Guestblogger Bruce Dear, Head of London Real Estate, Eversheds is at the IPD/IPF Conference in Brighton, where he comes to some interesting conclusions about what the UK can learn from Sweden.
To Brighton for the IPF dinner and I sit next to a Swedish analyst. Unlucky Bruce, looks like it's gonna be a slow one.
Much more exciting sitting next to Shane Warne and Liz Hurley, as my friend and I accidentally did in the West End last night.
Now Liz Hurley is elegant and sports an exquisite ski jump nose (I've seen it-she does), and Shane Warne now looks (bizarrely) like a skinny Midge Ure, rather than the chunky Blond Bomb Shell whose Ball of the Century bamboozled Mike Gatting, but believe me, neither of them has any answer to the credit crunch.
Whereas the analyst, unpursued by Paparazzi, did. In the early 1990s, the Swedish Government saw the danger of an ageing population, with a stubbornly rising average life expectancy, but without a higher retirement age.
Being Swedish, they came up with an inspiring liberal answer: give people tax breaks to extend their working lives beyond 65. Work into old age because you are incentivised, not because your retirement age has been brutally ramped up.
They have also creatively spread out the public pension pot to fit people's life expectancy. Lower pensions are paid early in retirement and rise as the pensioner gets nearer to average life expectancy. This ensures that the money can't run out-it only goes further, albeit perhaps a little thinner.
Bruce how does that cheer you up? Well, it's better than a country paying everyone a lot of index linked dosh from the get go and then running out, n'est pas?
Moral: don't waste your crisis. Sweden hit serious problems in the early 1990s. The Swedes were huge net buyers of real estate all around the world. People said their only due diligence was spotting buildings from their choppers.
After all, we have them to thank for Tamara Beckwith. SPP bought LET, Tamara's dad's vehicle, for a massive sum just before the 1989 crash. Inadvertently they created the UK's first It Girl and quickly followed this by becoming the highest profile entity escaping the UK market.
At home they had a currency crisis Domestic interest rates hit 500 per cent, just before the fixed exchange rate was abandoned.
But their visionary Government took the chance. They pushed through reforms that have made Sweden a great success story. It now boasts some of the world's most powerful pension funds, a deep retail property market and an enviable quality of life, amidst hundreds of islands fringing the coastline.
Sweden is the place we can all become, if our governments can seize the current crisis and remould our sclerotic social structures into dynamic new channels.
Matthew Paris, our after dinner speaker gave some great examples of finding success in crises. Undistinguished at school, he become head boy when most of the senior boys were sent down for running a marijuana ring. Later, he got the Mellon Fellowship at Cambridge, when the student who'd won it was sent down for excessive familiarity with LSD.
So, you may think the Eurozone crisis is all bad (and it mostly it is), but if we can use to refit our society for the 21st century, then we may find ourselves as a renewed economic power-even if it's partly because some of the others have been unexpectedly sent down.
And my Swedish analyst was charming, so you don't need a ski jump nose or to spin a ball round Mike Gatting's belly (big feat though it is), to be interesting.
Photo by Mrlins via Flickr.
Thanks for the information on the modification of the pension system in Sweden. Seems their politicians did a fine job of making the necessary changes in response to their demographic shifts. I wish I could be optimistic about our government doing the same. Thus far, our politicians are opting for the easy way out -- they're kicking the can down the road. I'm sure they'll kick at least through next year's presidential election. And to the detriment of all of us, they may very well kick much longer. Bill