Finland's co-ruling Finns party adds fuel to euro debate

HELSINKI, April 8 (Reuters) - The euro-sceptic Finns party on Friday added fuel to the debate on the euro, with a senior MP speaking openly of a possible exit from the currency for the first time during the party's membership of Finland's coalition government.

The Finns MP said the country could be better off outside the bloc. Separately, a party think tank report called "Fixit" a real option.

Finland's parliament will debate on April 28 whether the country should hold a referendum on its euro membership, following a petition on the issue signed by more than the required 50,000 citizens.

Polls suggest Finland is unlikely to exit the common currency, but the success of the petition demonstrates a high level of public dissatisfaction with the country's economic performance.

The economy is struggling to return to growth after a string of shocks, including the decline of Nokia (Milan: 23568.MI - news) 's former phone business and a recession in neighbouring Russia. The centre-right government is pushing through austerity and cuts to benefits.

"As a euro country we cannot use external devaluation, so when the economy needs fixing, we can only use internal devaluation," Kaj Turunen, a Finns party MP and chairman of the parliament's commerce committee, told Reuters.

"A referendum (on euro membership) could be good to have ... but then we would need to be well aware of the consequences of a possible exit. Still, it could be a better option to break with the euro," he added.

A report published by the party's think tank on Friday called euro exit a realistic option, saying that bad consequences should not be exaggerated.

"If we don't see substantial recovery within the euro zone and in Finland in the next five years, we need to consider it seriously," said Heikki Koskenkyla, a retired central bank executive who wrote the report.

The three-party government - also including the Centre Party with agrarian roots and the pro-Europe National Coalition Party - remains officially committed to eurozone membership.

According to a December poll by public broadcaster YLE, 54 percent of Finns supported remaining in the euro zone, while 31 percent wanted to leave. Asked whether Finland would do better outside the euro zone, 44 percent answered yes.

Finland adopted the euro in 1998 without a referendum, while neighbours Sweden and Denmark voted down the idea of adopting the euro a few years later. (Reporting by Jussi Rosendahl and Tuomas Forsell; editing by Andrew Roche)