Finland changes the guard, not the direction

The voters in Finland have replaced as prime minister one man of the centre-right with another. Neither the departing Alex Stubb (of the National Coalition Party) nor the incoming Juha Sipila (of the Centre Party) were impressed with the old administration. Yet Mr Stubb may yet win a high place in the new government, which will continue to slim down the state and support Finland's membership of the euro. The new government will also continue to cast a sceptical eye on any undue generosity aimed at the flailing Greeks.

Therefore, in a year threatening political earthquakes elsewhere in Europe, Finland's election must count as more of a gentle tremor. Unlike Syriza's victory in Greece, or the parliamentary tumult on the cards in Britain, Helsinki's political scene will retain its familiar, multi-party shape. The Social Democrats will probably depart, but this will bring no sharp change in governing philosophy. The genuine shock felt in Helsinki at the country's debt burden reaching 60 per cent of GDP crosses party lines.

This should not be mistaken for evidence of a country doing well. Finland's economic performance has been dismal. It is wrong to blame membership of the euro, as has been the wont of the Finns, the only significant eurosceptic party. Germany is just as heavily laced into the single currency and yet has motored ahead. Finland's growth has begun to trail that of Greece, and is expected to continue to do so.

True, Helsinki has kept a better grip on the public finances, as evidenced by its fondness for lecturing Athens on how to order its affairs. But in other ways Finland has a disquieting amount in common with the euro's most troubled member, not least a deteriorating competitive position undone by wage rises that have outstripped productivity. Finns are accused of labouring too little and retiring too early - on one account, putting in 50,000 hours of work over a lifetime, compared with 70,000 for the typical German.

Helsinki's example shows how austerity alone is not enough to turn an economy around. Failure to implement reforms elsewhere makes fiscal consolidation even harder. Mr Stubb's predecessor Jyrki Katainen, well regarded in his own right, led an administration that achieved little during its three years in power. Important reforms to healthcare and the labour market were stymied by government gridlock. With one of Europe's fastest-ageing populations, Finland can ill-afford such stasis any longer.

In the coming days attention may turn to Timo Soini, the boisterous leader of the Finns. Three years ago Mr Soini's obstreperousness threatened the derailment of Greece's bailout, which might have led to the end of the euro. But his party, formerly known as the True Finns, has since moderated its stance. No longer pressing for exit from the euro, and having lost some electoral ground, the years ahead may provide some insight into whether Nordic populism survives contact with the experience of governing.

In most regards, Finland sits as far from Greece as a fellow member of the euro can. No country is more closely associated with austerity - Finland even provided Brussels' sternest advocate of spending restraint in the shape of former EU commissioner Olli Rehn, a man unlikely to enjoy a rapturous welcome in Athens. But unlike their distant southern cousins, the Finnish people understand the reforms their country needs and are willing to support them. Their decision to elect Mr Sipila indicates less a yearning for political change than a desire to see in power someone they hope has the straightforward ability to get things done.

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