2021 budget negotiations begin under coronavirus financial constraints

Apart from the impact of coronavirus on Finland's economic situation, there's a number of other pressing issues the government needs to tackle.

Prime Minister Sanna Marin (SDP) and Anikka Saarikko (Centre) arrive at House of the Estates in Helsinki for budget talks, 14th September 2020 / Credit: VNK

Government ministers have started the latest phase of their 2021 budget negotiations today, against the backdrop of the impact the coronavirus epidemic has had on Finland’s economy.

Talks are taking place at House of the Estates in Helsinki, and arriving at the venue this morning Prime Minister Sanna Marin (SDP) said the most important things to consider are the state of the economy, employment and the coronavirus epidemic.

“We have a realistic view of the economic situation and the need for an economic policy” she told reporters.

The PM has said she wants the discussions to last for just two days, but there is time for the negotiations to continue on Wednesday if needed.

Meanwhile Finance Minister Matti Vanhanen (Centre) says that one of the challenging thing about budget process this year – as a former prime minister he’s been involved in a few of these negotiations before – is how much of the future is still unknown.

“The epidemic with vaccines and the like, must be managed” he told reporters outside House of the Estates, adding that dealing with the economy and issues of employment and unemployment, were extremely important.

“We must create a vision of how to get out of the crisis. We must have an idea of what measures we should invest in so that they are directed correctly” he said.

Other ministers, including Foreign Minister Pekka Haavisto (Green) and Minister of Science and Culture Annika Saarikko (Centre) also said that recovering from the coronavirus crisis economically was a top priority.

So what are the other top budget priorities? 

Apart from the overall pressure of how to recover financially from the impact of the coronavirus epidemic, there are a number of issues specifically the government will need to tackle.

First of all, a plan to get back on track with raising Finland’s employment level to 75% which was derailed this spring, and that means creating at least 30,000 new jobs. Within government, the Centre Party would like to see this number raised even higher and the Swedish People’s Party have made employment policy one of their top issues to press as well.

There’s a new, more gentle, version of the activation model for employment in the pipeline which contains more support for individual job seekers, and fewer sanctions if they don’t or can’t find work.

Environment and peat

The government is also going to have to push forward with concrete action to meet its ambitious 2035 carbon netural target. The Greens are showing clear signs of frustration that not enough is being done – in particular over fossil fuels like peat in order to phase it out faster.

The Greens want more taxes on fossil fuels, enough to generate €100 million in extra tax revenues, but the Centre Party has been intransigent on any proposals which they consider harmful to peat farmers or the peat industry – voters who could be likely Centre Party supporters.

Veikkaus and funding for municipalities 

The revenues from Finland’s state-owned gaming company Veikkaus have fallen steeply this year and that means cultural organisations and other social NGOs are worried about the knock-on effect for their own funding.

In social and health care for example, third sector organisations provide important help for people with disabilities and their families, people with addiction problems, among a wide range of services. If this money is lost it would mean the end of such charitable assistance and the government needs to figure out how to replace those funds.

Veikkaus also helps fund culture and sports to the tune of €140 million each year which minister Saarikko has promised to replace with money in the budget.

And the financial situation of Finnish municipalities is looking very shaky during the coronavirus crisis and afterwards, with multiple warnings of a dire state of affairs in many different parts of the country. Municipal leaders are also now looking to central government to help make sure they have enough funding to keep operating.