Government budget negotiations

10.08.2001  |  Press release

The Finnish Government presented on August 10 its budget proposal for 2002. The Government counters weakening economic developments by reducing income taxes and employers' social security contributions. Central government expenditures amount to 34.6 billion euros which marginally exceeds the medium-term guidelines. The central government surplus amounts to ½ per cent of GDP which compares to 1.9 per cent in this year. Correspondingly, the general government surplus will fall from 4.4 per cent in 2001 to 2½ per cent in 2002.

Uncertain economic situation

The budget proposal has been prepared in an exceptionally uncertain economic situation. Economic growth in Finland has clearly retarded after the long expansion. The prospects are highly dependent on the international situation, which is now subject to a range of severe risks. The growth forecast for the Finnish economy has been downgraded to 2.7 per cent for this year and 2.5 per cent in 2002.

The employment rate will increase to 67.7 per cent this year, but only slightly next year. The unemployment rate is set to decrease by almost one percentage point in 2001 to 9 per cent, but is expected to remain virtually unchanged in 2002.

Structural policy

The age structure will change exceptionally fast in Finland in the next two decades. It is, therefore, necessary to prepare for this change which will reduce the growth potential and increase pressures on public expenditures. To meet this challenge, employment has to be increased, e.g., by reducing the heavy tax burden. Also, it is important to reduce public debt and corresponding interest burden in order to create room for future expenditure pressures.

The government expects that the work aiming at reforming the unemployment insurance and pension systems will result in proposals during Autumn 2001 so that the required legislative changes can be made during Spring 2002.

For further information:
Mr. Timo Viherkenttä, Director General, tel. +358 9 160 3105 and
Mr. Martti Hetemäki, Director General, tel. +358 9 160 3177

Language versions

• Hallituksen budjettineuvottelut 10.8.2001
  10.08.2001
• Regeringens budgetförhandlingar 10.8.2001
  10.08.2001

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