(BBG – click to see) Finland should never have signed up to the single currency union, according to its foreign minister.
With the northernmost euro member now set to become the bloc’s weakest economy, the question of currency regime continues to resurface as Finland looks for explanations for its lost competitiveness. Timo Soini, who is also the leader of one of three members of the ruling coalition, the anti-immigration The Finns party, says the country could have resorted to devaluations had it not been for its euro membership.
The comments come as a former foreign minister gathers signatures in an effort to force the government to hold a referendum on euro membership. While polls still show most Finns don’t want to go through the process of exiting the currency bloc, there are signs that a plurality of voters think they would be better off outside the euro.
Debate on the subject “will gather steam,” Soini, who rose to power on a platform of euro-skepticism, said in Helsinki on Tuesday. But he also warned that a referendum “wouldn’t provide solutions,” here and now, to Finland’s economic woes. “The fact is that Finland is a member of the euro area.”
The country has seen its economy sink following the decline of a consumer electronics business once led by Nokia Oyj and a faltering paper industry, with political efforts to create new growth motors so far failing.
Without the option of currency devaluation, the government has calculated that Finland needs to lower its labor costs as much as 15 percent to catch up with its main trade partners, Sweden and Germany. Finland’s economy has shrunk for the past three years and Nordea, the biggest Nordic bank, predicts further contraction in 2015. Finland will be the weakest EU economy by 2017, when it will grow at less than half the pace of Greece, according to the European Commission.
Soini also lashed out at the EU for failing to secure the region’s borders as millions of Middle Eastern asylum seekers try to find refuge in Europe. The so-called Schengen area for passport-free travel is at risk as a consequence, he said.
“Schengen will probably not be declared dead, but it probably won’t be followed anymore,” Soini said. He also warned that most refugees seeking asylum in Finland probably won’t meet the country’s criteria to be allowed to stay.
“If the influx of illegal asylum seekers isn’t brought under control in Greece, or in other countries, that will cause national states to take matters into their own hands,” he said.