May 8, 2014 / 12:32 PM / in 4 years

Finland's finance minister may face ouster over party vote

HELSINKI (Reuters) - Finland’s social democrats will vote on Friday whether to oust their leader, Finance Minister Jutta Urpilainen, from the party’s helm in a move that would lead to her quitting her ministerial post just as the economy is struggling.

Jutta Urpilainen, the SDP (Social Democrats) party leader and Finance Minister, reacts at the party's reception in Helsinki October 28, 2012 after the Finns went to the polls in local elections. REUTERS/Vesa Moilanen/Lehtikuva

An ouster of Jutta Urpilainen could lead to the appointment of Antti Rinne, a union boss known for favoring state-led economic growth, to head the party and probably the finance ministry.

The move comes as Finland is battling an economic downturn. Credit rating agency Standard & Poor’s last month cut its outlook on Finland’s triple-A credit rating to negative, noting political risks in implementing reforms and austerity.

Since Urpilainen took the party leadership in 2008, support for the social democrats has fallen to around 15 percent in polls.

Rinne has led the two-horse race in surveys of party representatives. Rinne campaign chief Vesa Mauriala on Wednesday told Reuters the challenger already had the support of around half of the 500 party voters.

But a source close to the Urpilainen team said only “a few over 200” voters backed Rinne and around 100 were undecided. Both camps expect the final vote to be very close.

Rinne would be unable make major policy changes in the five-party government whose term will end in less than a year, but analysts have said the ministerial changes could complicate the coalition’s efforts to implement its earlier reform plans.

The government has agreed to cut public spending and implement tax hikes worth around 7 billion euros, and outlined long-term plans to reform health care and social welfare.

The biggest of the ruling parties, the conservative National Coalition, is due to change the prime minister next month after Jyrki Katainen steps down early, and more ministers may be replaced after the EU election on May 25.

Rinne has criticised the party leadership for doing too little to protect jobs and not looking harder at avoiding some spending cuts. The economy has seen its exports dropping due to problems at its flagship electronics and paper industries.

Rinne wants the government to quickly create new jobs by stimulating the economy rather than curb debt, and also to invest in new industries to boost exports in the future.

“The situation for Finland is like after wars. We need to take issues at our own hands, the state needs to take a clear role in creating new jobs,” he recently said in a TV interview.

He has attacked the government for not providing a loan to troubled Turku shipyard, owned by South Korea’s STX, in a decision which resulted to a loss of a 1 billion euro cruise ship order and hundreds of Finnish jobs.

Reporting By Jussi Rosendahl; Editing by Alistair Scrutton and Toby Chopra

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