Nordic Resilience

Admiration for the Nordic countries used to be the preserve of the British Left, who looked enviously at the success of Scandinavian social democrats and the strong welfare states they had created. But in recent years, the British Right has learnt to love the Nordics too

To British people watching the horrific events unfold over the weekend in Norway, the dignity, empathy and humanity with which the Norwegian people expressed their grief and loss was profoundly moving. Here was a nation unafraid to express its emotions of bewilderment and despair openly and candidly, and to talk about love, togetherness and caring for one another. It wasn't cheap or faux emotion of the kind we are too used to seeing in our celebrity-soaked and often glib popular culture, but real and deep human feeling - whether it was the Prime Minister or the Norwegian Royal Family talking, or survivors and their families.

An ethic of care and commitment to others runs deep in the Nordic character. It is etched into the public services and institutions of Scandinavian public life, which in turn help underpin the remarkable fortitude of the Nordic countries. These are countries have survived wars, massive banking crises, deep recessions, and now a murderous assault on their core values. Details are still emerging about the motives of the murderer, but it is obvious that Anders Breivik wanted to stir up cultural hatred and ferment social strife. However, the reaction to his killings has been the precise opposite. Norwegians have united around their shared values and shown their society to be tolerant, open and resilient.

Admiration for the Nordic countries used to be the preserve of the British Left, who looked enviously at the success of Scandinavian social democrats and the strong welfare states they had created. But in recent years, the British Right has learnt to love the Nordics too, as moderate conservatives have taken power in places like Sweden and introduced market reforms of public services that have served as model for policies such as Free Schools in the UK. David Cameron even hosted a UK-Nordic/Baltic Summit at 10 Downing Street earlier this year, to exchange ideas and nurture political relationships with Britain's Northern European cousins.

This admiration is not misplaced. The Nordic countries are world leaders when it comes to equality, happiness and environmental responsibility. They regularly come top in global league tables of prosperity and well-being. They are beacons of enlightenment the world over.

They are also enormously resilient countries. With the exception of Iceland, the Nordic countries weathered the global recession well. They introduced stimulus packages to offset the weakening of demand in their key exports markets, subsidised employers to keep workers in jobs, and came out of recession strongly, with low government deficits. They now have some of the most robust public finances in the world, with debt: GDP ratios at around 50%, well below the OECD average of 75%. Norway has vast oil reserves, but it invests the proceeds wisely in a Sovereign Wealth Fund, whilst Sweden has a fiscal rule that targets a government surplus of 1% of GDP over the business cycle.

This is fiscal prudence Nordic-style. It doesn't result from low levels of public spending, since the Scandinavian countries are amongst the biggest public spenders in the world. Instead, it results from a healthy mix of innovative, open and export-orientated private sector companies alongside strong, securely funded public services that invest in human capital and help families balance work and family life. Universal, affordable childcare ensures that both parents can work, which means that the employment rate is much higher in the Nordic countries than those in Southern and Eastern Europe which rely on women and extended families to care for children. Public funding also helps the unemployed to retrain and get back to work quickly, minimising long-term unemployment. And public spending on education secures brilliant results: Finland consistently tops the world rankings for the best education systems. The net result is that Scandinavia is full of well-educated people who can contribute productively to society.

There are clear lessons here for Britain. We may never have Nordic levels of taxation but we can learn from the important strategic choices they have made as countries. Investment in universal childcare and strong welfare-to-work policies help achieve full employment and must be key priorities for Britain as our society ages and the cost of looking after older people mounts. Public service reforms should ensure that all children, whatever their family origins, get a first class education. And our tax base needs to be more resilient and broader based, less reliant on revenues from volatile sources such as the City, stamp duty on housing sales, and wealthy individuals.

Our private sector would also benefit from the kind of support offered to Scandinavian companies by the state-owned Nordic Investment Bank (NIB). The NIB invests in competitive, innovative and green businesses, borrowing on the international markets with bonds that enjoy the highest possible credit ratings. As we struggle to grow our way back to recovery, we should be thinking about creating a British Investment Bank to pump prime our national infrastructure and innovative business, and not just limit our ambitions to a small scale Green Investment Bank.

The horrors of the last few days have shaken Norwegian society. But their country has reserves of resilience and is as future-proofed as it is possible to be in today's uncertain world. Of course they have their problems, and Norway is still struggling to come to terms with a traumatic event the like of which it hasn't seen since the Second World War. But if any countries can weather this storm and any future shocks the world might throw up, it is Norway and its Nordic neighbours.

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