Finland (also) turns right

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Finnish Prime Minister Sanna Marin lost in early parliamentary elections. National Coalition Party leader Petteri Orpo declared victory, with his centre-right party winning 48 seats, leaving Marin’s Social Democrats in third place (with 43 seats), behind the far-right Finns Party which won 46 seats. The result reflects a shift in political sentiment in neighboring Sweden, where a more introverted and fiscally conservative government led by the Moderate Party took power from the Social Democrats last year, and an extreme anti-immigrant force gained ground. With the party of the 53-year-old Orpo winning the most seats in parliament, he is on track to become prime minister. However, for this to happen, Orpo must start coalition talks. Political scientists point to two potential coalition partners: the first is the Finnish Social Democratic Party led by Marin, the second option is to reach out to Riikka Purry’s Finnish nationalist party. The result is good news for bond investors, but large changes related to the development of the situation in Finland are unlikely, observe Jan von Gerich and Juho Kostiainen, analysts at Nordea Bank, pointing out that the next four years will probably bring tightening of fiscal policy. Orpo has a lot of experience in politics. In 2014-2015 he was the Minister of Agriculture and Forestry, from 2015 to 2016 he was the Minister of the Interior, and in 2016-2019 he was the Minister of Finance. He is also known to enjoy fishing and spending time in his 100-year-old cottage without running water. While Orpo might agree with Marin on an ambitious climate policy, the approach to fiscal policy seems irreconcilable. The issue is a priority for the Orpo, which has been vocal in its criticism of the way the Marin government manages public finances. “We need to fix our economy,” Orpo told reporters. “We are a clear alternative to a left-wing government. People are very worried about the economy.” The Orpo party has pledged to cut spending by €6 billion, while Marin rejects any cuts. The coalition also seems to be dubious due to the mutual relations of those politicians who did not spare themselves harsh words during the election debates.

Second option

With the Finns Party, the winner of the election generally agrees on economic policy, but argues strongly about immigration and climate policy. The National Coalition wants to lure workers to Finland, which stands in obvious opposition to the anti-immigration policy of a potential coalition partner. On climate, the Finns Party has the voices of those who think too much fuss is being made about reducing emissions. “My party has now managed to precisely define the state’s problems and propose a clear alternative to combat them,” Purra said, pointing to public finances, homeland security, and the government’s energy and climate policies. Forming a cabinet with the Finns Party would also be complicated as many would refuse to cooperate with anti-immigrant forces, making it difficult for the Orpo to form a stable majority. The talks “will certainly be quite difficult,” Orpo told reporters. “(…) the only way forward is cooperation. There are big differences between the three biggest parties and there is a lot to work out. ”

More caution

The result of the last election shows that the Finns wanted more caution in fiscal policy. Under Sanna Marin, Finland’s public debt increased by around €40 billion ($43.4 billion) to around €195 billion last year alone, fueled by loans to fight the effects of the pandemic, Russia’s war in Ukraine and the energy crisis. About a quarter of the total increase in debt, however, cannot be explained by these crises. Despite this, Marin enjoys a lot of support, especially thanks to how the Finnish prime minister dealt with both the pandemic and the effects of the war, which ultimately led to Finland applying for NATO membership. She gained international fame as the head of a cabinet headed only by women, and many young voters identified with the lifestyle of the 37-year-old prime minister. As a rule, the party with the most seats in parliament makes the first attempt to form a governing coalition – and cabinets can even form parties from opposite ends of the political spectrum if they manage to agree on a common political agenda. The talks may start after the election of the parliament’s president, i.e. after April 12, and will last weeks, if not months. Marin congratulated the “other election winners”, naming both the National Coalition and the Finns Party, but not admitting defeat. The article Finland (also) turns right comes from the Polish Economy Forum.

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