SPEECH DATE:  26/03/2018  SPEAKER:  Deputy Governor Cecilia Skingsley  VENUE:  Handelsbanken, Södertälje  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se  Thoughts on technology and the economy* Thank you for your invitation to visit Södertälje. Many people come here to spend hours playing with their children at the science museum Tom Tits Experiment, which can be found here in town. This is a place where you can experiment with the laws of physics, puzzle over medical phenomena and observe chemical effects. I dare say that many of today’s and tomorrow’s Swedish scientists had their first insights into science there. My speech today does not deal with scientific laws but with how important technological advances are redesigning the playing field for the economy and thus the way in which economic policy is conducted. I will also discuss how the Riksbank assesses the current economic situation and its forecasts for the years ahead. Finally, I will describe how monetary policy can facilitate economic development in Sweden. Technological breakthroughs transform our society. We human beings constantly strive to make things a little better. When we achieve technological breakthroughs, lives and entire societies are revolutionised. Important examples include steam power, which made mechanised industries independent of water power possible, followed by rail transportation.
I would like to stress just two ideas which may help us understand the exceptional situation we face and justify the urgency of the measures Spain needs. The first is that there is a feedback loop between the vicious circles in which the economy is caught and the contractionary forces at play. And if prompt action is not taken, these may inhibit the operation of the factors that should underpin a turnaround towards recovery. The second is that, once the worst of the crisis is behind us, i.e. when international financial markets regain stability and the world economy begins to pick up, the Spanish economy will not be able to resume growth at rates similar to those in the recent past if substantial structural changes are not addressed. This is because we will no longer be able, as previously, to resort to growing debt to stimulate domestic demand. The fiscal drive to date had been notable. This is evident in the rapid deterioration in public finances in recent months. Accordingly, in order to infuse economic agents with confidence, a strategy should be designed immediately to allow a return to budgetary stability, which was of such benefit to Spain. The current priority, therefore, is to focus on applying forthwith structural measures to promote a growth pattern with a greater emphasis on productivity, in contrast to that followed in the past 15 years. Specifically, among the aspects requiring the adoption of immediate measures are those relating to the workings of the labour market.