Finland's government has had to recall the country's Parliament during its summer break for the first time in half a century to debate whether to accept collateral put up by Spain to ensure Finland's support for a European bailout package.
Finland’s government has had to recall the country’s Parliament during its summer break for the first time in half a century to debate whether to accept collateral put up by Spain to ensure Finland’s support for a European bailout package.
The bailout is intended to enable Spain’s government to assist its ailing banking sector, which is dragging down the economy and contributing to unsustainable costs of borrowing hitting the state.
Finland took a hard line in the negotiations around the bailout, demanding collateral be put up by Spain in exchange for its support.
Acceptance of a collateral deal was announced by the Finnish government yesterday afternoon. It was modelled on a similar deal with Greece made last year, and is intended to provide collateral equal to about 40% of the Finnish contribution to a European bailout package.
However, Finnish news service YLE reports that MPs only got the full 70 page translated agreement at 8pm yesterday evening (Wednesday), ahead of the Parliament meeting today, and a vote expected by tomorrow (Friday).
This has upset the main opposition party – the Finns Party – whose leader Timo Soini said yesterday evening that “It’s preposterous that parliamentarians have less than 19 hours to decide on billion euro guarantees.”
The collateral deal was pushed through by finance minister Jutta Urpilainen, and it was expected that the Finns Party would reject it as they have taken a consistent line against any use of Finnish taxpayer money to aid struggling peripheral eurozone member states.
It is less certain how the Centre Party will vote on the proposed deal. Hufvudstadsbladet quotes defence minister Carl Haglund complaining that although the party supported deals struck with Greece and Ireland previously, recently it turned against a deal with Spain.
But Juha Sipilä, chairman of the Centre Party countered that it is the speed of the decision making that is causing his caucus to react the way it has. “Decisions in the euro crisis are being made at a continuously accelerating rate, and there is a danger that Finland through many small, hasty decisions is going down a path that will lead straight to a European federal state,” he is quoted by the newspaper.
Spain’s latest government bond auction today (Thursday) saw borrowing costs rise once more above the key 7% threshold. Reuters reported that yields on two, five and seven year debt rose. Meanwhile, the benchmark 10 year Spanish government bond yield rose 7.3 basis points to 7.03%.