Tuesday, May 3, 2016

Parliament in Finland debates leaving the Euro zone.

The Finnish parliament is debating whether Finland should leave the Eurozone after 53,000 people signed a petition asking that parliament debate the issue.

 
The petition was filed by MEP Paavo Vayrynen who said:”We should revive our economy by leaving the euro zone and reinstating our own currency (with a floating exchange rate). This will restore our competitiveness.” His main argument for leaving the euro is the fear that Finland might lose economic and political independence if it remains in the eurozone. The petition demands a referendum but only if the parliament supports it. The petition is a sign of growing frustration with poor economic performance, rising unemployment, and an outlook for weak growth. All of this is going on alongside a government austerity program. So far no political group has proposed Finland exit the Eurozone or a Fixit as it is called. However, some euro-sceptic parliamentarians claim that the lack of an independent foreign policy is a problem. Prior to entering the eurozone, Finland would reduce the value of its currency the marrka in order to stimulate export growth when it appeared necessary. The eurosceptics say that Finland should have had a referendum on the issue in 1998 when the euro was adopted. Sweden and Denmark voted against adopting the euro.
Simon Elo. an MP from the co-ruling euro-sceptic Finns Party said: "The euro is too cheap for Germany and too expensive for the rest of Europe, it does not fulfill requirements of an optimal currency union." Finland's economy managed just 0.5 percent growth last year and this was after three years during which it contracted. High labor costs and a recession in Russia are among the problems facing Finland.
Since Finland cannot devalue its currency to improve its competitiveness, it has adopted a controversial plan of "internal devaluation" including longer working hours to reduce unit production costs. Finance minister, Alexander Stubb, says the government is committed to the euro and that a "Fixit" would have more harms than benefits:"Our international position would probably weaken, our currency rate would become unsustainable... our country risk would be high and we would be likely driven into a situation where interest rates would increase." A December poll showed that 54 percent of Finns wanted to remain in the eurozone while 31 percent wanted to leave. Forty-four percent thought that Finland would do better outside the eurozone.
The petition still needs to pass through several stages in the Finnish parliament before it results in a plenary vote and a possible referendum. The next stage will be discussion with a parliamentary committee.
In the UK leaving the eurozone or a Brexit is a hot topic. Britons go to the polls on June 23 to vote in a referendum to decide whether to leave the 28-member zone or to stay in it.

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