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Wahlroos: Finnish economy moving in the wrong direction

Successful and outspoken banker Björn Wahlroos says a lack of wage flexibility, loss of market share and structural problems plague Finnish industry.

Björn Wahlroos.
Björn Wahlroos on 11 January 2014. Image: Yle

Björn Wahlroos rose to superstar status in Finland after successfully steering the Union Bank of Finland (Suomen Yhdyspankki) in the 80s and founding the Mandatum & Co partnership in 1993, which went on to become the leading advisor of mergers and acquisitions in Scandinavia. Wahlroos is currently Chairman of the Board at three of Finland’s largest firms: Sampo Group, Nordea and UPM-Kymmene.

Appearing on television on Saturday morning, Wahlroos said he was pessimistic about Finland’s economic situation, even though Finnish competitiveness was recently rated by the World Economic Forum as top in its league and has managed to preserve its triple A credit rating throughout the economic crisis.

“Appraisals of competitiveness like that measure long-term trends and social climate. Our loss of competitiveness is of a much simpler quality. We are just too expensive to be a valid producer for the export market. This is the heart of our problem,” says Wahlroos.

“We see the world economy picking up and hope this reflects well for the Finnish economy. This time, however, the residual effects are much weaker than in previous years.”

He lists three things in particular that are weighing the Finnish economy down.

“Finland’s entrance into the EU was supposed to introduce more flexibility in the development of our economy and wage formation. This has not been the case. Among all of the countries in the eurozone, salaries have risen most in Finland. This makes it very difficult to export Finnish labour to the world. We have lost a huge amount of market share,” he says.

Wahlroos is also concerned about the country’s structural problems. He feels the paramount obstacle is the European Central Bank, which frustrates Finland’s situation by keeping the euro high. He finishes by stating, “All of these things together mean that Finnish industry is not doing very well here in Finland.”

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