Gov't Stability Rocked By Budget Talks As Parl't Could Hold Up EU Funds

The Finnish gov't is in a precarious position after days of budget negotiations between the five government coalition parties have yet to reach a conclusive agreement. Comes as major EU focus likely to come down on Finland, with the parliament's Constitutional Committee ruling yesterday that a 2/3 supermajority will be required in parliament to approve the EU's Recovery and Resilience Fund (the COVID-19 support package).

• The centrist agrarian Centre Party (Kesk) - the second-largest party in Prime Minister Sanna Marin's coalition - has been at odds with the more left-wing parties in gov't regarding levels of gov't spending following the COVID-19 crisis.
• At an internal meeting earlier this morning, the Centre Party leadership voted to continue talks rather than pulling out of the coalition - which would rob the gov't of its majority in parliament. Party head and deputy PM Annika Saarikko stated after the meeting that "Our view is that the pieces are starting to slot into place", but that negotiations "are still not finished."

Source: Finnish Parliament, MNI

• The budget negotiations - which are held up on major ideological issues regarding the size of the deficit that the gov't should run - are also held up on an environmental issue. The Centre Party, which gains most of its support from rural areas, wants to ensure support for struggling peat farmers, while the Green Leage (Vihr) wants to see peat farming phased out due to its contribution to carbon emissions.
• PM Marin, from the centre-left Social Democrats (SDP) has stated she would not seek to run a minority gov't if the Centre Party pulls its support, risking a snap election. Opinion polls show that the current gov't retaining enough support to win another majority, although the Centre Party could play kingmaker in putting in a right-wing gov't involving the centre-right National Coalition Party (Kok) and the right-wing populist Finns Party (PS).

Source: Kantar TNS, Taloustutkimus, Tietoykkonen, MNI

• Regarding the EU's Recovery and Resilience Fund, the entire package cannot be approved until all member states have submitted their approved plans to the Commission. With the Finns stating they will vote against the RRF, the gov't will have to rely on conservative National Coalition members following through on their plan to abstain in the vote to get the package approved.