Brexit Scenario: Stockholm as London's Replacement

♠ Posted by Emmanuel in at 4/15/2016 10:33:00 AM
MNCs decamping from London to Stockholm after Brexit: a fanciful or plausible scenario?
Can Scandinavian social democracy beat English laissez-faire after all in the big-money arena of European global business? The Swedes are now thinking of what seemed unthinkable--or, indeed still sounds implausible: How about Sweden being the replacement for London for any number of European multinationals if the UK referendum results in it leaving the European Union? It would be a turtle-and-hare story of unimaginable proportions. Consider that while London is the world's top financial center, Stockholm ranks a very distant 32nd. Then again, Stockholm may not necessarily be eyeing financial services but rather other industries that would benefit from remaining domiciled in an EU country:
Swedish businesses are preparing for a British exit from the European Union, hoping a so-called Brexit will help Stockholm lure more companies and build its status as a global business hub. While a Brexit “would be devastating on many levels,” both for the U.K. and countries like Sweden, the Stockholm Chamber of Commerce said it also sees opportunities should such an event play out.

“We are convinced that companies with headquarters in the U.K. would have an interest in reviewing where they locate their operations in case the referendum leads the country away from the EU,” Chief Executive Officer Maria Rankka and chief economist Andreas Hatzigeorgiou said in an e-mailed statement. “Sweden and Stockholm would then be an attractive alternative to the U.K. and London.”
While there are a number of world-class companies in Stockholm, it is not exactly yet on terms with London:
According to the Stockholm Chamber of Commerce, the Swedish capital is currently home to the headquarters of nine global businesses, ranking it eighth worldwide. The U.K. hosts 21 global headquarters.

To climb the ladder, Stockholm will probably need to fix its housing shortage. In addition to building more homes, especially rental apartments, the Spotify founders urged Sweden to improve its education system to focus more on programming and to relax corporate ownership rules for employees.
I am not entirely sure if Stockholm can even begin to replace London even outside of financial services firms. There are several other considerations for creating a business capital such as: level of cosmopolitanism, level of internationalization, amount of international travel, amount of trade, the home language (English is certainly an advantage), level of taxation (social democracy is generally more expensive to maintain), size of the national economy and so forth. On these counts, Sweden is an interesting exercise in the social-democratic variant of political economy, but not (yet) the main show.

OTOH, do see the argument of Stockholm's supporters that it is #2 in the emerging "financial technology" area.

Also, see the CEO of the Stockholm Chamber of Commerce, Maria Rankka, writing about this topic.