MINISTER of Economic Affairs Mika Lintilä (Centre) on Saturday encouraged Finns to prepare for wartime prices in goods and services due to the Russian invasion of Ukraine.
“Food prices will increase. We’re faced with the big challenge that the situation in agriculture was already critical. We need a support package for agriculture for security of supply reasons alone,” he said on YLE Ykkösaamu on Saturday.
“If people are currently spending 11 per cent of their wage or income on food, it’ll rise to over 20 per cent,” he predicted.
While the doubling of consumer prices is possible, it is not the most likely consequence of the crisis, according to Csaba Jansik, a senior scientist at Natural Resources Institute Finland (Luke). He reminded that food prices are difficult to predict because they are made up of a high number of components.
“[Doubling] is the worst-case scenario. We won’t see increases as big as that if everything goes well and we get a regular harvest in Finland.”
The Bank of Finland has published a dimmer economic forecast due to what it expects will be a protracted war, predicting that the national economy will grow at a clip of 0.5–2.0 per cent in 2022. Inflation is expected to jump to 4–5 per cent in both scenarios mainly due to rises in energy and raw material prices.
Lintilä told YLE that the government is not planning on financially supporting businesses withdrawing from Russia in protest of the war in Ukraine. Russia, he reminded, has been perceived as a high-risk, high-reward market by many companies, and sometimes the risks simply are realised.
The government and business advocacy groups will offer businesses leaving the market consultation on what to do in the uncertain situation.
“Finnish companies have three options according to information available in public: they can either continue their business operations, sell the operations to Russian partners or enter into bankruptcy,” he summed up.
Among the Finnish companies leaving Russia are Fazer, Hesburger, Paulig and Valio.
Western countries have also declared their intent to break free of their energy and raw material dependence on Russia.
Lintilä viewed that the government should make a “pit stop” in regards to its climate goals to guarantee the security of energy supply in Finland. He would personally re-consider the upcoming increase in the renewable fuel distribution obligation of fuel distributors, given its impact on diesel and petrol prices. Also peat will be required for heat production in the short term to offset the drop in wood chips imported from Russia.
Security of supply alone is grounds for financially supporting the logistics and transport sector amid high fuel prices, according to him.
“We have to keep the wheels turning,” he explained.
Lintilä has previously declared that he cannot foresee a scenario in which a building permit is granted to the nuclear power project of Fennovoima, a consortium that is in the minority ownership Russian state-owned nuclear energy company Rosatom. Roughly two-thirds of the project are owned by Finnish companies and municipalities.
The owners are the ones who will bear the costs of the likely doomed project, retorted Lintilä.
Lintilä reminded the public broadcasting company earlier last week that the project consortium is allowed to carry out some construction work under the decision-in-principle granted by the government.
“They’re currently building the factory floor. They can build the floor, but whether they can have equipment on the floor will depend on another permit. And I don’t think there are prerequisites for that permit,” he commented on YLE A-studio on Tuesday, 8 March.
Aleksi Teivainen – HT