The euro in Denmark and Sweden

Citation

Hemmer Pihl, L. (2002), "The euro in Denmark and Sweden", European Business Review, Vol. 14 No. 4. https://doi.org/10.1108/ebr.2002.05414dab.003

The euro in Denmark and Sweden

Luise Hemmer Pihl

Keywords: European monetary system, Denmark, Sweden

Like the UK, Denmark and Sweden did not join the euro on 1 January 2002. Denmark took the decision to stay out on 18 May 1993 when a majority said "Yes" in the second Maastricht referendum, because a protocol from the Edinburgh Summit accepted four Danish opt-outs from the Maastricht Treaty, one of these being an opt-out from the single currency.

This does not, however, mean that Denmark is not in the Economic and Monetary Union of the EU. The opt-out applies only to the third phase of the EMU, which introduced the common currency. The Danish government has decided to tie the krone to the euro, as it was formerly tied to the D-mark. At the time of writing, one euro corresponds to 7.4 kroner.

Politicians argue that in these circumstances Denmark might as well join the euro and "get a seat at the table where decisions are taken". This argument has been refuted very effectively in cartoon form, by a drawing of the Titanic (reputedly unsinkable) and a small boat tied to it with a rope, which may be cut in an emergency.

Denmark has also been doing well economically since 1 January. Nevertheless, the massive advertising campaign to boost "our new money" has resulted in opinion polls in favour of Denmark's joining the euro. In March 2002, 57 per cent said "Yes" and 35 per cent said "No". This result contrasts with the historic referendum on the euro on 28’September 2000, when 53.1 per cent of Danish voters said "No", defying the main political parties and many sections of the media, which urged a "Yes" vote. The "No" campaign had few resources at its disposal and yet was able to strike a chord with Danish voters.

The success of the grassroots campaign against membership of the euro in 2000 suggests that there is a rich vein of scepticism within Danish society about aspects of the EU's "project". Danes are an outward-looking people and so are neither "anti-European" nor even hostile to the euro as such. However like the Swedes (and even more so the Norwegians), they are concerned that the EU is too centralised and unwilling to surrender any further aspect of their independence, economic or political, at least at this stage. Because of these important political and cultural factors, the current popularity of the euro will not necessarily be reflected in future referenda.

The politicians' enthusiastic talk of the euro as a future "strong" currency is belied by the practical experience of home owners, an increasing number of whom are taking mortgages in euros because everybody expects that the euro will have lost value when the mortgages are to be honoured in five years' time.

Denmark is a country with a lot of tourism, as people from Germany, Sweden and Norway especially visit our beaches and amusement parks. This has led over the years to a pragmatic attitude to the currencies of these countries, which are usually accepted without much fuss – and so there is no reason why the euro should not be treated in exactly the same way. D-mark or euro as payment from a German family buying petrol and ice creams at a motorway station will in practice be more or less the same thing.

The Danes themselves are some of the world's foremost plastic card users. Almost every Dane over 18 who does any amount of travel has a so-called VISA-Dankort, which has a double face. In Denmark it is a Dankort, accepted by all banks and almost all retailers in Denmark, bound together in a controlling electronic network, while the other side of the card is a VISA Card to be used abroad as a normal credit card. Thus the Danes seem likely to accept the euro as a practical second currency while sticking to the krone for political and symbolic reasons.

Sweden is, in contrast to Denmark, not a member of the EMU and thus in a situation much like that of the UK. Sweden's popular Social Democratic prime minister, Göran Persson, wants the country to join when certain economic conditions, much like those set down by Britain's Chancellor of the Exchequer Gordon Brown in 1997, have been fulfilled. But Mr Persson's trade minister, Leif Pagrotsky, objects to this policy. EUObserver.dk quotes Mr Pagrotsky on 28’January 2002:

After having experienced the inflation crises during the seventies and eighties and the early nineties I have been strengthened in my conviction that we need a national interest policy in order to fight inflation.

Mr Pagrotsky is supported by three other Swedish cabinet ministers. According to them, it is not in Sweden's "national interest" to join the euro.

Around New Year 2001/2002, a majority of the Swedes backed the euro, according to opinion polls. But now EUobserver.com reports:

Euro enthusiasm is falling in Sweden, according to two fresh opinion polls, writes Swedish paper Dagens Nyheter. But, according to the latest Scop poll, there is still a narrow majority of 51 per cent in favour of Swedish euro membership, while 46 per cent would say "No", and 3 per cent are undecided. In the course of the past month, the "Yes" side has sunk by 4 per cent, while the "No" side has gone up by 6 per cent.

What is certain is that in both Scandinavian democracies, the debate will run and run.