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“Say ‘nein’ to Merkel”, Finnish MPs urged

Finland's economy remains in recession, with forecasts suggesting things won't improve significantly in the near future. On Tuesday parliament’s economy committee called experts to hear what they thought should be done to improve matters.

Pertti Haaparanta
Taloustieteen professori Pertti Haaparanta Aalto-yliopistosta. Image: Yle

The Finnish economy is not quite the sick man of Europe, but it isn’t too healthy either. Premier Alexander Stubb has already ordered a report from Sweden’s former Finance Minister Anders Borg, but yesterday at parliament it was the Finnish experts’ time to shine.

They came with criticism as well as plaudits. Pertti Haaparanta of Aalto University said that Germany’s Eurozone policies were the biggest problem—and that Finland was also to blame for being an uncritical friend of the Germans. Citing the American economist Paul Krugman, who has been a fierce critic of EU responses to the crisis, he said that the problem has been the tight fiscal line advanced by German chancellor Angela Merkel.

“The best policy would have been that instead of always saying ‘ja’ to Germany, Finland would have sometimes said ‘nein’,” said Haaparanta, who warns that forcing more austerity on France and Italy could bring down Germany’s and Finland’s economies too.

Export slump

“Finnish economic problems stem in large part from the Eurozone’s problems, which in turn stem from the policy that Germany has driven. Germany, Finland and the Netherlands have been the main culprits for this situation,” said Haaparanta.

If Germans don’t start spending money on products from abroad, then exports from countries like Finland will struggle to grow. Since 2011 Finland has run a trade deficit, buying more from foreign countries than it sells abroad itself.

Finding a way out of that situation is key, but if Eurozone policy is slow to change—and Russian sanctions remain in place—Finland will remain in a tight spot, suffering from low economic growth.

Invest in infrastructure?

Sixten Korkman, another Aalto professor, suggested infrastructure projects as one possible stimulus measure. He said that sooner or later more rental apartments will need to be built and now’s a good time as interest on state debt is so low.

“The best place to invest is in growth centres (Finland’s growing towns and cities), which will play a central role in the recovery of exports,” said Korkman.  

All the experts warned against further belt-tightening in the public sector—something that could hit Finns in the pocket and thereby cause a further drop in demand. MPs are currently preparing next year’s state budget—it remains to be seen if they’ll try to reverse course on the austerity path they’ve now been treading for several years.

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