(Bloomberg) — Finns look set to vote out a government marred by political infighting and elect a party led by a self- made millionaire promising a business-driven recovery.
After three years of economic decline, Finland’s next government will need to fix chronic budget deficits, a debt load that’s set to breach European Union limits, rising unemployment and economic growth that’s about half the average of the euro zone.
Juha Sipila, who leads the opposition Center Party, has promised business-friendly policies he says will create 200,000 private-sector jobs. His party is polling about 6 percentage points ahead of the next-biggest groups, according to newspaper Helsingin Sanomat. If he wins Sunday’s vote, Sipila will probably try to form a majority coalition that’s likely to include the euro-skeptic The Finns party.
“Putting together a new, workable government that can turn around Finland’s public finances is the most important economic policy step,” Anssi Rantala, chief economist at Aktia Bank Oyj, said by phone. “The government has to take seriously the gigantic deficits we have in state and municipal budgets, and it has to change the way it implements austerity: most has been through tax increases.”
Austerity isn’t what splits Finland’s political parties. All major groups have pledged some combination of belt- tightening and growth policies. The Finance Ministry estimates 6 billion euros ($6.5 billion) of austerity measures are needed by 2019 to prevent debt reaching 70 percent of gross domestic product. It also says there’s no scope to raise taxes without stifling economic growth.
Sipila has warned that Finland still faces a tough decade. His party wants to continue budget cuts and to lower social security fees. It also plans to loosen labor market regulations to keep deficits from widening as it tries to stimulate growth.
