NordenBladet — Early this year, Twinning activities were extended to seven new countries under the three-year pilot of the European Commission’s Directorate-General for International Partnerships (DG INTPA). The results of the calls for proposals for the first two pilot projects have already been published, and Finland is very proud to have been awarded both projects. Finland will now help Zambia enhance anti-corruption measures and audits of central government finances. Winning these two tenders is a fine complement to Finland’s recent successes in Twinning projects. Recent extension of Twinning activities opens new opportunities for cooperation. Finland’s Twinning cooperation in Zambia is due to begin in summer 2021. In the picture: River Kafue. Photo: Pirjo Suomela-ChowdhuryExtending Twinning beyond its traditional cooperation areas is a milestone that comes with numerous new opportunities. For the European Union, Twinning is an important instrument for supporting further development of public administration and legislation in its neighbouring areas, in the target countries of the EU’s enlargement and neighbourhood policy. Under the DG INTPA pilot, projects will be implemented not only in Zambia but also in Senegal, Madagascar, Namibia, Kyrgyzstan, Indonesia and the Dominican Republic. Assistance will be provided in various sectors, the themes spanning from development of the court system to areas such as renewable energy, promotion of digital transformation and strengthening public services to meet the requirements of international trade.“It is excellent news that Finland is now actively involved in the new openings made under Twinning. Having already established our position in development work in the neighbouring areas of the EU, we now get the chance to export our expertise further afield. Finland is the only EU Member State to participate in both Zambian projects. Twinning is a very tangible way for Finland to be globally influential,” says Matti Anttonen, Permanent State Secretary at the Ministry for Foreign Affairs.Zambia, a new opening for HAUSThe project related to anti-corruption action is designed to primarily strengthen the operating conditions of the Zambian Anti-Corruption Commission. It is set to promote the administration and technical capacity of the Commission and to improve cooperation with other agencies involved in anti-corruption activities. The focus will be on updating current legal framework enhancing criminal investigation and prosecution practices, and communicating about anti-corruption activities.The Finnish and German consortium is led by HAUS Finnish Institute of Public Management Ltd, with participation of the German Foundation for International Legal Cooperation (IRZ).The other Twinning project of Finland aims to strengthen the capacity of Zambian authorities to manage public funds efficiently and accountably. Finland shall cooperate with Croatia and Austria, which is the lead EU Member State of the consortium, and the beneficiary is the Office of the Auditor General in Zambia (OAG). The concrete objectives are related to updating the Office’s mandate, better monitoring of the use of public funds and strengthening the Office’s administrative services and the wellbeing of its employees. In this consortium, too, Finnish expertise in public administration is exported to Zambia under the leadership and coordination of HAUS Finnish Institute of Public Management Ltd.“HAUS has already long been involved in Twinning activities, cooperating with many partner countries. We have often been the first Finnish Twinning partner in new target countries. We learnt about Finland’s success in the anti-corruption project on the same day that the Finnish Government released Finland’s Africa Strategy. We are particularly happy and proud of these achievements, for many reasons. Winning these Zambia projects also marks the 50th anniversary of HAUS in a nice way,” says Heidi Lempinen, Director at HAUS International.Both projects will span over three years, and they are due to start in the coming summer.Twinning supports Finland’s Africa StrategyEU Member States compete for Twinning projects by submitting tenders, and implementing parties will subsequently be selected by partner countries. Founded on collegiality and the sharing of best practices, Twinning brings together public officials working on the same issues in EU Member States and partner countries.Although the coronavirus pandemic has prevented travel and forced the projects to resume their work remotely, cooperation between individuals remains at the core of the activities.Twinning also provides an excellent tool for supporting the implementation of Finland’s recent Africa Strategy.“Finland and Zambia share a long experience in joint projects. Over the years, stronger governance has been one of the lead themes in Finland’s development aid, and we now welcome the chance to engage in such cooperation under EU funding. By winning these Twinning projects, Finland continues its strong presence in the development of Zambian public administration over the next few years,” notes Finland’s Ambassador to Lusaka Pirjo Suomela-Chowdhury. Eerikki Vainio, Specialist, the Twinning Team of the Ministry for Foreign Affairs

Source: Valtioneuvosto.fi

NordenBladet — Minister for Foreign Affairs Pekka Haavisto will meet Hungarian Minister of Foreign Affairs Péter Szijjártó in Helsinki on Wednesday 5 May.The Ministers will discuss the bilateral relations between Finland and Hungary, topical international and EU matters, as well as Hungary’s Presidency of the Committee of Ministers of the Council of Europe, which will start on 21 May. The Hungarian Minister of Foreign Affairs will also have a meeting with Minister of Economic Affairs Mika Lintilä.  

