Finnish Prime Minister Sanna Marin lost to a pro-business opposition group in the Nordic country’s close parliamentary elections.
National Coalition leader Petteri Orpo declared victory as his center-right party took 48 seats, leaving the millennial leader’s Social Democrats in third place with 43 seats, behind the far-right Finns Party, which won 46 seats.
The outcome mirrors the shift in neighboring Sweden where a more inward-looking and fiscally conservative government, led by the Moderate Party, took power from the Social Democrats last year and an extreme anti-immigrant force surged in popularity.
With his party having won the most seats in parliament, Orpo, 53, is on track to become prime minister. He has two main options to start talks on forging a coalition. One alternative is to work with Marin’s party, and another to reach out to Riikka Purra’s nationalist Finns Party.
The outcome is welcome news for bond investors, with big swings related to Finland-specific developments unlikely, Jan von Gerich and Juho Kostiainen, analysts at Nordea Bank Abp, said in a note. The next four years will likely bring a tighter fiscal stance, they said.
Orpo has overseen the finance, interior and agriculture portfolios in two governments, and has led his party since 2016. He’s also known to enjoy fishing and spending time at his century-old cottage with no running water and little electricity.
While he could agree with Marin on an ambitious climate policy, their big differences lie on the fiscal side. The issue is a priority for Orpo, who has been a vocal critic of how Marin’s government has managed public finances.
“We must fix our economy,” Orpo told reporters. “We are a clear alternative to the left-wing government. People are very worried about the economy.”
The National Coalition has pledged to reduce expenditure by €6 billion, an amount calculated by the Finance Ministry that compares with the state budget of about €83.5 billion. Marin rejects spending cuts.
It’s also questionable how well the two leaders get along, with Marin appearing to make jabs at Orpo throughout the campaign and election debates.
Second option
With the Finns, the election winner is broadly in agreement on economic policy, but strongly at loggerheads on immigration and climate policies. The National Coalition wants to lure more workers into Finland, a policy rejected by the anti-immigration party. On climate, the Finns Party has channeled the vote of those who think too much fuss is being made of reducing emissions.
“My party has succeeded in defining the exact problems of the state at the moment and succeeded in offering a clear alternative to combat them,” Purra said, singling out public finances, internal security and the government’s energy and climate policies.
Putting together a cabinet with the Finns Party would also be complicated by a refusal of many to work with the anti-immigrant force, leaving open whom Orpo would persuade to join in to ensure a majority. The Center Party of Finance Minister Annika Saarikko was the election’s biggest loser, and the party is likely to spend the next four years in opposition, she indicated.
The talks “are certain to be quite difficult,” Orpo told reporters. “That said, the only way forward is through cooperation. There are big differences between the top three parties, and there’s a lot to work out.”
More prudence
While Marin’s SDP was the only one in her five-party left-leaning cabinet to add seats, the result shows Finns wanted to see more prudence in fiscal policy.
Under her government, Finland’s public debt jumped by about €40 billion ($43.4 billion) to about €195 billion last year, fueled by borrowings to tackle fallout from the pandemic, Russia’s war in Ukraine and the energy crisis. About a quarter of the total debt growth isn’t explained by those crises.
Still, Marin has widespread support, stemming from her handling of both the pandemic and the fallout of the war, which led to Finland’s bid to join NATO. She has garnered international fame as head of a cabinet led solely by women, with the 37-year-old premier’s personal lifestyle drawing in young voters.
As a rule, the party with the most seats in parliament gets the first attempt to form a ruling coalition — and cabinets can even be formed by parties from opposite sides of the political spectrum if they manage to agree on a joint policy program. The talks can kick off after the election of a parliament speaker April 12 and are set to take weeks, if not months.
Marin congratulated the election’s “other winners,” mentioning both the National Coalition and the Finns Party, but stopping short of conceding defeat.
“Finnish people have cast their votes,” she said. “A celebration of democracy is always magnificent.”
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(Bloomberg News writer Philip Tabuas contributed to this report.)
