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Prime Minister Jyrki Katainen told reporters today that the economic situation is “very challenging”, even as the government will stick to its austerity policies to keep borrowing costs from rising. “Creating new growth is more challenging than usual”, he said today. “We can’t take risks at the expense of our public finances, as we must defend our credibility.”
The government has agreed on €2.3 billion of austerity measures next year, which will swell to €5.9 billion by 2016. The deficit will shrink to 1.2 per cent of GDP in 2013 from 1.7 per cent in 2012, the government said on September 17.
The economy of the euro area shrank 0.1 per cent in the third quarter after contracting 0.2 per cent in the second, according to preliminary data. It had stagnated in the first three months of the year as growth eludes the single currency bloc. Growth is also slowing in Germany’s economy, Europe’s biggest.