Source: Valtioneuvosto.fi

NordenBladet — The final report of a trust survey by the Organisation for Economic Co-operation and Development (OECD) provides current information on people’s trust in government and public institutions in Finland and sets out recommendations on how government and governance can be improved to build and maintain public trust. The final report was published today, 4 May, in an online event opened by Minister of Local Government Sirpa Paatero.Significant differences in level of trust “Government exists to serve citizens. The legitimacy of a welfare state with extensive public admin-istration is based on people’s trust that it will generate wellbeing. The OECD survey is valuable, as it tells us that government and public institutions are trusted, but at the same time it points out where we can make improvements, for instance in services,” says Minister of Local Government Sirpa Paatero.In Finland there is a high level of public trust, and the country performs well in international comparisons of trust. The OECD report nevertheless shows that despite the high national average, public trust in different institutions varies. According to the survey, 66% of citizens trust central government (the ‘civil service’), 61% trust the Government in power, 53% trust Parliament and 52% trust local government. There are significant regional and demographic differences in these figures. Trust in government and public institutions is weaker for rural residents and among people with lower levels of education and income. If the disparities in trust deepen, this may weaken social cohesion and Finland’s ability to cope with the challenges of an ageing population, climate change, digitalisation and the transformation of work. Report points to Finnish paradoxAlthough people’s trust in public institutions and their satisfaction with democracy is high, the proportion who believe they can influence political processes is small (i.e. political efficacy is relatively low) compared to other high-trust countries. The OECD emphasises that potential marginalisation in certain population groups should be tackled by promoting broader social dialogue in Finland.The OECD analyses the challenges related to trust in Finland and identifies opportunities to address them. The report’s recommendations for action focus especially on the ability of government to respond to people’s changing expectations and needs, and to future challenges. In addition to well-functioning, high-quality and accessible public services, it is essential to secure a stable economic environment. The OECD’s recommendations for government and public institutions relate to improving the measurement of trust, ensuring services meet people’s expectations and needs, more inclusive forms of policy preparation and decision-making, increased transparency, public integrity, and fairness and non-discrimination. Government actions in COVID-19 crisis influenced people’s trustThe OECD notes that in Finland people displayed a high level of trust in the Government’s ability to manage the COVID-19 crisis, keep the public informed and address the economic and social consequences of the pandemic. People with higher levels of trust in public institutions complied more willingly with the restrictions and guidelines imposed during the crisis. The OECD emphasises the importance of trust in dealing with and getting over a crisis.Next stepsThe OECD recommendations will be examined closely in a cross-government working group. The working group will determine which of the recommendations can be pursued in existing programmes or projects and which require further work or additional studies.The OECD trust survey was commissioned by the Ministry of Finance and carried out by the OECD Directorate for Public Governance. The survey also made use of other data and materials, such as a survey commissioned from Statistics Finland, the regular Citizens’ Pulse survey and the Lockdown Dialogues summaries. In addition, the OECD interviewed various representatives of Finnish public institutions, government and civil society, as well as researchers.

