Economic policy conclusions

Finnish public finances are in a structurally weak position despite the current cyclical upswing, and they are facing new permanent expenditure pressures, such as strengthening defence and cyber security, the green transition, and increased social security needs due to higher prices.

To finance these pressures, adjustment measures are proposed, including spending cuts, higher taxation, and improvements in public sector productivity. From a policy perspective, these measures would be particularly appropriate to implement during a strong cyclical phase. Cutting business subsidies is seen as one key instrument for improving public finances and curbing overheating in the labour market.

In the long term, fiscal sustainability depends primarily on strengthening productivity growth, which can be supported through innovation, R&D activities, and the diffusion of knowledge, although some subsidy policies may simultaneously increase costs and wage pressures. (AI translation)

• Publication in PDF-format