Purra plans new €1 billion adjustment measures: “We have not managed to save enough”. Photo: Markku Ulander / Lehtikuva
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Finance Minister Riikka Purra said on Monday that further budget cuts remain an option as Finland’s economic recovery continues to face setbacks.
Speaking at a press conference in Helsinki, Purra outlined her response to the Ministry of Finance’s latest economic forecast, which predicts only modest growth over the next few years. GDP is expected to rise by around 1.0 percent in 2025, 1.5 percent in 2026, and 1.7 percent in 2027. Last year, the economy contracted by 0.1 percent.
“Any further adjustments must focus on genuinely non-essential spending,” she said. “I am not prepared to make additional cuts to social security, health and social care, or other essential services.”
Purra said there was no political appetite for raising taxes. She added that while the government is not currently negotiating new savings measures, she and the prime minister were aligned on revisiting the matter in autumn budget discussions.
Possible targets for cuts include development aid and business subsidies, though Purra stressed these were her own views and not binding government policy.
The ministry expects inflation to remain below one percent this year and under two percent for the forecast period. A drop in energy prices and lower housing costs are key drivers of this trend.
With inflation slowing, wages are expected to rise modestly. Real earnings, which factor in inflation, have begun to increase again. Still, high consumption taxes and reduced social benefits are dampening growth in average real incomes.
The forecast anticipates a gradual improvement in employment, with the jobless rate dropping to 8.8 percent in 2026 from 9.3 percent now.
Despite a slower rate of borrowing, Finland’s debt ratio is set to continue rising. The ministry projects the general government debt-to-GDP ratio will exceed 86 percent this year and reach more than 90 percent in 2029.
The forecast casts doubt on the government’s aim to stabilise the debt ratio by the end of its term. It cited the impact of spring tax cuts and increased defence expenditure as additional strains on public finances.
HT
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Source: www.helsinkitimes.fi
