16/18  Regulatory framework I would now like to focus on three regulatory challenges with the potential to distort our country’s current regulatory framework: the enormous disparity of regulations at the municipal and regional levels; regulations that depend on firm-size; and regulations that artificially distort the costs of different-sized firms. Firstly, the disparity of regulations at the municipal and regional levels. The OECD published a report in 2015 showing the enormous dispersion of procedures needed in 19 Spanish cities in order, for example, to start a company, to apply for a building permit or to initiate a legal claim. In such a setting, the formalities needed to undertake investment projects proliferate, which hampers building up the business in alternative locations. This may be particularly relevant for certain sectors, such as professional, scientific and technical activities, training and wholesale and retail trade. To correct these distortions, the Law to Ensure Market Unity was approved. This legislation only allows limits on an operator’s freedom of establishment and movement when this is warranted by pressing reasons that are proportionate and in the general interest. Moreover, the legislation places at operators’ disposal claim mechanisms under administrative law that are swifter, in principle, than the previous ordinary procedures. Benefits have clearly arisen from the defence mechanisms for agents fomented by this Law. And thanks to the sectoral conferences being held as a result of the legislation, coordination between regions and municipalities is increasing so as to identify and, as far as possible, adopt best practices at the sectoral level.

But as it was the exaggerated commercial property prices that contributed to the banks’ major losses in the 1990s, I consider that we should monitor future developments in these prices a little extra closely. In recent years foreign investors have become more interested in the Swedish commercial property market. In 2006 foreign investors accounted for just over 40 per cent of all investments in the market. In terms of financial stability, this development has both advantages and disadvantages. More foreign participants mean that the risks are spread to different types of investor, which is positive. It also contributes to making the Swedish property market more liquid. At the same time, it is also conceivable that potentially negative developments in the international market could more easily spread to the Swedish market. If, for instance, an investor were to make losses on another country’s market, it is conceivable that the investor would sell Swedish property to cover the loss. Prices could thus change quickly even without any change in the underlying factors. That was the commercial property market. What about the housing market? Why have house prices risen so much? As you know, house prices have also risen substantially since the mid-1990s. A person who bought a house ten years ago would be able to sell it now for a price more than double what he paid for it then. Prices of tenant-owned apartments have probably risen even more 1 . It is more difficult to analyse prices of tenant-owned apartments. The statistics are more uncertain.