Standard & Poor’s affirmed its AA+ credit rating and stable outlook for Finland on Friday, 17 March.
Standard & Poor’s affirmed its AA+ credit rating and stable outlook for Finland on Friday, 17 March.

The Finns Party’s upcoming leadership election could compromise the stability of the ruling three-party coalition in Finland, warns Standard & Poor’s.

Timo Soini’s (PS) decision not to seek re-election as the chairperson of the populist party could, according to the credit rating agency, trigger an internal leadership battle with “uncertain consequences for the ruling coalition’s stability”.

“This, in turn, could jeopardize the government’s ambitious reform agenda, which includes further reforms of the labour market and the social and health care sectors,” views Standard & Poor’s.

Such concerns are warranted, believes Ari Pauna, the chief executive at the Finnish Mortgage Society (Hypo).

“The political crisis possibly generated by the leadership election and the contentious autumn in the labour market could be extremely costly for all Finns. The cost of money would increase for the state, businesses, banks and households. Uncertainty and hesitation would return to the domestic markets. That’s bad news for the increasingly indebted country, businesses and households,” he says to Uusi Suomi.

Related posts:

- Halla-aho challenges Terho for Finns Party leadership (14 March, 2017)

The possible crisis, he adds, could thwart the optimism that has been building up in the housing market and slow down housing production at a time when the production should be stepped up. Regional disparities in the housing market could similarly widen further, according to Pauna.

Standard & Poor’s upheld its AA+ credit rating and stable outlook for Finland on Friday. It reminded, however, that the rating can be downgraded in the event that political uncertainty jeopardises the planned reforms or that public finances and indebtedness deteriorate beyond expectations.

“The stable outlook reflects our expectation that the gradual economic recovery alongside continued structural reform efforts will help gradually consolidate public finances and contain further increases in general government debt,” it says in its country report (PDF).

Soini commented on the warning issued by the credit rating agency in his blog on Saturday.

“You should not underestimate the Finns Party,” he wrote. “We are not that crazy as to open the doors of Smolna [the Government Banquet Hall] to the groups of Ville Niinistö [the chairperson of the Green League] and Paavo Arhinmäki [an ex-chairperson of the Left Alliance].”

The Finns Party’s leadership race is widely expected to be a two-horse race, with Sampo Terho, the chairperson of the party’s parliamentary group, enjoying the backing of the party leadership and Jussi Halla-aho, a Member of the European Parliament, the backing of the rank and file of the party.

Jan Vapaavuori, the mayoral candidate of the National Coalition in Helsinki, has already declared that the National Coalition would be unable to form a ruling coalition with a Finns Party led by Halla-aho.

Aleksi Teivainen – HT
Photo: Stan Honda – AFP/Lehtikuva
Source: Uusi Suomi