Finnish finance minister announces increase in social spending, appeals for more industrial investments

Source: Xinhua| 2019-08-15 05:41:47|Editor: yan
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HELSINKI, Aug. 14 (Xinhua) -- Finnish Finance Minister Mika Lintila on Thursday published the 2020 budget plan that largely reflected the program of the current left-center government.

"The budget aims at increasing the confidence of the people and the business community in the future, at a time when uncertainty grows in the world economy," the ministry formulated.

The total of the budget would increase from 55 billion euro in 2019 to 57 billion 2020. The budget would show a 2.3 billion deficit, covered partially with new debt.

The government would ease the taxation of low and medium income households and increase small pensions. There would be increases in taxation of consumption, especially on fuel. There would be additional funding for education, following cutbacks during the previous cabinet.

Talking to the media, Lintila expressed concern with the sluggish industrial investment rates that have continued since 2008. In Finland investments fall far below the level in Sweden and Germany. Lintila assured that the governmental plan does not worsen the business environment. "The business sector would be welcome to talk with the government if they see negative measures", he said.

The budget plan is based on the assumption that taxation revenue will increase and the cost for unemployment support will decline. But during the intervening time, additional debt will be required. Lintila said the cabinet aims at a budget balance in 2023.

Petteri Orpo, then finance minister of the previous center-right coalition, described the budget as a "dramatic change of policy line". In a TV debate with Lintila on Wednesday evening, Orpo highlighted that "governmental spending is increased while there is no knowledge yet of money coming in".

Hannu Tikkala, a political analyst at the national broadcaster Yle, summed that the budget draft is taking Finland "towards the left". "It increases the public sector expenditure and in employment policies the government uses the carrots instead of sticks."

The news about a downturn in the German economy reached Finland just before Lintila's announcement. Germany is the most important trading partner of Finland. Lintila described the news from Germany as "anticipated" and again underlined the importance of domestic confidence.

The full coalition cabinet will finalize the budget in mid September. It is expected then to take decisions about public sector investments, mainly in infrastructure, that would be financed through sales of state holdings.