March 5. 2024. 12:50

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Finnish parties turn focus to budget balance ahead of elections

Balancing the state budget and reducing indebtedness as the national debt has risen to €144 billion has become a hot topic among Finnish parties ahead of the elections.

A catchphrase from the 1992 US elections, ”it’s the economy, stupid”, holds true also in the April elections in Finland. Currently, the national debt of Finland has risen to €144 billion, equating to around €26,000 per citizen.

To plug the deficit, parties on the right would cut taxes and social benefits, and those on the left would rely on economic growth and taxing the rich.

The debate rose to a new level when the current Finance Minister Annika Saarikko (Centre) raised the alarm and announced that the next government might have to borrow a minimum of at least €10 billion a year during its four-year term just to manage the interest payments on the current state debt.

One possible solution was offered Monday by the Finnish Business and Policy Forum (EVA), a conservative think-tank close to employers, in its report titled ”An Economic Compass for Political Leaders”.

Finland would need to implement cuts worth €13 billion in the next eight years, said EVA.

EVA offers four options for Finland to choose from in the coming years. In the so-called ”chamberlain” alternative, state spending would be simply and swiftly axed across the board and even education would not be left out. The ”state tax” option would mean tax raises, while a ”minimal state” would lead to a gradual erosion of the welfare state.

Presumably, the most likely route could be the one EVA named “reformist,” entailing both cuts and new approaches. The measures would include at least a higher retirement age, changes to unemployment benefits and increased immigration – all of which are politically contested.

Parliamentary elections will be held in Finland on 2 April 2023.

(Pekka Vänttinen |