A number of economists, including Pasi Kuoppamäki of Danske Bank, have voiced their concerns about the economic policy direction adopted by the next government of Finland. (Mesut Turan – Lehtikuva)

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THE NEXT GOVERNMENT is unlikely to make any major progress on the structural reforms needed in Finland, estimate Lotta Lähteenmäki and Kristian Nummelin, analysts at Nordea.

“The Social Democrats is an advocate of high taxes and won’t hesitate to ramp up public spending. Finland, however, is faced with great challenges as the working-age population shrinks and costs related to population ageing increase,” they commented in a post-election economic review on Monday.

Lähteenmäki and Nummelin also estimated – similarly to many other analysts and political journalists – that the next government will most likely consist of the Social Democrats, National Coalition, Green League and Swedish People’s Party.

“The most probable government composition will make it difficult to address problems in Finland, particularly as global economic growth is sputtering. A ruling coalition ranging from left to right will probably struggle the most in carrying out the necessary labour market reforms,” they predicted.

Heidi Schauman, the chief economist at Aktia, told Kauppalehti she agrees with her colleagues in regards to the most likely government composition. She added, however, that she is no longer as concerned about future economic policy as she was before the elections because parties will tone down their pre-election rhetoric and realise they will have to make compromises in the rigorous coalition formation talks.

“I think in the formation talks parties will manage to return to the economic themes and realities that were pushed aside in the run-up to the elections,” she estimated.

Pasi Kuoppamäki, the chief economist at Danske Bank, said the National Coalition will likely consider it necessary to defend the labour market reforms carried out by the previous government and draw attention to the need to improve the balance of public finances.

“The Social Democrats led by Antti Rinne would find it easier to get sympathy from the Left Alliance. But the National Coalition would struggle to align its campaign platform with that of the Left Alliance,” he analysed.

“The Centre may retreat to the opposition to re-construct its platform, but it’s not impossible it jumps on the government’s journey.”

Aleksi Teivainen – HT
Source: Uusi Suomi