Finnish Elections Could Trigger Grexit

Finland’s rigid stance over euro zone bailouts could become even more hardline after the weekend’s election, in what would be a further blow to beleaguered Greece as it tries to avert a default.

A parliamentary election on Sunday in the small, northern euro zone state was won by the opposition Centre Party’s Juha Sipila.

He may have to rely on the euro-sceptic Finns Party for support to form a coalition government – a development that analysts say raises risks to the future of the euro area. The Finns Party is against sovereign bailouts and wants to boot Greece from the 19-member euro zone.

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“Finland was in the anti-bailout camp before yesterday’s election and it’s now likely to take an even harder line towards Greece,” Nicholas Spiro, managing director at Spiro Sovereign Strategy, told CNBC.

While Finland has a land area of over 300,000 square kilometres, its population size is relatively small at about 5.4 million compared with 80.6 million in Germany, 66 million in France and 11 million in Greece.
Spiro added that while the Finns Party was likely to have a prominent role in the Centre-led coalition, other Finnish parties had already toughened their stance towards Greece. According to Finland’s state broadcaster YLE, the Centre Party won 49 seats in the 200-member parliament based on almost 99 percent of the votes, while the Finns won 38 seats.

“When it comes to parliamentary approval for another bailout program for Greece – provided, that is, that Athens and its creditors can reach a deal which, for the time being, looks very unlikely – the Finnish parliament is likely to be even more obstructive than the German one, which is saying something,” Spiro said.

via CNBC

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza