It may come as a surprise to those of you who remain under the impression that all Sweden has to offer is Abba and saunas, but Sweden is at the very forefront of the new economy.
According to a recent survey by World Times Information, Sweden is top of the table, just ahead of the US, when it comes to investment in IT and telecoms in terms of the percentage of its gross domestic product. The UK comes in third place. As for investment in research and development, according to Eurostat, Sweden is top again, just ahead of our neighbour Finland. The UK is seventh.
According to Eurobusiness magazine, Sweden is home to more of Europe’s top-500 businesses than any other country, with Switzerland in second place and the UK in third.
How have we achieved this success in the brave new world of the internet? Sweden, in terms of infrastructure for the new economy, is among the best in the world. It also has a tradition for adapting quickly to new technology and that has continued into e-commerce. For example, 20 per cent of bank customers now do their banking through the internet and we are second only to the US in the amount of e-business we do. We have more than one computer for every two people, again just trailing the US.
Another factor is the relatively high level of education in Sweden, which produces a very highly skilled labour force. We have always spent substantial amounts of money on education but in the last decade spending levels have increased sharply.
We are now becoming recognised as a world leader in development of the internet and new media and this is encouraged by the entrepreneurial climate we have in Sweden. It is easy to start up a new company in Sweden. The procedures are unbureaucratic compared to many other countries, as our government departments are run in an informal way. This has encouraged many new media companies which have had a high level of success.
The informal style of government is also reflected in many companies which tend to have very flat management structures. This lack of hierarchy motivates workers and our productivity levels reflect this.
Obviously, the large law firms in Sweden are also reaping the benefits of this new economy boom. Most of the largest are now looking to widen their services into Europe, although the firms are focusing on different parts of Europe. Swedish firms generally have a very international outlook.
In the past few years, we have seen many small technology start-up clients who have developed a high level of technological expertise become very attractive to US Nasdaq companies. We are now dealing with a high number of acquisitions and strategic investments by US companies.
Perhaps surprisingly, the interest shown by US and UK law firms on moving into Sweden has been low. This may be due to a prejudiced perception that the tax level here is prohibitively high.
This is not true. While personal tax levels may be high (although they are beginning to fall), with the highest level set at approximately 53 per cent with an additional levy for social services on top of that, the maximum rate of corporation tax is 28 per cent. But because there are many business expenses that can be offset against tax, the effective corporate tax rate is approximately 20 per cent. This is one of the lowest rates in Europe.
Perhaps inevitably, we too are facing a legal recruitment crisis comparable to the UK and US. It has sneaked up on us very quickly with the situation coming to a head in the past couple of years. This is the price we pay for living and working in such a buoyant economy.
Per Magnusson, a partner at Magnusson Wahlin, was talking to Fiona Callister.