* More than two thirds of Finns still back euro - survey
* Finnish economy has contracted for three years in a row
* Referendum unlikely to follow parliamentary debate
By Jussi Rosendahl
HELSINKI, Nov 16 (Reuters) - Finland’s parliament will debate next year whether to quit the euro, a senior parliamentary official said on Monday, in a move unlikely to end membership of the single currency but which highlights Finns’ dissatisfaction with their country’s economic performance.
The decision follows a citizens’ petition which has raised the necessary 50,000 signatures under Finnish rules to force such a debate, probably the first such initiative in any country of the 19-member euro zone.
“There will be signature checks early next year and a parliamentary debate will be held in the following months,” said Maija-Leena Paavola, who helps guide legislation through parliament.
The petition - which will continue to gather signatures until mid-January - demands a referendum on euro membership, but this would only go ahead if parliament backed the idea.
Despite the initiative, a Eurobarometer poll this month showed 64 percent of Finns backed the common currency, though that is down from 69 percent a year ago.
But the Nordic country has suffered three years of economic contraction and is currently performing worse than any other country in the euro zone.
Some Finns say the country’s prospects would improve if it returned to the markka currency and regained the ability to set its own interest rates, pointing to the example of neighbouring Sweden, which is outside the euro. The markka could then devalue against the euro, making Finnish exports less expensive.
“Since 2008 the Swedish economy has grown by 8 percent, while ours has shrunk by 6 percent,” said Paavo Vayrynen, a Finnish member of the European Parliament who launched the initiative.
“Now is a good time to have a wider debate whether we should continue in the eurozone or not,” said Vayrynen, a veteran lawmaker from the co-ruling Centre Party who is known for his opposition to greater European integration.
The centre-right government is struggling to balance public finances and improve export competitiveness through “internal devaluation”, including cuts to workers’ holidays and other benefits, amid opposition from unions.
Before 1992, Finland devaluated its markka currency time and again to improve export competitiveness.
Finland remains officially to eurozone membership.
“Finland is committed as a member of Economic and Monetary Union to promote the stability of the euro area,” the governing coalition says in its government programme.
However, some economists support the idea of ‘Fixit’.
A recent report by EuroThinkTank of Finland, a group critical of the euro, put the one-off cost of returning to a floating markka currency at as much as 20 billion euros, but said the move would make sense in the longer run.
“The exit would not be easy, but it must be viewed from the point of view of how it would help gross domestic product to grow,” said Vesa Kanniainen, a professor of economics at Helsinki University and a member of the group. ($1 = 0.9276 euros) (Additional reporting by Anna Ercanbrack; Editing by Gareth Jones)