April 5 (Bloomberg) -- Finnish Prime Minister Jyrki Katainen announced he will step down as leader of the northernmost euro member to seek a career on the broader European or international stage.
Katainen said his National Coalition Party will pick a new leader in June, in an unscheduled speech in Helsinki today. The new party leader will also take over as premier, he said.
“You can’t imagine how thankful I am to have been allowed to lead the country during these hard years,” he said. “I have worked on behalf of Finland through the crisis.”
Katainen, 42, has been struggling to revive a stagnant economy since taking power in June 2011 and to find common ground at the helm of a broad coalition. The Left Alliance this week left the six-party government in protest over deepening austerity measures designed to halt debt growth in the Nordic nation. The premier has fought to maintain Finland’s AAA rating throughout the region’s debt crisis.
The government has agreed to 6.6 billion euros ($9.05 billion) of measures to reduce the budget deficit. Finland this week cut its economic growth forecast for 2014 to 0.5 percent from the 0.8 percent estimated in December, in part as sanctions against Russia are now also threatening the recovery.
Three years of recession in the past five years have eroded Finland’s public finances at the same as its export cornerstones, papermaking and technology, have struggled with competition and falling demand. General government debt will breach the 60 percent Maastricht treaty threshold next year, after reaching 59.8 percent in 2014, the ministry estimates.
The ideologically conflicted Cabinet persisted on “pragmatism” since taking power, Katainen has said. It has survived 15 confidence votes over less than three years.
“This amounts to the government declaring bankruptcy,” said Timo Soini, head of the opposition The Finns party, according to state-owned broadcaster YLE. “They either run off to Europe or quit, like the Left Alliance did. If the prime minister quits in the middle of the term, it’s hands up.”
Social Democrat Finance Minister Jutta Urpilainen is also facing a challenge at the helm of her party, which is the second-biggest in the government. The group meets in May to pick a new leader. Finland will hold an election in April next year.
Katainen said he’s interested in international positions, as the European Commission is set to change composition later this year.
“I have to say the international world has pulled me in,” he said. “It’s so rewarding to see my work can make a difference internationally.”
Finland’s Olli Rehn, European Commissioner for Economic and Monetary Affairs, is running for European Parliament in the May elections as a candidate of the opposition Center Party.
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