Revision of Finland's stability programme: Public finances remain in surplus, but central government finances turn into deficit

02.12.2004  |  Press release 140/2004

The surplus on Finland's public finances during the period 2005-2008 will remain at about two per cent in relation to total output. The surplus will be based on savings by the employment pensions institutions, as municipal and central government finances will be in deficit during the entire programme period, according to a revision of the stability programme that was approved by the Government on 2 December 2004 and will be sent to the EU.

In connection with the comprehensive incomes policy agreement, the Government is committed to new tax cuts and to expenditure that will strengthen the competitiveness of the Finnish economy. Apart from 2005, the tax and expenditure decisions will only be implemented if the negotiation outcome reached by the central labour market organizations wins sufficient approval in union-level negotiations. The incomes settlement and the tax cuts supporting it would reduce the surplus on public finances by one-third of a percentage point in relation to the programme's basic scenario by 2007. Employment is expected to increase by one and a half per cent in the same period as a result of the agreement.

The Government's commitment to medium-term stability has ensured consumer confidence. Companies' prospects have also strengthened. International competition has, however, become tougher as a result of the innovative spirit in high-productivity countries and, in particular, cost competition in emerging countries. This will require the continuation of structural reforms that will increase productivity and flexibility in the economy, the Government states in the programme.

An increase in employment is crucial if the financial pressure brought by the ageing of the population is to be kept under control. The Government's main economic policy target is to increase employment by 100,000 during the electoral period 2003-2007. The recent settlement will make it easier to reach this goal. Even if the target schedule had to be revised slightly, it would still be possible to achieve the goal before the end of the decade.

Further information is available from Markus Sovala, Head of the Economic Policy Unit, tel. + 358 (0)40 761 2723

Language versions

• Suomen vakausohjelman tarkistus: Julkinen talous pysyy ylijäämäisenä, mutta valtiontalous kääntyy alijäämäiseksi
  02.12.2004
• Uppdatering av Finlands stabilitetsprogram: den offentliga ekonomin uppvisar ett fortlöpande överskott, men statsekonomin börjar få underskott
  02.12.2004

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