Helsinki has grasped an Irish solution to Finland’s spiralling problems, unveiling plans to cut €6 billion from the budget in a bid to restore economic growth.
Finland's new centre-right prime minister, Juha Sipilä, appointed his predecessor, Alexander Stubb, as the new finance minister with oversight of the six-year programme of cuts.
Mr Stubb, leader of the liberal National Coalition Party, promised to restore “credibility” to Finnish finances, after his last, feuding left-right coalition that failed to push through promised reforms.
“Some of the measures are painful, but they’re necessary,” said Mr Stubb, who has also served as European and foreign minister.
He said the cuts would be frontloaded, with savings of €4 billion by 2019, coupled with a €1.6 billion investment programme in infrastructure, financed by “utilising state assets”.
After roaring through the 1990s and 2000s, largely powered by Nokia, the Finnish economy is in crisis, shrinking three years in succession in a crisis catalysed by Nokia's mobile sell-off and long-term crises in the crucial paper industry.
The export trade has been hampered by European Union sanctions on Russia and Finland is facing a budget shortfall this year of €6 billion. After breaking EU fiscal rules for three years running, Finnish debt levels are set to shatter the EU ceiling of 60 per cent this year, requiring urgent action.
Mr Sipilä named as foreign minister Timo Soini, leader of the Eurosceptic populist Finns party, which finished second in April's general election.
Mr Soini was also a runner for the finance post, customary for the second-largest party leader, but his party's hard line on Greece and EU/International Monetary Fund bailouts may have coloured his decision to take the foreign portfolio instead.
The Finns leader insisted in the election his party would not back further assistance for Greece. Should that be necessary, returning from crucial finance-ministerial meetings in Brussels that did just that could have hurt his political credibility at home.
Mr Soini said Finland had made a “political choice” to be part of the EU, that his party would remain a “critical friend” of the bloc he said required deep reform.
With an eye on tensions with neighbouring Russia, Mr Soini announced his first policy shift saying Helsinki would launch an examination of joining Nato.
Mr Sipilä, a multimillionaire businessman, won the election for his Centre Party on an economics platform, vowing to apply his business know-how in office, promising 80,000 new jobs in the next four years.