This year they are expected to increase by almost 5 per cent, almost 80 per cent of which will come from increased transfers and reduced taxes and charges. An increase in income of this size has only occurred on a few occasions over the past decades. During 2003 and 2004 the increase is expected to be almost 3 per cent a year. It is primarily the strong development in disposable income that is expected to contribute to an increase in consumption over the coming years. Consumption of durable goods, such as fridges and TVs is expected to increase in particular. An expected recovery on the stock market (albeit modest) and a slight rise in property prices are other factors that will contribute to an increase in consumption in Sweden. Public consumption in Sweden is also expected to grow, by approximately 1 per cent a year. BIS Review 37/2002  3  As a whole, industrial activity in Sweden is showing several signs of improvement, although the upturn is still proceeding at a fairly slow pace. The recovery is fragmented. Base industries such as forestry and steel are in a period of recovery and the motor vehicle industry is also showing some improvement. The telecommunications product industry, on the other hand, has experienced a continued deterioration in demand. In mid-April Ericsson presented an interim report that painted a very gloomy picture of prospects for the near future and the company warned of redundancies. This development is a source of some concern and uncertainty.
The Riksbank has therefore been working on internal EMU preparations for several years now. What would the economic consequences of membership of the Eurosystem be for Sweden? Swedish participation in stage three of EMU is essentially a political issue on which the Executive Board of the Riksbank has not taken a stand. On the other hand, earlier General Councils of the Riksbank have declared themselves in favour of EMU membership on two occasions, in 1994 and 1997. So, what economic consequences would membership of the Eurosystem have for Sweden? One advantage, in my opinion, is the strength and stability entailed in belonging to a large currency area rather than a small one. Fluctuations in the value of the currency ought to decline, which would reduce uncertainty. The most evident economic effect of EMU membership would be the transaction gains as a result of the currency borders disappearing. These are the costs and the inconvenience of  6  BIS Review 37/2002  exchanging currency when one visits or trades with different countries in the euro area. Another concrete advantage is that the administration costs companies have been forced to bear to safeguard against undesirable fluctuations in exchange rates would disappear. It is probably of greater significance for the economy that a single currency would promote competition to the advantage of consumers, who would meet lower prices and thereby have more money left in their purses. When all parties use the same currency unit, it is possible to make price comparisons between countries.