Budget talks continue for second day, as 2021 deficit could top €7 billion

Party leaders are meeting to try and reach agreement on some of the key issues - while the PM concedes talks will likely continue for a third day.

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Prime Minister Sanna Marin (SDP) arrives for second day of budget talks at House of the Estates in Helsinki, 15th September 2020 / Credit: VNK

Government party leaders are meeting again in Helsinki for a second day of talks to set the 2021 budget.

It’s supposed to be the last day of discussions, however, Prime Minister Sanna Marin (SDP) says it looks like talks will continue on Wednesday as well.

“Hopefully today we will resolve several of these big issues that are currently still causing inconvenience between the governing parties. It may be that calendar reservations are needed for tomorrow” she told reporters on arrival at the House of the Estates.

Minister of Finance Matti Vanhanen (Centre) said on Tuesday morning that the talks themselves were not exceptionally difficult, but rather they are exceptionally broad in scope: taking in big topics like employment and fossil fuel taxation, and how to best use a €3.2 billion windfall coming Finland’s way from the EU’s coronavirus recovery fund.

In an interview with MTV Uutiset after the first day of talks, Vanhanen cautioned that the unknown financial factors associated with tackling the coronavirus epidemic could push Finland’s budget deficit over €7 billion next year.

“If there are 30,000 tests each day and just over €100 per test, then we go into the realm of more than a billion euros for testing alone. This is big money, and it will be reflected in the fact that the €7 billion deficit will clearly be higher” he told the channel.

What are some of the biggest budget issues?

The latest phase of the 2021 budget preparation talks are focused around a number of high priority issues including getting the economy back on track and increasing employment for the post-Covid-19 period. This includes working out a new activation model for getting people back to work.

There’s also intense discussions about finding ways to tax fossil fuels like peat and moving forward with more concrete action to meet the climate neutral targets – something the Greens in particular have pushed for, but the Centre Party has been reluctant to tackle.

And there’s a need too to figure out how to replace funding for arts, sports, science and third sector charities from falling Veikkaus revenues.

Ministers also have to agree on how to protect the financial situation of municipalities, which have been hit particularly hard by the coronavirus economic impact.