Finland's free market economy is hallmarked by a high level of industrialisation and a per capita output on par with the UK, France, Germany and Italy. The country is a world leader in telecommunications and high technology applications. It is strategically located at the centre of a rapidly developing market place of 80 million consumers from northwestern Russia, Scandinavian countries and the Baltic states.
Economy
In 2007, Finland experienced a third year of positive economic growth with GDP increasing by 4.7 per cent. The economy was forecast to slow in 2008 as a result of the overall European slowdown, however, growth rates were expected to remain above the euro area average. Economic performance was weaker than expected and the economy grew by just 0.9 per cent in 2008. Dramatically reduced domestic and external demand and tighter credit will contribute to a sharp economic contraction in 2009. The Economist Intelligence Unit sees the economy shrinking by 5.7 per cent before slowly recovering in 2011; despite this, it has ranked Finland’s business environment as the best in the world for the period 2009-2013.
The largest sector of the economy is services, followed by manufacturing and refining. The export of goods and services provide more than 30 per cent of the country's GDP.
Investment Climate
The Finnish government is open to direct foreign investment. There are no general regulatory limitations relating to acquisitions. Legislative control of mergers and acquisitions is mainly governed by domestic and EU competition rules. Certain acquisitions of large Finnish companies may require follow-up clearance from the Ministry of Trade and Industry, in accordance with the Act on the Control of Foreign Acquisitions of Finnish Companies. The purpose of the clearance is to protect essential national interests.
Unlike many other countries, however, Finland does not "positively" discriminate in favour of foreign-owned firms by giving them tax holidays or other subsidies not available to other firms in the economy. Instead, Finland relies on "condition-providing policies" which means pursuing policies that offer all firms in the economy appropriate conditions and sufficient pools of advanced factors of production, including an educated labour force and well-functioning infrastructure.
Industry Sectors
Agriculture
Due to the severe Nordic winters and relatively short growing season, Finland relies heavily on imported food and agricultural products. Finland’s geographical proximity and long-established connections to the Baltic States and Russia offers an ideal business base in Northern Europe. Increased demand for consumer goods, agribusiness opportunities, food industry investments and tourism in the region has been generated by structural reforms and development of market economies in the Baltic countries and Russia.
Real Estate
A stable market for new investors, there are many promising opportunities for UK companies in Finland’s residential and commercial real estate. New hotel and leisure centres are being developed in Lapland and the Archipelago and Lakeland regions.
Increasing outsourcing, both in the public and private sectors, has led to a growing demand for service producers. Facility services, i.e. catering and security services, are also growing fast and creating opportunities for UK businesses operating in this market. The neighbouring large market area, especially Russian, also offers additional business opportunities.
Technology
Growth in Finland's technology sector has been rapid in recent years. The country’s largest industrial sector continues to attract international success by committing to long-term investments in R&D and by being flexible to react to sudden changes in the market. Many companies operating in this sector are Finland's leading exporters and internationally recognised as innovative pioneers.
Companies engaged in electronics and electrotechnical activities generate innovative solutions which are employed in production processes all over the world, from underground trains to windpower plants, from space technology to sports and medicine.
One industry which capitalises on this expertise is the metals industry.Finnish metal processing is well known for its efficient utilisation of energy and raw materials, and holds world-leading positions in a number of processes. More than half the world's copper and a third of all nickel is manufactured using flame melting technology developed by Finns. State-of-the-art cruise ships are built in Finland's shipyards.
Telecommunications
Although Finland is a relatively small country, both consumers and companies have been aquick to adopt emerging digital and wireless technologies. As a result, Finland’s scientific, technological and telecom infrastructure is highly developed.
The telecommunications market is fully liberalised – no licences are needed, except for digital television networks and building mobile networks. Finland’s Ministry of Transport and Communications is responsible for licensing.
Internet and broadband penetration is among the highest in the world. A new government resolution, made at the end of 2008 aims to further spread and enhance the availability and quality of broadband in Finland. By the end of 2010, every permanent home as well as business and government buildings will have a broadband connection of at least 1 Mb/s. By the end of 2015 at the latest, a minimum of 100 Mb/s broadband should be available to nearly everyone in the country.
Transport & Logistics
Finland’s advanced transport infrastructure and logistics, are key strengths of Finland’s domestic economy and its lively trade with the Nordic and Baltic countries, the EU, Russia and Asia. Business is served by excellent roads and railways, and a vast network of waterways, canals and sea lanes. Finland has 24 airports serving air freight and passenger traffic, including the Helsinki- Vantaa Airport – recognised among the best international airports in IATA and ASQ surveys. Helsinki-Vantaa Airport offers global connections to more than 120 destinations and is an increasingly popular gateway to Asia as the most direct route between Europe and Asia.
Finland’s fully automated, state-of-the-art ports are highly specialised and rank among the safest and fastest in the world. Car ferries and container ships serve the region with regular daily departures. The newly opened Vuosaari Harbour has been built in a key location for efficient transport connections with key markets.
UK Trading Relationship
Finland and the UK enjoy very good bilateral relations. The two countries are partners in democracy, culture, education and commerce.
Finland consumers are sophisticated, with an eye for quality and design. The main UK exports to Finland are:
• Road vehicles
• Office machines and data processing equipment
• Electrical machinery, apparatus and appliances
• Telecommunications and sound recording
• Specialised industrial machinery
• Medical and pharmaceutical products
• Industrial equipment
• Professional, scientific and control instruments
In 2008, the UK exported goods worth £1.86 billion to Finland. Over the same period the UK took goods worth £2.73 billion from the country
KEY FACTS
Official Name: Republic of Finland
Capital: HelsinkiArea: 338,145sq km
Population: 5.3m (UN, 2008)
Major languages: Finnish, Swedish
GDP (current): US$244.66bn (World Bank, 2007)
GDP growth: 4.4% (World Bank, 2007)
GNI per capita: US$44,300 (World Bank, 2007)
Inflation (consumer prices): 4.1% (2008 est.)
Labour force: 2.3m (2008 est.)
Unemployment: 6.4% (2008 est.)
Monetary unit: 1 euro = 100 cents
Exports to UK: £2,730.42m (HMRC 2008)
Imports from UK: £1,861.88m (HMRC 2008)
Main Industries
Metals, electronics, machinery and scientific instruments, shipbuilding, paper, foodstuffs, chemicals, textiles, clothing.
Main Exports
Electrical and optical equipment, machinery, transport equipment, paper and pulp, chemicals, basic metals, timber.
Main Imports
Foodstuffs, petroleum, chemicals, transport equipment, iron and steel, machinery, textile yarn and fabrics, grains.
CONTACTS
UK Trade & Investment
Kingsgate House
66-74 Victoria Street
London SW1E 6SW
Tel: 020 7215 8000
Email: kirsti.metsa-ketela@fco.gov.uk
Web: www.uktradeinvest.gov.uk
British Embassy
Itainen Puistotie
1700140 Helsinki
Tel: 00 358 9 2286 5210
Email: commercial.helsinki@fco.gov.uk
Web: www.ukinfinland.fco.gov.uk
Embassy of the Republic of Finland
38 Chesham Place
London
SW1X 8HW
Tel: 020 7838 6200
Email: sanomat.lon@formin.fi
Web: www.finemb.org.uk
