Bloomberg News

Finnish Government Set for Local Election Victory

October 26, 2012

Finland’s ruling parties are on track to cement control over local governments as voters back their austerity policies and efforts for conditioned-based bailouts for struggling fellow euro nations.

Prime Minister Jyrki Katainen, head of the National Coalition Party, and Finance Minister Jutta Urpilainen, leader of Social Democrats, are vying to become the biggest party in the Oct. 28 municipal election, opinion polls show. The euro- skeptic “The Finns” party, replicating last year’s national election surge, are in a race for third with the Center Party.

As Europe’s debt crisis has worsened, prompting aid requests from Spain and Cyprus, the northernmost euro member has toughened its stance on supporting rescues amid slowing economic growth. Katainen and Urpilainen have called for stricter rules, resisted shared liability for debt and demanded collateral in exchange for bailouts since coming to power in April 2011.

“The main government parties are in a tussle over who’s the biggest,” said Sami Borg, director of the Finnish Social Science Data Archive at the University of Tampere.

Recent polls in newspapers Helsingin Sanomat, Ilta-Sanomat and Iltalehti as well as broadcasters YLE and MTV3 signal the prime minister’s party will win 20.5 percent to 22.6 percent nationwide, ahead of the Social Democrats at 18.5 percent to 20 percent. The Center Party has 16.9 percent to 18.6 percent, while the “The Finns” may garner 13.6 percent to 15.8 percent. The margin of error ranges from 1.4 percentage points to 3 percentage points.

Biggest Party

“It would be a surprise if the biggest party wouldn’t be -- as the polls show -- either the National Coalition or the Social Democrats,” Borg said. Municipalities depend on the state for funding, and that’s why “the Finnish economic situation and the euro crisis have bearing on the outcome of the local vote,” he said.

About 24.4 percent of voters have cast their ballots in advance, according to the Justice Ministry. The results of those votes will be published on Oct. 28 at 8 p.m. local time as polls close. No exit polls are conducted.

The opposition “The Finns” party may double or triple its popularity from the 5.4 percent it won the 2008 local election. That would bring its local-level support closer to the backing it received in the April 2011 general election, when it won 19.1 percent of ballots, suggesting steady opposition to bailouts. The party has more than doubled the number of candidates to 4,394 from 1,840 four years ago.

Staying Firm

Markku Halme, a 35-year-old carpenter from Helsinki, is casting his ballot for Timo Soini’s euro-skeptic group and said the government needs to stay firm on bailouts.

“Finland needs to keep to the same stance,” Halme said on Oct. 23. “The countries that are blundering should be booted out. It’s their own fault.”

The National Coalition won 23.5 percent in 2008, the Social Democrats 21.2 percent, the Center Party 20.1 percent.

Finns will go to the ballot box to select about 10,000 council members in 320 municipalities in an election that has focused mostly on local issues such as how to pay for social services. Three quarters of public services are provided locally, according to Borg. That includes health care and schools.

While the National Coalition and the Social Democrats dominate councils in the biggest cities, including Helsinki, Turku and Tampere, many councils in the countryside are in the hands of the Center Party. “The Finns” will probably add support both in the towns and in rural areas.

Power Structures

“‘The Finns’ party will shake up the traditional power structures in towns,” said Ville Pernaa, head of the Center for Parliamentary Studies at Turku University. “The Center Party will probably lose its absolute majority in many small councils to them.”

The cost of supporting Europe’s fastest-aging population is straining welfare funds, prompting the government to propose that smaller municipalities merge to create bigger units with a wider tax base.

“The municipal election is about reforming Finland,” Katainen said in an interview in Helsinki on Oct. 24. “It’s very important in terms of local services.”

Anneli Nuoritalo, 70, said she’s most worried about the economy as she prepares to vote in the Finnish capital.

“There’s no well-being if we can’t get the economy going,” the retired civil servant said. “It’s a worry for the nation as a whole, also on the municipal level.”

Slowing Growth

Finland’s economic growth is slowing as a recession in the euro-area saps demand for exports such as steel and machinery. The government is raising taxes and cutting spending to trim deficits in one of the four remaining AAA rated countries in the 17-nation euro area. It has been able to keep its deficits within the European Union’s 3 percent rule even as its economy shrank 8.5 percent in 2009.

“Voters have a mental image of money being poured into Europe, and ‘The Finns’ party is using that to gain votes,” Borg said. “Euro-skepticism will play a significant part in politics as the party solidifies its foothold.”

To contact the reporter on this story: Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net


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