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News : EU Economy Last Updated: Apr 13, 2011 - 4:03 AM

Finland's finance minister warns of new financial crisis if Europe does not help Portugal
By Finfacts Team
Apr 12, 2011 - 6:15 AM

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Jean-Claude Trichet, President of the European Central Bank, Jyrki Katainen, Finnish Minister for Finance and fellow Finn, Olli Rehn, member of the European Commission, Brussels, March 14, 2011.

Finland's finance minister, Jyrki Katainen, warned on Monday said that there could be a new financial crisis if Europe does not help Portugal, as he fights to head off a challenge from opponents of bailouts for European struggling peripheral economies, ahead of a general election on Sunday.

The conservative National Coalition Party, which is headed by Katainen who is also deputy prime minister, remains the most popular party according to a poll by the newspaper Helsingin Sanomat.

YLE, the state broadcaster, reports that the populist anti-bailout True Finns Party has however dropped from second to fourth place in the poll.

The Social Democratic Party has succeeded the True Finns in second place, while the Centre Party’s support, headed by the prime minister, Mari Kiviniemi  (she is in her early 40s like Katainen), is the third strongest.

The National Coalition have 20.2% support; the Social Democratic Party 18.0% and the Centre Party is at 17.9%. True Finns Party has 16.9% support.

YLE says backing for the populist True Finns Party has fallen by 1.5 percentage points since March, which is within the poll’s margin of error.

True Finns’ support also dropped, similarly within the margin of error, in an MTV3 poll last week.

Finland won’t agree to changing the terms of Ireland's loans, Katainen told YLE in February.

“There is an understanding in Europe and the euro area that the requirements can’t be eased in a way that would endanger the work to bring the Irish economy back to health,” Katainen said.

"The message is this: since 2009, Finland lost €40bn of tax money because of the financial crisis. In 2009, Finnish pension funds' return was €17bn negative," Katainen told Reuters on Monday.

"We don't want this to happen again, so we need to back such solutions that keep up the Europe's financial stability," he said.

Timo Soini, head of the anti-EU True Finns party, says on bailouts: “People just don’t get it, don’t want it.”

A delegation from the International Monetary Fund, European Central Bank and European Commission is expected in Lisbon on Tuesday for initial talks on an estimated bailout worth €80bn.

Nobody supports debt restructuring at this stage in the Eurogroup council of Eurozone finance ministers, Katainen said.

"It doesn't make any sense to me that countries, that have managed their finances poorly, would be told that they don't have to pay off their debts."

Portugal is due to hold a general election on June 5th. It has debt of €4.5bn maturing on Friday and will need to raise a further €7bn in June.

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