PM Petteri Orpo’s administration began budget framework talks on Tuesday that are expected to shape Finland’s economic policy for the rest of its term in office.
Members of the Finnish government gathered at the House of the Estates in Helsinki on Tuesday morning to begin negotiations on state spending and revenue for the coming year.
Prime Minister Petteri Orpo (NCP) told reporters that the government plans to save a total of 700 million euros in next year’s budget. Of that sum, 400 million euros would come through compensatory savings measures.
He added that some of the government’s earlier austerity policies have not delivered the expected results.
According to Orpo, the main goal of the talks is to strengthen Finland’s economic growth, as he noted that global developments since the start of the year have left the government with limited room for manoeuvre in the negotiations.
Ministers were greeted by protestors at the doors of the House of the Estates as they arrived on Tuesday morning. The demonstrators called on the government to stop cutting from essential services, such as health and social care, as well as from the funding of organisations.
No change to spending limits
Speaking to reporters before the meeting began, Minister of Finance Riikka Purra (Finns) said the government intends to stick to its planned spending framework despite external economic shocks. Any spending increase, she noted, would have to be financed through further savings.
Purra added that growth and employment measures would also need to be funded through new savings. The Ministry of Finance is expected to publish updated forecasts after the talks.
Another possible source of funding discussed during the negotiations is the sale of state assets, with proceeds potentially going towards new public investments.
The National Coalition Party is also pushing to increase the household tax deduction as part of the budget talks.
This spring’s negotiations come after several years of significant cuts and reforms under the Orpo government. The coalition has introduced extensive labour market changes and sought to balance public finances through spending cuts.
Government targets social service savings
On Friday, Minister of Social Affairs and Health Wille Rydman (Finns) said further cuts to social services were being prepared, with savings expected to rise to 100 million euros next year.
The government is proposing some 55 million euros in social welfare savings next year, with social rehabilitation services facing reductions.
In addition, patient fees for 24-hour assisted living and institutional care would be increased. A further 218 million euros in compensatory savings is expected through adjustments in the health and social care sector.
Some of the planned savings would take effect from July 2027.
Increase in pension spending
On Sunday, Helsingin Sanomat and Yle reported that the governing parties had reached an agreement on entrepreneurs’ pensions. The deal is expected to increase state spending by around 80 million euros by 2030.
“Since the beginning of the government term, we have said that we will correct the pension reform for entrepreneurs from last term. This is a growth measure in a situation where smaller entrepreneurs in particular have fallen under these payments”, Purra said.
Under the proposed model, entrepreneurs would be able to choose whether pension contributions are calculated on the basis of imputed earned income or actual income.
Expansion of Kela benefits proposed
Additionally, Yle and STT reported on Monday that the government is considering expanding a pilot scheme offering private healthcare services to people aged 65 and over. The reform would not increase planned spending, as the trial has been less popular than expected.
Other issues under discussion include additional investments in drone countermeasures, possible compensation for higher living costs linked to the war in Iran, and temporary changes to transfer tax.
The negotiations can be expected to continue into Wednesday, although Orpo said it was not yet certain whether a second day would be needed.
