Finland Feeling the Pinch From EU-Russia Sanctions War

Nearly half of Finland's companies are suffering as a result of the economic sanctions that the European Union and Russia have imposed on each other, according to the country's chamber of commerce.

Finland's economy has shrunk over the past two years, amid weak demand for some of its key exports, such as mobile phones and paper.

Gross domestic product rose 0.1% in the second quarter of the year, providing a boost to an economy that has struggled to escape technical recession.

However, increased tension between Russia and the European Union could hurt the country, which currently retains a triple-A credit rating.

Russia is Finland's third-biggest export market and accounts for around 10% of Finland's foreign sales.

The country is also a hot destination for Russian tourists, who spend around €2bn in the country each year.

However, the breakdown in relations between Russia and Europe has heightened fears that Finland's economy will be dragged back into negative growth.

The European Union imposed sanctions on entire sectors of the Russian economy in July, targeting finance, defence and energy.

Russia retaliated in August, banning most food imports from the EU, US, Norway, Canada and Australia.

In a survey carried out by Finland's Chamber of Commerce, 41% of companies said their business was being affected indirectly by the sanctions, while 6% said they were suffering directly.

However, half of respondents backed the EU sanctions against Russia, while 16% said they approved tougher measures against Moscow.

The chamber of commerce spoke to 2, 676 managers from a range of large and small firms for the survey.