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28/09/2016

Finnish parliament will debate leaving eurozone next year

Euro & Finance

Finnish parliament will debate leaving eurozone next year

Juha Sipilä

[Ulkoministeriö]

In 2016, Finland’s parliament will debate whether to quit the euro, a senior parliamentary official said on Monday (16 November).

The move, unlikely to end membership of the single currency, highlights Finnish dissatisfaction with their country’s economic performance.

The decision follows a citizens’ petition which has raised the necessary 50,000 signatures under Finnish rules to force such a debate, probably the first such initiative in any country of the 19-member eurozone.

“There will be signature checks early next year, and a parliamentary debate will be held in the following months,” said Maija-Leena Paavola, who helps guide legislation through parliament.

The petition – which will continue to gather signatures until mid-January – demands a referendum on euro membership, but this would only go ahead if parliament backed the idea.

Despite the initiative, a Eurobarometer poll this month showed 64% of Finns backed the common currency, though that is down from 69% a year ago.

But the Nordic country has suffered three years of economic contraction and is currently performing worse than any other country in the eurozone.

>>Read: Finnish government close to collapse over healthcare reform

Some Finns say the country’s prospects would improve if it returned to the markka currency and regained the ability to set its own interest rates, pointing to the example of neighbouring Sweden, which is outside the euro. The markka could then devalue against the euro, making Finnish exports less expensive.

“Since 2008, the Swedish economy has grown by 8 percent, while ours has shrunk by 6 percent,” said Paavo Vayrynen, a Finnish member of the European Parliament who launched the initiative.

“Fixit”

The centre-right government is struggling to balance public finances and improve export competitiveness through “internal devaluation”, including cuts to workers’ holidays and other benefits, amid opposition from unions.

Before 1992, Finland devaluated its markka currency time and again to improve export competitiveness.

>>Read: Stubb: Finland punches above its weight in the EU

“Now is a good time to have a wider debate whether we should continue in the eurozone or not,” said Vayrynen, a veteran lawmaker from the co-ruling Centre Party who is known for his opposition to greater European integration.