Finland has highest prices in eurozone, and they're about to get higher

Eurostat: Consumer price levels in 2010

In 2010, price levels for consumer goods and services1 differed widely across Member States. Denmark (143% of the EU27 average) had the highest price level, followed by Finland (123%).

This comes to us shortly after the end result of the parliamentary elections, the new Katainen cabinet, put together their agenda. One of the sticking points of the coalition talks was a rise in VAT, which the left-wing parties vocally opposed because of its impact on low-income earners. What they eventually went along with was a system that ditches the overall VAT increase, and slightly bumps up capital gains tax. Income tax will also be slashed slightly in the lowest bands.

At this point, the recently departed Peter Falk's best-known character would have turned around at the door and said "oh, just one more thing". Because they're also raising fuel duty by 10%, car taxes and Pigovian taxes on health and environmental, erm, things, including a broadening and raising of the controversial and badly implemented sugar tax. Also featured is a hike in waste duty and property tax.

So not only is Finland the most expensive country in the eurozone right now, but it's going to get even worse. Meanwhile, these tax hikes and the failure of the agenda to really address Finland's burgeoning deficit in any sensible way mean the whole economy is headed downhill fast. We're burdened with a huge public sector and tax burden to run a welfare state that barely functions at all and eats up a gigantic chunk of the economy. Simultaneously the political left is getting stronger, with the rise of the left-wing conservative-populist "Base Finns" and the collapse of the agrarian center-right party. In my opinion, if the current trend continues, it isn't going to be possible to put together a political coalition to fix the crumbling economy, because all parties except two are basically running on a platform of more taxes, more benefits. Together they're going to exert enough inertia that the deficit will simply not get fixed before it's too late. And then we'll go the way of Greece.