Speech by Ulf Kristersson

Speech by Prime Minister Ulf Kristersson at the annual meeting of the German-Swedish Chamber of Commerce

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Speech by Prime Minister Ulf Kristersson at the annual meeting of the German-Swedish Chamber of Commerce on 4 May 2023 in Stockholm.

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Your Excellencies,

Ladies and gentlemen,

Thanks for inviting me to this prominent event and community. As you know, much better than most Swedes, there are very good reasons for underlining and understanding the many ties between Sweden and Germany.

At first, it was the Baltic Sea that united us. In the Middle Ages, half of Stockholm’s population – a pretty small one, I admit – spoke German. And the trading network of the Hanseatic League is a great example of how the free movement of goods and services can make life better. 

In modern times, Germany’s and Sweden’s parallel paths to dynamic and industrialised societies are a story about how trade and innovation can build prosperity. Post-war Germany demonstrated to the whole world that peaceful reconstruction based on a sound market economy and democracy was possible. At the same time, Sweden embarked on a profound journey to prosperity.  

We both have our symbols of this remarkable progress: Germany has the Volkswagen Beetle, and Sweden has the Volvo Amazon. 

Today, Germany is one of Sweden’s largest trading partners. Sweden’s goods exports to Germany make up more than 10 per cent of our total exports, and our imports of German goods account for almost 20 per cent of our total imports.

Both our countries are known throughout the world today for their advanced manufacturing industry and strong engineering traditions, leading the way for Europe’s green transition. 

However, this story of progress is not a result of historical accident. Nor was it pure luck that made Swedish and German companies so successful. Rather, it was the right political conditions that created the competitive market economy we are so proud of. 

Today, Europe faces at least three major challenges to this model. 

First, a completely new geopolitical era. Since the fall of the Berlin Wall, we have become used to the rule that more trade leads to more democracy. Wandel durch Handel. But things have changed. Today, we see a global authoritarian trend proving the political scientists of the 1990s wrong. 

China combines a state-run market economy and global trade with power politics and authoritarian policies. And Russia is obviously the clearest example – leaving economic and democratic reform in the 1990s in favour of Putin’s imperialist ambition to erase a free nation from the map of Europe. 

Our joint message has been clear. We will support Ukraine for as long as it takes. But the war and the broader geopolitical challenges also mean we have to adapt here at home. For example, reducing the dependency risks and making our industrial base more resilient. 

Second, the climate crisis calls for major changes. The EU target of reducing net greenhouse gas emissions is ambitious and necessary. 

Ultimately, our obligation is to protect our planet for future generations. Common objectives on biodiversity, environment and circular economy need to be met. 

Third, our mechanical economies are undergoing a digital transformation. Artificial intelligence is making huge strides. These advances will bring new business opportunities but also new risks. Leaders in politics also need to understand both. Leaders in the democratic world have a special responsibility. 

That means it is up to wise governments and responsible investors to manage both these perspectives. The work to get the new Artificial Intelligence Act right is important. 

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How should Sweden, Germany and the EU tackle all of these challenges?

When I was in Berlin in March, speaking to students at Hertie School, I told them that Europe needs to act more like an engineer and less like a firefighter. Europe should focus more on building the robust foundations for a competitive economy, and less on short-term solutions and putting out fires one at a time. 

As holder of the Presidency of the Council of the European Union, Sweden strives to do just this, addressing the geopolitical challenge as well as the green and digital transitions. And I honestly believe that we have to some extent succeeded: competitiveness is back at the top of the EU agenda. For a business community like yours, that might sound self-evident. But trust me, in politics it’s not.

It worries me that the EU is lagging behind its competitors. The US West Coast and the Chinese East Coast are now the world’s two innovation and technology hotbeds. And between 2014 and 2019, European firms grew on average 40 per cent more slowly than their US counterparts and invested 40 per cent less in research and development. 

The EU has still not met its own target of 3 per cent investment in R&D, and that’s 13 years after its adoption. That won’t do.

