The investment boom will start in the world, where the chips of the coming years or decades will be distributed in real life, writes Jussi Pellinen, the forerunner of HS’s economic and political editorial office.
HS said on Tuesday, two economic news stories that tell a lot about how big the forces in the economy are raging right now.
First, the smaller amount, which is also huge. According to HS Vision monitoring In January-May, Finnish startups have raised at least 1.1 billion in private equity investments. Software, services, hardware: investors from Finland and abroad are now putting money at a record pace into Finnish companies in order to get them back in multiples later.
For comparison: Throughout last year, Finnish startups received a total of just under a billion in funding. Now the billion-euro mark was broken in May.
Then bigger a sum that also indicates a big turnaround. According to EK’s investment survey industrial fixed investment is on the rise this year to an all-time high of EUR 5.2 billion. Growth from last year would therefore be as much as 19 percent.
Alone, the numbers may seem detached: billions are buzzing, whatever. Looking further afield, however, they say that a big wave of renewal is starting in the world, with chips being distributed for the next years or even a decade.
Debt recovery after the coronavirus is becoming concrete. Cheap loan money, huge government subsidies, and a promised spike in demand are creating conditions in which Western companies seem to have finally woken up to investing and sneaking money by investing in new growth for the future.
This has been awaited for a long time. Business investment in Western countries has dragged on due to a declining population and global competition, among other things. Korona seems to have broken this cap: companies in the United States, for example, are expected to invest exceptionally much this year and next, the British magazine The Economist reported a couple of weeks ago. Globally, investment is expected to be well above pre-pandemic levels next year.
The pattern is also in Europe clear. EU subsidies, public money and companies’ own resources are being transformed into factories, power plants, roads, software, service concepts and research projects. Part of the money goes to startups in the hope of inventions, part to the production facilities and services of large companies, part to making the energy system climate-sustainable.
The automotive industry in Europe is rapidly experiencing the production of batteries and their parts and chemicals, electric car charging infrastructure and new energy and heating solutions. In Finland, the forest industry invests in “bio-based products”, ie in practice pulp and its derivatives, and invests in research.
In northern Sweden, hydropower is being followed by a very large wave of investment in the renewable economy, including batteries. Because of that Up to one hundred thousand new inhabitants are expected in the northern part of Sweden over the next ten years as workers and their families move to the area, SVT said in May. In total, an investment pot of up to EUR 70 billion is promised for the region over the years. The change is huge.
About this news it should be clear that right now Finland should be awake too. The transition to a sustainable economy is in full swing, and its chips are being distributed on the table right now. If Finland wants its share, it must get involved in the investment boom that is starting around.
The financial crisis and the collapse of Nokia were followed in this sense by a lost decade that cannot be afforded now. Someone will soon make a lot of money fighting climate change, and the more of these factors can be found in Finland, the better.
At the same time careful it is also worth being decision-makers and our citizens. When money starts to move, it can also get lost. This is especially easy when money is loose.
As many as 440 million of the investment startups of Finnish startups received the platform company Wolt, which runs the transport of restaurant food – the investment can be profitable, but at least not unequivocally the most productive capital allocation in the world.
But if the investments really start now and are still successful, they will grind the well-being of Finland and its neighbors for a long time to come. Therefore, it is essential that Finland stays involved in the race, gets its share of the pot. It is important that companies emerge from the corona at the forefront of Europe and that they dare to be involved in the race by investing. For the same reason, Finland should also be a destination where you want to invest from abroad.
The next time companies or politicians talk about the conditions for investment, it’s worth listening to what they offer as their fins. It may be that the game is now really underway.