Finland Times

 

Nordea Bank chief economist Aki Kangasharju. File Photo Lehtikuva.

Leaders of the major political parties are misleading people about the austerity measures as they are not telling the truth in this regard in their election pledges, said Nordea Bank chief economist Aki Kangasharju on Friday Kangasharju said political parties are taking citizens for a ride based on the saving targets they have been proposing.

 

“All the parties are clearly preparing for elections, and they are not telling the truth about the stark realities of austerity measures. They think the voters are so dumb that they do not understand the Ministry of Finance’s last calculation of 10 billion euros in deficit,” said Kangasharju.

 

Kangasharju described achieving savings out of index increases in the current situation as window dressing. Both the Suomen Keskusta (Centre Party) and the Suomen Sosialidemokraattinen Puolue (Social Democratic Party of Finland) have proposed savings by raising indices.

 

“Indices are tied to inflation or wage growth, which will add to zero,” pointed out Kangasharju, adding that just about nothing will be saved by the measure.

 

Pasi Holm, the executive director at Pellervo Economic Research Institute PTT. Photo Lehtikuva.

Cuts in indices hike could be made, since adverse tax increases and oil prices may push up inflation, pointed out Pasi Holm, executive director at Pellervo Economic Research Institute-PTT.  

 

Kangasharju considers the proposal by the Social Democrats as a significant blow to the economy.

 

“Finland’s total tax rate is the second highest in the world after North Korea. Tightening can no longer bring savings to the state but instead will reduce the savings,” said Kangasharju.

The only positive side, according to Kangasharju, is that the different parties within the political spectrum have internalised the idea of wage moderation.

 

Holm, on his side, welcomes the fact the political parties have a united understanding of the need of the adjustments which have been proposed by the Ministry of Finance.

 

“There are differences in the pace at which parties wish to bridge the deficit gap,” Holm said.