We need both to deepen the single market and re-emphasise sound competition. State aid can sometimes overcome market failures, but it cannot be the norm. Therefore, the temporary schemes established in response to the COVID-19 pandemic and expanded to clean tech in response to the American Inflation Reduction Act must be temporary and well framed. 

To build the competitive economy of the future, we need to develop the single market. And what could possibly be a better starting point for that than this year’s 30th anniversary? 

At the same time, we cannot remain passive to other countries’ trade policies that might harm Europe’s industrial base. 

We also need to make the free movement of services a reality, one based more on mutual trust than on complex rules. Europe does not need more red tape. It needs less, but better, regulation. Germany and Sweden can be two strong voices for this view in the European family. We deeply regret Brexit, but let’s not ignore the best of the UK’s free market thinking.

Secondly, the Fit for 55 package to fight climate change is almost in place and will be extremely important for directing capital into new green investment. In Sweden and Germany, this has already started. Electric cars and battery factories have become a reality, and soon even electric aviation. Fit for 55 will speed up this industrial transformation. 

And just to show that even good friends sometimes can disagree, I want to stress the importance of all fossil-free energy sources. Sweden is now part of a growing European coalition for new nuclear energy, which will speed up the green transition. It’s my firm belief that we need more, not less, nuclear power.

Finally, we need to deal with the new and harsh geopolitical environment. I’m not a big fan of labels like European sovereignty or strategic autonomy. Not because I’m against sovereignty – nor autonomy. 

But because I believe there’s a big risk of jumping to wrong conclusions. I would stress words like competitiveness, transatlantic cooperation, defence capabilities and the need for global level playing fields in trade and investment. This is not a time for naivety. 

In certain strategic sectors, we need to boost our European production capability. Energy and critical raw materials are such examples. Therefore, the mining industry plays a key role, both for security and for the green transition.

However, I agree with Ursula von der Leyen that the goal should be de-risking, not decoupling. Diversifying supply chains. And that’s why we also need to strengthen our free trade agenda by working with reliable partners who share our commitment to a rules-based world order. 

I also want to stress the importance of a common European strategy on China. So that as Europeans we speak with one voice – with a clear transatlantic link. That is how I believe we best serve our interests and the fundamental values anchored in democracy and freedom. 

***

Ultimately, politics can create the conditions needed for growth, innovation and competitiveness. Or, as an engineer would put it, we can build a stable foundation. 

But it is you, the business community, who must do most of the real work. This is particularly true for the green transition. Modern business has become the new environmental movement. And allow me to mention some of the exciting green Swedish-German partnerships that now are under way. 

The battery producer Northvolt has a strong partnership with the BMW Group and Volkswagen Group that centres around its gigafactory in Skellefteå. And the company is now planning a new factory in Heide in Schleswig-Holstein. This partnership will make electrification of the European car fleet possible.

We also see an increasing number of joint ventures. One example is Milence, between Daimler, TRATON GROUP and Volvo to build charging infrastructure for heavy vehicles. Another is the partnership between Powercell and Bosch to produce power cells for cars, buses and transport vehicles. 

And just off the German North Sea coast, Vattenfall is now building an offshore wind park that will produce enough renewable energy for half a million German homes. 

I could go on, but I would like to finish on a different note. 

Swedes and Germans share a deep history of language exchange. But today, it is often thanks to English that we can do business together. But we shouldn’t underestimate how much knowing another European language can help to create strong commercial and cultural ties. 

German and French are less popular today among Swedish teenagers. And just like the German-Swedish Chamber of Commerce, I am concerned by this trend. English is great, but English alone is not enough. Statistics show that more people are studying Swedish in Germany than the other way around. Of course, Germany is much larger than Sweden, and I am happy about this surprising interest in Swedish language and culture. But this is still somewhat strange. Quite simply, more Swedish children should study German. 

And I am happy to see that the Chamber of Commerce and its members are part of this language mission. Let’s not give up!

Thank you.