Finnish Prime Minister Juha Sipila struck a last-minute accord with his finance minister, averting a collapse that had threatened to disrupt efforts to resurrect the euro zone’s weakest economy after Greece.
Sipila, who won office just seven months ago, said early on Saturday morning he and a coalition partner led by Finance Minister Alexander Stubb had agreed on a health reform bill. Differing views on how to allocate services had seemed insurmountable earlier in the week, with the prime minister warning that failure to reach a deal would prompt him to dissolve the government.
The health accord will form part of a package of measures put forward by Sipila as he tries to drag Finland out of its crisis. The economy has contracted for three consecutive years, prompting Stubb to dub it the “sick man of Europe.” The loss of its consumer electronics business, a comparatively expensive workforce and fraught trade relations with Russia have all taken their toll on the ailing economy in recent years.
Nordea, the largest Nordic bank, said bond markets were ready to punish the government for a potential split, while investors are likely to be unsettled by the sudden flare-up in Finnish politics. The European Commission on Thursday predicted Finland’s economy will grow just 0.3 percent this year, the worst performance in the 28-nation bloc aside from Greece.
The agreement struck in the early hours of Saturday means Finland will have 15 health care regions, fewer than the 18 Sipila had hoped for, but more than Stubb had argued were necessary. Full details of the accord will be revealed on Nov. 9, Sipila said. He has previously estimated that an accord will lead to 3 billion euros ($3.3 billion) in savings.