29 November 2013

Finnish government decides on implementation of structural policy programme

The government hopes that this plan will help to rebalance public finance of a country which is one of the last in Europe to enjoy a triple A rating amongst the three main international ratings agencies. "After these decisions everyone can have greater confidence in the future of Finland", commented Finnish Prime Minister Jyrki Katainen during a press conference.

Excerpted from Government Decision

The Government’s structural policy programme will help reform institutional frameworks in economic activity as well as the incentives they create so that conditions for economic growth are strengthened. The reforms must, however, be reconciled with other economic policies in such a way that the overall package supports growth and employment also in the short term. It should be noted that economic recovery worldwide has also been slow and fragile since the economic crisis of 2008–2009.

To ensure that incipient demand and growth are not stifled, a balanced fiscal policy is required. There exists a degree of choice between structural policy and rapid adjustment measures: the more credible the structural policy that secures the sustainability of general government finances, the less need there will be in the short term for tax increases and spending cuts that will put the brakes on growth.

The economic policy choice can be encapsulated and simplified as follows: without a credible overall structural policy solution, there would a greater need to reduce the central government and local government deficits quickly. Large-scale adjustment measures implemented immediately would weaken demand and employment. The agreement of a credible structural package will give time for the controlled removal of the budget gap. The Government has chosen the latter option.

Press release

© Finnish Government