Finland’s New Premier Stubb Pledges to Keep to Economic Line

Photographer: Henrik Kettunen

“If this crisis is, say, 100 steps, we’ve probably taken somewhere between 60 and 70 steps,” said Alexander Stubb, Finland's foreign minister. “We’re still in the process of building trust among each other.” Close

“If this crisis is, say, 100 steps, we’ve probably taken somewhere between 60 and 70... Read More

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Photographer: Henrik Kettunen

“If this crisis is, say, 100 steps, we’ve probably taken somewhere between 60 and 70 steps,” said Alexander Stubb, Finland's foreign minister. “We’re still in the process of building trust among each other.”

Alexander Stubb, elected yesterday by his party to become Finland’s next prime minister, pledged to continue his predecessor’s program of budget restraint amid the nation’s deepest economic rut since the early 1990s.

“A new recovery requires predictability and stability,” Stubb, 46, said in a speech today. “The economy sets the limits within which the government must work. Decisions that have been made have to be implemented. The government must also make new decisions with real impact to boost growth.”

Coming from a position as Europe minister, Stubb will take over the National Coalition Party chairmanship after winning 500 votes in the second round yesterday during a party conference in the southern Finnish town of Lahti. Paula Risikko, 54, garnered 349 votes. Stubb will succeed Jyrki Katainen, 42, who steps down tomorrow after leading the party for 10 years to become a commissioner in the European Union.

Stubb has little time to celebrate the victory before taking on the government’s biggest challenge: an economy that’s lost its main growth motor. Contracting output has followed faltering exports as the nation’s technology and paper industries decline. That’s collided with a period of austerity policies and lost demand due to Europe’s debt crisis. Since 2008, Finnish public debt has swelled 47 billion euros ($64 billion), in net terms, to a total of 110 billion euros.

Coalition Work

Stubb will need to work with a new finance minister, former union boss Antti Rinne, who has spoken out in favor of more stimulus to rescue growth. Rinne, 51, assumed the job last week after becoming chairman of the Social Democrats, the second-biggest of five parties in Finland’s ruling coalition.

“Social Democrats face pressures to shift further left while the National Coalition clearly has a desire to start implementing more right-wing policies,” Mari K. Niemi, a researcher in political science at the University of Turku, said in an interview. “Both sides must bring some realism to the table.”

Katainen’s cabinet, in power since 2011, has agreed on austerity measures totaling 6.8 billion euros by 2017, equal to about 3 percent of gross domestic product, to protect Finland’s AAA rating. Its latest spending limits plan, put together in March, prompted the Left Alliance to quit the coalition. Members of the Green League have also called on their party to leave the government over an expansion into nuclear energy.

Debt Limits

Finland’s central bank said June 10 that the nation’s economic stagnation will be prolonged through this year as exports fail to recover. GDP grew an annual 1.2 percent in April, after a revised 1.1 percent contraction in March, Statistics Finland estimates.

Stubb today emphasized the importance of sticking to the government’s agreed on framework. He said the coalition must “implement these decisions in the coming months.”

“The government has agreed on measures intended to end debt growth,” he said. “This goal is not negotiable. I’m not going to be the first prime minister whose government breaches the spending limits framework.”

The best way to foster growth and create jobs is to remove impediments to entrepreneurship, creativity and hard work, he said.

Stubb will be Finland’s first Helsinki-born prime minister in 86 years and the first minority Swedish speaker to lead the country since the 1950s. Economy Minister Jan Vapaavuori, 49, was eliminated in the first round of voting.

EU Career

Cai-Goeran Alexander Stubb was Finland’s foreign minister for three years to 2011, and has been minister for European affairs and foreign trade in the current coalition. Stubb received a doctorate in international politics at the London School of Economics in 1999. He’s worked as an assistant to then-European Commission President Romano Prodi from 2001 until 2003, before his election to the European Parliament in 2004.

“He’s youthful, uses social media in an agile way, a streamlined superman,” Niemi said. “The other party leaders represent an earlier idea of what a statesman is. This may be beneficial for the party when trying to reach urban voters, young voters.”

Stubb holds a bachelor’s degree in politics from Furman University in South Carolina and a master’s degree in politics from the College of Europe in Bruges, Belgium.

He’s married to a lawyer, Suzanne Innes-Stubb, and has a son and a daughter.

Stubb’s passion for sports, including the triathlon and golf, comes from his father Goeran, who worked as a sports reporter, ice hockey team leader and talent scout for the National Hockey League.

Katainen, who will replace fellow Finn Olli Rehn as commissioner for economic and monetary affairs next month for the remainder of the commission’s term, said in an interview with Finland’s state-owned broadcaster yesterday that his aspirations for any leadership roles in the EU would come “in the long run” and that he is now focused on becoming a commissioner “with an interesting portfolio” in the next EU cabinet to be put together in the autumn.

To contact the reporter on this story: Kasper Viita in Helsinki at kviita1@bloomberg.net

To contact the editors responsible for this story: Jonas Bergman at jbergman@bloomberg.net Kati Pohjanpalo

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