SWEDEN - Swedish foundations’ losses on the equity markets have contributed to a drop in the funding of research and development in Sweden.

Estimates by the government’s innovation research agency Vinnova suggest that funds available have fallen by 10 billion kronor (1.1 billion euros) - more than a seventh of the country’s total research a and development spend of 70 billion kronor.

Sweden has also lost its place as the leading country for funding R&D. It is now ranked third behind Finland and Japan.

Research funding in Sweden is provided by the state, local authorities, business and the public and private research foundations (stiftelsen).

The foundations invest their funds on the financial markets. Some invest heavily in equities. The Knowledge Foundation invests 80% in Swedish equities.

The fall in equity prices on the stock market has forced the foundations to reduce the amount of money available for research. The Swedish Foundation for Strategic Research plans to almost halve its annual allocation of grants this year from SKr900m to SKr500m.

The effects of these reductions are being felt by Sweden’s university-based research. The Swedish newspaper Finans Vision reports that the Royal Institute of Technology in Stockholm, which provides one third of Sweden's technical research and tertiary level education, has seen a cut of 1.5 billion kronor in its funds.