Finns Back Government Parties in Municipal Election

Finland’s two biggest government parties came out on top in municipal elections, winning backing for their austerity agenda and support for the euro even as skeptics of the common currency gained some ground.

Prime Minister Jyrki Katainen’s National Coalition Party won 21.9 percent nationwide and Finance Minister Jutta Urpilainen’s Social Democrats won 19.6 percent in yesterday’s municipal elections, according to a full count by the Justice Ministry in Helsinki. The opposition Center Party received 18.7 percent, beating the euro-skeptic “The Finns” party, which got 12.3 percent. Turnout was 58.2 percent.

“In a way this is a vote of confidence in government,” said Pasi Kuoppamaeki, an economist at Sampo Bank, a unit of Danske Bank A/S. (DANSKE) The government’s “policies and the euro crisis inevitably had an impact on the results. At least they didn’t make a mess of it, given how little support the ruling parties lost.”

The three biggest parties’ popularity was in line with polls ahead of the election, even as they all lost support compared with the 2008 municipal vote. “The Finns” rose 6.9 percentage points from four years ago, though failed to repeat its success from last year’s national election, when it garnered 19.1 percent support.

Renewed Confidence

The government parties received renewed confidence at the local level after having called for stricter budget rules, resisted shared liability for debt and demanded collateral for helping to bail out struggling nations in southern Europe. The northernmost euro member has toughened its stance on supporting rescues amid slowing economic growth.

“The National Coalition Party is trusted even in tough times,” Katainen said in an interview in Helsinki yesterday.

The election of about 10,000 council members across 320 municipalities focused mostly on local issues such as how to pay for social services such as health care and schools. 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.

‘No Moping’

“There’s not a lot of point moping,” Timo Soini, who heads the euro-skeptic party, said in an interview in Helsinki last night. The new council members for his party means “the going will get tougher and stances stricter.”

The National Coalition won 23.5 percent in 2008, the Social Democrats 21.2 percent, the Center Party 20.1 percent. Third place means the Center Party may assume the role of the main opposition party in resisting the policies of the six-member governing coalition.

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.

More Discord

The neck-and-neck result of the governing National Coalition and the Social Democrats may force more disagreements over policy within the cabinet as it faces more cuts to keep the budget gap in check. The government will review the need for further budget cuts and tax increases in March as it assesses its spending framework for the following four years.

“The forward-looking agenda of reforms won,” Katainen said on YLE TV1 last night. “People want to see parties pushing openly for change, and they support it.”

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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