Union asks for guarantees as Sweden mulls adopting euro

STOCKHOLM

The Swedish government has agreed to set up buffer funds worth 10 billion kronor (1.09 billion euros) a year to counter economic crises that could arise after Sweden joins the euro.

The influential Confederation of Trade Unions (LO), which has 2 million members, has said it would only support Sweden's adoption of the euro if the government agreed to establish buffer funds.

Swedes are to vote on whether to adopt the single European currency in a referendum Sept. 14.

LO has expressed fears that Sweden would no longer be able to control its monetary policy independently and, subject to the European Central Bank's monetary policy, would not be able to pull itself out of an economic slump if it adopts the euro.

As a result, the Social Democratic government, keenly aware that it needs LO's support if it is to secure a "yes" vote in the referendum, has been engaged in talks with LO officials for months to find an agreement on buffer funds.

According to the newspaper Dagens Nyheter, the two sides have now reached an agreement under which reserves would be created by raising the budget surplus goal from the current 2 percent of gross domestic product to 2.5 percent.

That would result in an extra 10 billion kronor per year that the government would set aside as reserves.

Public opinion polls have in recent weeks shown a rise in euro opposition. Three polls published last week showed that between 44 percent and 51 percent of Swedes are against adopting the euro, while between 35 percent and 39 percent are in favor.