East meets West

January 5, 2021

The COVID-19 restrictions put on Boris Johnson as he posed for pictures with European Commission chief Ursula von der Leyen in December were a perfect metaphor for a man so keen to distance himself from Brussels. But despite what happens with Brexit, and the UK’s future trading relationship with the continent, Steven Hugill learns the country will always have an ally in Sweden.

ABBA understood a thing or two about break-ups.

From the pain of divorce expressed in The Winner Takes It All, to the emptiness of Knowing Me, Knowing You, and the unravelling of once tight bonds in SOS, members of Sweden’s biggest musical export were well versed in the difficulties of relationships.

The final throes of the UK’s Brexit negotiations late last year felt like one long ABBA lament.

As a country, Sweden has a deep interest in Britain’s departure from the European Union.

From the very moment the UK’s separation was crystalised in 2016, Sweden has kept its focus firmly on our shores, and assessed in detail Brexit’s potential impact on its relationship with a key trading ally.

To flick through its newspapers and see coverage of Britain’s European Union exit, is like listening to Agnetha’s pining in The Winner Takes It All when she sings, ‘It’s hurting me, now it’s history’.

Only days before Christmas was journalist Ingvar Persson, writing a leader piece in daily publication Aftonbladet, calling for an “orderly” conclusion to Brexit, citing the country’s multi-billion- pound trading relationship.

Earlier in the year, news website The Local SE mourned how Sweden “was losing its best friend in the EU”, while newspaper Dagens Nyheter’s front page depicted its feelings through an image of a golden star peeling from the European Union’s pennant.

The latter later carried a leader page with Britain shown as a boxer sat on its stool, bruised and exhausted by another bout of Brexit negotiations, above a headline stressing, ‘The strongest possible band across the English Channel is now required’.

Their arguments are understandable. During 2019, Britain exported £5 billion worth of goods to Sweden, with items totalling £6.5 billion coming back across the water1.

A number of Sweden’s business flagbearers, such as audio streaming and media services provider Spotify, financial services operator Klarna and Candy Crush Saga game maker King, all have offices in England’s capital too.

But look at the North East of England and the landscape has its own Scandinavian ecosystem.

Britain might have left the European Union, but our region’s relationship with Sweden is stronger than ever.

Stockholm-headquartered Husqvarna Group’s Newton Aycliffe lawnmower factory and Handelsbanken’s regional portfolio already provided a Swedish feel to the North East, but a flurry of lucrative acquisitions from across the North Sea in 2020’s concluding months catalysed that association.

Those deals included Thunderful Group’s approach for Sunderland-based video games studio Coatsink – in a tie-up that could eventually be worth as much as £65.5 million – and Embracer Group’s investment into Newcastle’s Silent Games.

Add in data and software provider Byggfakta Group’s swoop for Newcastle global technology platform NBS and Dellner Bubenzer Group’s rescue of Consett safety and security glass maker Romag, and the final half of 2020 was less The Winner Takes It All and more Take A Chance on Me.

And, says Peter Sandberg, managing director at the Swedish Chamber of Commerce for the UK, the stream of interest in Britain – and specifically the North East – will continue to remain strong, regardless of Brexit.

“With the North East and Scotland facing Denmark, west Sweden and west Norway, there has always been an affinity and a lot of business,” he tells North East Times.

“The UK offers a lot of positive points for Scandinavian businesses.

“One of them is culture and a second one is if you are looking to grow beyond Europe – which very often means the US – the UK is the best launchpad.

“That matters immensely to the Scandinavian economies, which are extremely global in their mindsets.

“Scandinavians and the UK are probably the greatest flag-bearers of free trade in the world, which is why we get along so well.”

Another crucial point, says Peter, is the North East’s status as a hothouse for innovation and talent, as is its ability to offer much more financially favourable opportunities than London.

The capital’s dominant commercial landscape means it is naturally considered by many as the de facto business location for foreign investors to put down roots and grow.

However, Peter says any company taking such a view is actually potentially limiting their progress, with the UK’s regions – including the North East – offering fecund ground for expansion.

“There are a lot of touchpoints,” he says.

“If you are a business, and there’s no need for you to be in London, then the advantages of being in the regions and their clusters are great.

“You can reduce your cost when it comes to space and labour, but you get the same talent – it thrives in those cluster environments – and you probably get greater buy-in from the community around you too.”

A key element in ensuring these positives are amplified is the creation of a welcoming environment, a point agreed by Invest Newcastle director Jen Hartley.

“We have many synergies with Sweden, specifically within the tech sector and the recent acquisitions are testament to the strength of this relationship and confidence in our region as a place to invest,” says Jen, who was previously part of a One North East team that built trade and investment relations with Sweden through the SEAGULL Project.

“Newcastle has one of the largest and most historic gaming communities in the UK, a standing recognised by a Ukie report last year that showed it was one of only four UK cities outside London and the South East where the sector contributes more than £60 million to our regional economy.

“Through our immersive tech specialisms, the support of our world- leading universities and our impressive tech clusters, we see our relationship with Sweden continuing to go from strength- to-strength.”

Peter concurs and says previous work to encourage new investment to the region – that includes the creation of Gateshead’s PROTO building, which bosses say is the first digital production facility of its kind in Europe for animators, film makers and games developers – has really helped the situation.

“One of the first questions for a business will be, ‘do I feel comfortable about entering the market and setting up my business in Newcastle or Gateshead versus London?’

“If you are investing money in acquiring a business or expanding to the region, you need some kind of reassurance that you have growth potential.

“You need role models to provide that and, if you don’t have a lot of Swedish entrepreneurs having previously set up, you need reassurance from authorities, governments and ecosystems that makes you feel comfortable.

“PROTO, and those kinds of hubs, where you feel like you’re going to be taken care of, really help to give businesses a softer landing.”

Jen adds: “International investments play a crucial role in supporting businesses with their global growth ambitions – creating more jobs for our tech talent and giving a much-needed boost to our regional economy.

“The fact investors are seeing our region as one of the strongest tech clusters and a global hub for games development will position us well for further investment, international trade and collaboration opportunities.

“Now more than ever, strategic relationships, like the one we have with Sweden, will support us to build our future economy, maximise opportunities and raise our international profile.”