THE idea that the “Nordic model” of capitalism would be held up as an economic paragon around the globe would have seemed highly unlikely only a couple of decades ago. In the early 1990s, the region was in the midst of its own financial and economic crisis, as it sought to shift away from tax-and-spend public policy to a more balanced fiscal approach.
The Nordic countries’ response to this challenge in the intervening years has been a resounding success. Today, they cluster at or near the top of global rankings on everything from health to happiness – not to mention economic competitiveness.
This feel-good story was very much evident during our recent visit to Finland, Sweden and Norway. There are many opportunities for UK firms to partner with their Nordic counterparts within the infrastructure, energy, biochemical and pharmaceutical sectors – as well the digital economy.
And having worked for a Swedish bank for 30 years, I also believe that the Nordic region can invite interesting comparisons to other parts of the world – including the City.
The Nordics have developed a strong relationship between politics, business and banking in recent decades. They work together closely, almost an adjunct of industrial policy. Whether it is financing dams in Iceland, export trade from Sweden or factories in Finland, banking in Nordic countries is very much part of society not separate from it.
The primary role of the banks is seen as delivering finance to tangible projects and enterprises.
This healthy attitude towards capitalism has helped to develop a positive environment to foster innovation. Stockholm, for example, is a leading centre for fast growing tech companies like Spotify, in addition to established multinationals like Ericsson. Elsewhere, the staggering success of Angry Birds originated from Finnish computer game developer Rovio Entertainment.
Technological innovation has been combined with active, long-term ownership of companies. As such, Nordic corporates have been more able to plan for the long haul, which in turn has underpinned the success of their exporters.
Since the 1990s, the Nordics have managed to develop a healthy partnership between capitalism and wider society. As the debate over the future of UK banking continues, it is important that we draw the right conclusions from these successful models.
Healthy capitalism does not require a strictly legal approach. Box-ticking has never been the best way to regulate a bank or to foster an economy that supports innovative businesses.
We need to find a commonsense approach, where the moral works hand-in-hand with the legal. I hope that the Parliamentary Commission on Banking Standards will recognise this in when it reports shortly on professional standards and culture across the industry.
I believe we are moving towards a healthier capitalism in the UK but, of course, no system – not even the Nordic one – will ever be failsafe.
Roger Gifford is lord mayor of the City of London.