Thursday 15 September 2011

Finland: budget disciplinarian seeing red

In the world of intergovernmental EU economic and eurozone politics, Finland is seen as one of the disciplinarian hawks alongside Germany, Austria and the Netherlands.

However, the return path to sustainable public finances is slow and difficult.

Yesterday evening, the Finnish ”six-pack” government agreed on its budget proposal for next year, after only a day of cross-party talks.

The 2012 budget of Finland promises to be EUR 7.1 billion in the red, which is 13.6 per cent of total central government expenditure amounting to EUR 52.3 billion.

The government points out that the projected 2011 central government deficit is EUR 8.2 billion, so the deficit decreases by more than a billion in absolute terms in 2012. The improved balance is based on expenditure cuts as well as increased revenue through economic growth and higher taxes.

The government plans to shrink the deficit at a measured pace until the end of the electoral period, both in absolute terms and relative to GDP.

Next year the government debt of AAA-rated Finland will grow to EUR 89 billion, but about 44 per cent of GDP is still unusually low in the European Union and the eurozone.


Ministry of Finance (Finland), press release 14 September 2011: Government budget proposal for 2012, key figures in the spending limits decision and Finland's economic outlook

Ralf Grahn

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