the digital economy.

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