Finland: Government forms six-party coalition without anti-euro True Finns
July 1, 2011
After nine weeks of complex negotiations to form a coalition, the parliament elected Jyrki Katainen, leader of the conservative National Coalition Party (KOK), as the new prime minister on 22 June. The coalition was formed between the KOK, the centre-left Social Democrats and four other smaller parties, controlling a total of 126 out of the 200 seats in parliament, giving the coalition a comfortable majority to implement its agenda. The anti-euro party True Finns, which turned from the smallest party into the third-largest political force (39 seats), was left out of the coalition, easing concerns that Finnish politics may further complicate the already entangled Greek bailout negotiations. The new coalition promised tough terms in case further financial aid was needed in the Eurozone and reaffirmed its pledge to maintain a sober fiscal stance at home. On the economic front, consumer confidence dropped below its long-term average for the first time since November 2009, underscoring the fragility of the domestic recovery. The drop was broad-based, as consumers were less upbeat about both the overall economy and their own personal situation. Meanwhile, export growth plummeted from 37.5% in March to 5.5% in April. However, the moderation mainly reflected the waning of a favourable comparison base and thus, despite expanding at a slower rate, exports should continue to support the recovery. In particular, exports to Russia and Germany, the country's main export destinations, should remain buoyant. The Central Bank expects GDP to grow 3.9% this year and 2.7% in 2012.