Given that wage costs make up a large portion of the food sector’s costs, this difference in itself could explain the difference in prices. Detailed studies show that taxes, labour costs and other economic factors (e.g. GDP per capita and population density) may account for around half of the differences in food prices in Sweden and the EU.6 The other half appears to be largely attributable to lower competition pressures in Sweden than in other countries. That the price differences in relation to EU countries are due in large measure to the relative price competition is reinforced by the fact that there are also large price differences within Sweden, where the differences in wages and other costs between regions are small and the taxes the same. Studies7 show that the prices in the south-east and west of Sweden are around 8 and 5 per cent lower, respectively, than in the eastern part of the country. The prices in Greater Stockholm are some 6 per cent higher than those in the Greater Gothenburg area. This reflects the differences in shop structure in various parts of the country, with a much larger market share for low-price chains and other chain stores than for the three major players in southern and western Sweden than in eastern Sweden.
The ATC has also been supported by the work of several working and expert groups. The ESRB’s work so far I hardly need to point out that the ESRB started in a very difficult period when systemic risks in Europe seemed to be greater than ever and when political and economic issues were tightly interconnected. Obviously, the work of the ESRB has largely focused on the immediate challenges of the current situation. But work is also taking place on more longterm structural challenges to the EU financial system. The vicious financial triangle At its June meeting, the ESRB concluded that the most serious threat to financial stability in the EU stems from the interplay between the vulnerabilities of public finances in certain EU member states and the banking system, with potential contagion effects across the Union and beyond. At the last meeting on September 21, the ESRB stated that the risk to stability has increased considerably. I think we can all agree with this conclusion. Over the summer, the weakening prospects for economic growth have further added to the difficulties. We now face a dangerous interplay between fragile public finances, weak banking sectors and low economic activity both at global and EU levels – the vicious financial triangle. It was right of the ESRB to put this issue at the very top of its agenda, in spite of its highly political content. Anything else would have  BIS central bankers’ speeches  5  seriously hurt the credibility of the ESRB.