Pessimistic Swedes may have a point

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With more than half of Swedish companies expecting to cut jobs this year, don't hold your breath for a turnaround in bank hiring - but it will come, eventually.

A survey by PricewaterhouseCoopers has suggested Swedish firms are among the most pessimistic in Europe about the jobs outlook, with 52% anticipating headcount reductions this year, compared with just over 25% across Europe as a whole.

The brutal recession in the Baltics is likely to continue to act as a drag on any recovery by Swedish banks, which lent extensively to this region in the boom years, Swedish financial markets minister Mats Odell pointed out.

And, while there are signs of some pick-up in domestic banking activity, particularly in loans to the housing market, investment banking at a whole remains pretty moribund, argues Anders Assarson, partner with PwC in Sweden.

"Many of the equity houses are still not as active as before, although there is more business-to-business activity. Their problem is that they really have to wait for the banks to overcome their crisis. When the banks are more willing to invest or take risks, then the equity houses can start buying again," he suggests.

Nevertheless, there is a general sense that the worst of the crisis may now be over. "My feeling is that we will not see any more large-scale cutting of staff or any Swedish banks closing," says Assarson.

But whether this bottoming out actually leads to increased hiring activity later this year is hard to gauge, he says.

"There are signs of a greater willingness to lend, though the situation is still overall quite defensive."

Helge Pedersen, global chief economist at Nordea, agrees it is unlikely any part of Sweden's expert-dependent economy will see a quick turnaround in the jobs' market.

"I believe unemployment will keep soaring throughout this year and into next. The best we can hope for is a flattening out this year," he points out.

The bank has suggested Denmark's economy is still in the mire, although a cautious upturn is expected in the second half of the year.

Finland, similarly, contracted sharply during the winter but is now showing signs of stabilising, with some growth expected next year, while Norway can expect some weak growth later this year.

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