The potential withdrawal of the United Kingdom from the European Union would herald uncertain times for Finland, warn several experts.
“The Brexit, if it occurs, would create new political unrest within the EU that would benefit a variety of extremist organisations and particularly Russia, which believes a discordant Europe to be in its best interests,” Samu Lang, the head of investments at Taaleri, states in an economic review.
Pasi Sorjonen and Jan von Gerich of Nordea estimate in their review that the outcome of the possible withdrawal would resemble the financial turbulence of 2009. “It is also a good guess that Finland would be among the countries worst hit by such uncertainty,” they state.
Finland would nevertheless be unlikely to follow the United Kingdom out of the European Union, they add.
The Brexit would according to them have a three-fold effect on Finland – through the bilateral trade relations between Finland and the United Kingdom, through their relations with other trading partners and through uncertainty.
“The far biggest downside, however, would arrive in the form of greatly increased uncertainty. [...] It is safe to predict [...] that the outlook would become foggy enough to curb down investments, employment and risk appetite,” write Sorjonen and von Gerich.
They also draw attention to the potential effects on the sovereign bonds issued by Finland. Investors, they point out, area already cautious about bonds issued by the country because, for example, the national economy is already one of the weakest in the European Union and the country has hardly convinced investors with its ability to implement reforms.
“[I]f Britain votes to leave the EU, Finnish bonds would suffer more,” they estimate.
Lang, meanwhile, calls attention to the possible effects on immigration – an issue he believes has been a pet topic for the advocates of the Brexit.
“Unilateral immigration restrictions by the United Kingdom would undermine the free movement of labour and the efficient concentration of assets. This would inevitably result in a rise in costs in a variety of sectors,” he states.
“It would cost more to clean up a law office, for example, and become more difficult to commute by public transport. The results of businesses would take a hit and ensure the businesses would no longer have the funds to recruit new manpower. More and more over-educated people would look for low-paid jobs, also affecting the employment prospects of others,” adds Lang.
The United Kingdom will hold a referendum on its future in the European union on 23 June, 2016.
Aleksi Teivainen – HT
Photo: Ben Stansall – AFP / Lehtikuva
Source: Uusi Suomi