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Finland combats rumors over euro exit

Finland is debating its future in the eurozone but reports indicate it is not ready to quit the single currency.

Finland combats euro rumors 2012 08 15Enlarge
Finland is combating rumors it is considering leaving the eurozone. (Daniel Roland/AFP/Getty Images)

With the focus of the eurozone crisis on Europe's southernmost countries such as Greece, Italy and Spain, several of its northern members are questioning their own future in the single currency.

Finland is so far denying rumors that it is considering leaving the euro zone but, as Bloomberg reports, its economy is starting to struggle.

Europe's debt crisis is weighing on exports as the second-quarter seasonally adjusted GDP shrank 1.3 percent from the prior three months, according to Helsinki-based Statistics Finland.

The Finnish government expects to have a budget deficit of 6.6 billion euros ($8.2 billion) next year and is planning on shrinking the gap with 1.3 billion euros in tax increases and 400 million euros in spending cuts, reports Bloomberg.

Finland's commitment to the euro zone came under question in July, when AFP quoted Finance Minister Jutta Urpilainen as saying the country is taking a "tough line" when it comes to eurozone bailouts and that "Finland will not hang itself to the euro at any cost and we are prepared for all scenarios," she said. 

Urpilainen said she was not referring to Finland leaving the euro, but as Helsingin Sanomat, Finland's largest newspaper reported, the debate eroded public confidence in the future of the euro.

Finnish reporters jumped on the remarks and claimed that there is no government support for leaving the euro. Helsingin Sanomat reports that no politician in either of the two main parties would be in favor of leaving the euro.

The BBC World Service reports that some of the rumors may be coming from one of Finland's growing political parties, known in English as the Finns. The euro-skeptic party came third in last years parliamentary elections with 19 percent of the vote. The BBC reports that a lot of the party's success is due to its "key policy on the euro - "no" to the bailouts of countries such as Greece and Spain."

Party leader Timo Soini told the BBC that "It is not for the Finnish tax payer to pay for the mistakes of the fat cats of the banks and politicians from the south," adding that "this kind of eurozone cannot function".

Finland's economy may have slipped a bit in the last quarter but it is still one of the strongest economies in the eurozone. The single currency will need its strongest players to stay in the game and if the rumors persist there will be more discussion over whether the eurozone can stay intact.

http://www.globalpost.com/dispatch/news/business/120815/finland-combats-rumors-over-euro-exit