Hopes of a rapid recovery fade in the technology industry – the pickup in demand must be supported with stable industrial policy
The positive momentum in Finland's technology industry has strengthened, but hopes of a swift recovery in the economy have faded. The value of new orders has weakened slightly, order books have remained moderate and demand is showing signs of gradual recovery. At the same time, trade and geopolitical uncertainties are still putting the brakes on investment decisions. The difficulties caused by global instability must now be mitigated in both Finland and the EU by means of industrial policies that are both predictable and boost confidence.
It had been hoped that Finland’s largest export sector would start to see rapid growth towards the end of the year. Although there have been no signs of such swift recovery yet, and none are expected in the near future, demand seems to be reviving gradually. According to the order book and personnel survey conducted by Technology Industries of Finland at the end of October, the value of new orders was seven per cent lower in July–September than in the previous quarter, but ten per cent higher than in the corresponding period of 2024. That said, the euro-denominated order intake was reasonable, considering the circumstances.
“The mood in the industry is mixed. Erratic policies have muted hopes for growth in the last months of the year, but on the other hand the slow recovery in demand indicates a more stable trend. There is activity in the markets, and this supports the view that the gradual recovery will continue,” says Hanne Mikkonen, Senior Economist.
The value of order books was two per cent higher at the end of September than at the end of June and 19 per cent higher than a year earlier. In January–July of this year, turnover in the Finnish technology industry was up two per cent year-on-year, and full-year turnover is expected to improve on 2024.
The balance figure for tender requests in October was +2, virtually on a par with the figure for the summer. The balance figure is the share of enterprises reporting positive development less the share of those with a negative trend.
“The slight decline in new orders is not yet a cause for concern. Businesses have managed to fare relatively well in the turmoil caused by erratic tariff policies. In spite of the uncertainty, the volume of tenders is high and order books strengthened slightly. The business climate will continue to recover gradually as companies decide to move ahead with the various projects they’ve got lined up,” says Mikkonen.
In mechanical engineering, which is the largest technology industry sector, the value of new orders in the July–September period was one per cent less than in the preceding quarter. The value of new orders rose by 20 per cent year-on-year; however, a year ago, the situation had remained very weak for an exceptionally long time.
The number of personnel in the technology industry in Finland remained stable at around 331,000. The number of people temporarily laid off has declined significantly from last year and stood at around 7,700 at the end of October.
“Your own decisions must not contribute to the prevailing mood of uncertainty”
Although the business cycle seems to be gradually turning for the better, trade policy has become permanently erratic and uncertain. Security policy is unstable, EU countries are competing against each other with investment incentives, and the USA and its customs authorities are pursuing a very unstable tariff policy. For this reason, it is not worth waiting for better days to go ahead with planned investments.
“Uncertainty is here to stay. Decision-makers in both Finland and the EU must understand that the increasing volatility in the operating environment of export companies has become a major challenge. We must not, through our own actions, undermine Finland’s competitiveness and business environment in any way. We must mitigate difficulties with industrial policies that are predictable and boost confidence,” says CEO Minna Helle.
Even public discussions about weakening R&D subsidies and multiple concurrent changes to taxation is enough to erode companies’ confidence in Finland as an investment environment. Helle says that earlier decisions that strengthen confidence send out the right signals. These include lowering the corporate tax rate, stepping up investments in R&D, maintaining the carbon neutrality target and launching investment programmes to support the clean transition.
“There may still be surprises ahead in U.S. tariff policy, but we have the means to strengthen industrial policy both in the EU and here in Finland. Finland’s strength lies in its expertise across the entire industrial value chain, as well as in the development and production of clean technologies. There is strong international demand for these solutions, and we must promote our competitiveness through a firm and consistent national industrial policy,” she says.
Further information
Mikkonen Hanne
Senior Economist – Economic Development and Investment Technology Industries of Finland