HELSINKI (Reuters) - Finland's Left Alliance has rejected the government's budget framework agreement, Finnish news agency STT reported, throwing the small party's future in the coalition government into doubt.
However, the Social Democrats, the second-biggest of the six parties in the coalition government, has accepted the deal unanimously, defusing the risk of a government collapse.
The government would still command a clear parliamentary majority of 112 seats out of 200 even if the Left Alliance, which holds 12 seats, pulled out.
Earlier, Conservative Prime Minister Jyrki Katainen said the government had agreed to a framework to adjust its budget after economic recovery failed to take hold.
Left Alliance chief and Culture Minister Paavo Arhinmaki told the Finnish national broadcaster that the party's future in the government depended on "whether others are ready to be flexible."
The party said it could not accept a deal reached after two days of intensive coalition talks on general spending and taxation plans for the next three years.
The Finnish economy shrank in 2013 and there are fears that the Crimean crisis could dampen the expected recovery, increasing pressure on the government to cut spending in order to reduce the budget deficit, which amounted to 2.0 percent of gross domestic product last year.
Europe's downturn has weighed on exports from Finland's machinery and paper industries, and Nokia's loss of dominance of the global mobile-phone market has exacerbated the economic decline.
While the government has not yet published details of the agreement, Katainen told reporters: "There is no one in Finland who would not have to participate" in the budget squeeze.
(Reporting by Sakari Suoninen; Editing by Ruth Pitchford)
