15 October 2013

FT: Finland prime minister ready to support further eurozone bailouts

A fervent defender of eurozone austerity, Finland appears to be softening its image as being 'more German than the Germans' in the face of growing support for 'populist' eurosceptic parties ahead of the EP elections.

"Nobody likes bailout packages but so far we have been looking at what is good for the stability of the eurozone", Mr Katainen said after talks with Enrico Letta, his Italian counterpart.

Noting that his six-party coalition government, which is struggling in opinion polls, was also sharing the eurozone’s pain in cutting its budget to keep rising public debt under control, Mr Katainen added: “No one can outsource that national responsibility to others . . . but if the situation is hopeless we must look at the stability of the eurozone and be ready to help countries. We are very pragmatic on this issue."

Mr Katainen stressed that no further bailout request from Portugal or Greece was on the table, and that his coalition government had not discussed the possibility. Finland’s policy towards eurozone assistance had not changed and it would consider requests if forthcoming, he said. Finnish officials noted that the EU package for Cyprus, supported by Finland, had been a “bail-in” with banks and investors picking up the bill.

Asked if Europe’s austerity had gone too far in exacerbating recession, Mr Katainen acknowledged it had been “difficult”. But he said it was impossible to know how interest rates on sovereign debt would have reacted otherwise, noting that rates for Ireland, Spain and Italy had dropped significantly and that southern Europe’s exports were recovering.

Commenting on opinion polls showing that eurosceptic parties could emerge as the single largest bloc in the European parliament in next May’s elections, Mr Katainen admitted that “there are lots of people who tend to think that Europe is lacking fairness”. A decisive victory by France’s far-right National Front in a local by-election on Sunday was “worrying” but “part of democracy”, he commented.

Full article (FT subscription required)

© Financial Times