The Finance Minister, Mr. Orpo, has set out the expected outcomes of the country’s public budget today at a meeting with the press.
He outlined the big improvements in GDP growth – now going on above 3% compared to last year, the big improvement in exports, and the signs that investment activity is beginning to pick up in the SME and industrial sectors.
Exports have actually grown faster than world trade so Finnish companies have done well and captured new markets – “great positive news” as Trump News would tweet, and that is expected to continue!
However, the level of unemployment is coming down a little too slowly and the employment rate is still below 70% which is still too far from the “planned” 72%. More of that later.
The government’s debt is still increasing but this is expected now to flatten off at 60% of GDP. The government cannot give any ground to new costs, since an ageing population will require higher healthcare costs in the coming decades. Every possibly action to reduce debt now is at the top of his agenda.
It was interesting that the Minister did not try to hide the not so good news. He pointed out that the government was only succeeding on 2 objectives – debt and tax revenues as a percentage of GDP. The other 3 objectives – borrowing will continue to increase after 2021, the employment rate of 72% will not be achieved, and tax revenue from work will not be reduced without further measures.
The Minister stated categorically that the 72% employment rate is far too low when compared to our Nordic neighbours who have employment rates way above 80%. He also said that too many workers are in the wrong places and need to move where there are job opportunities. More men and women need to be retrained for the new jobs that are now growing, while older traditional jobs are seeing less demand. Finally the government needs to balance the budget as soon as possible with a whole collection of different measures, accompanied with stronger sustained economic growth and a more flexible labor market.
The government will continue with budget negotiations over the coming 2 months.