Source: Valtioneuvosto.fi

NordenBladet — At the end of March, a total of 331,500 unemployed jobseekers were registered at the Employment and Economic Development Offices and municipalities participating in the local government pilots on employment. This represents an increase of 22,500 from the previous year. The number of unemployed jobseekers increased by 4,400 from the previous month. Of the unemployed jobseekers, 162,200 were customers of municipalities participating in the local government pilots on employment. The number of unemployed jobseekers also includes those fully laid off. These figures are from the Employment Bulletin of the Ministry of Economic Affairs and Employment.At the end of March, the number of people laid off was 79,500 in the whole country; a year-on-year increase of 5,500. The number of people fully laid off totalled 62,700, representing a decrease of 2,600 from March the year before. The number of people fully laid off increased by 7,100 from February.The number of long-term unemployed — that is those who had been unemployed without interruption for at least a year — amounted to 104,000, up 39,100 on the previous year. The number of unemployed jobseekers aged over 50 was 120,000, representing an increase of 12,700 on the year before.Unemployed jobseekers under 25 years of age numbered 40,600, representing a decrease of 500 from March last year. Among unemployed young people, the period of unemployment ended within three months on average in 54.9% of cases between January and March, which is 10.3 percentage points less than the year before.Increase in new vacanciesThe number of new vacancies reported during March totalled 77,700, or 14,200 more than in March the previous year. The total number of unfilled vacancies amounted to 162,500 in March, which was 12,600 more than a year ago.At the end of March, the number of persons covered by services included in the activation rate amounted to 117,100, down 2,100 on the previous year. These services include pay subsidies, labour market training, work trials and self-motivated studies.Statistics Finland: Unemployment rate 8.1%According to the Labour Force Survey issued by Statistics Finland, in March the number of people in employment was 22,000 more than on the previous year. The employment rate was 70.7%, which was 0.5 percentage points higher than in March the year before. According to the Survey, the unemployment total was 219,000, which is 24,000 more than a year ago. The unemployment rate was 8.1%, or 0.8 percentage points higher than the previous year.Press release on the revision of the Labour Force Survey: https://www.stat.fi/til/tyti/tyti_2020-12-22_uut_001_en.htmlKey differences between Employment Service Statistics and the Labour Force SurveyThis information is based on the Ministry of Economic Affairs and Employment’s Employment Service Statistics and the Labour Force Survey of Statistics Finland. The Employment Service Statistics of the Ministry are compiled on the basis of the information in the Employment and Economic Development Offices’ customer register, while the Labour Force Survey of Statistics Finland is based on sampling.In the Ministry’s Employment Service Statistics, people that are not in an employment relationship or employed in business are listed as unemployed. Persons fully laid-off but not full-time students are also categorised as unemployed in the Employment Service Statistics. The Labour Force Survey of Statistics Finland has a stricter definition of being unemployed: a person is unemployed if he or she has actively sought employment during the preceding four weeks and is available for work over the coming two weeks. The figures of the Labour Force Survey of Statistics Finland are internationally comparable and thus they are the official Finnish unemployment statistics.Further information on the differences in the statistics https://tilastokeskus.fi/til/tyti/tyti_2019-09-13_men_001_en.html

Source: Valtioneuvosto.fi

NordenBladet — Finland has been accepted as one of the Global Champions countries promoting the preparation of the High-level Dialogue on Energy to be held in New York in September 2021 in connection to the UN General Assembly.Finland will participate in the preparation of the Innovation, Technology and Data theme of the Dialogue on Energy. Minister of Economic Affairs Mika Lintilä will represent Finland and act as a Minister Champion of the international dialogue. – We applied for this role at the request of the European Commission, because Finland is known as a pioneer in clean energy transition and low-carbon issues. We also have a lot to contribute to the dialogue as a promoter and enabler of innovations and clean technologies, Minister Lintilä says.Other Global Champions countries for the theme of Innovation, Technology and Data are Mauritius, Morocco and the Russian Federation. The other four themes of the High-level Dialogue on Energy are Energy Access, Energy Transition, Enabling SDGs through inclusive, just energy transitions and Finance and Investment. Over 30 Global Champions countries from around the world are preparing the themes.The main task of each Champions country is to lead international outreach work on its own theme, as well as to co-host Ministerial-level Thematic Forums with the other Champions countries with the same theme. – This dialogue is very timely, as the energy sector is facing an ambitious change to achieve the objectives of the Paris Agreement. In addition, we are working together to achieve the UN Sustainable Development Goal on Energy. The UN Sustainable Development Goal 7 seeks to ensure affordable, reliable, sustainable and modern energy supply for all, Minister Lintilä emphasises.– I believe that the development of innovative climate and energy technologies is the key to success and to achieving of climate goals around the world. Long-term decision-making and a stable regulatory environment are important for all stakeholders in promoting the transition to climate neutrality. In the energy sector, political measures can last for decades and investment decisions are made in the long term, Lintilä reminds.The cross-cutting Innovation, Technology and Data theme will focus on advancing energy access and energy transitions as well as enabling the SDGs through the development and application of data, technology, innovation, research and capacity building measures. The preparatory work will be carried out in Technical Working Groups of experts, which will prepare the content of the theme and submit their reports on the work done in May.  The VTT Technology Research Centre of Finland will participate in the preparatory work of the Working Group on Innovation, Technology and Data. Further information:
Teppo Säkkinen, Senior Adviser to Minister of Economic Affairs, tel. +358 50 516 2868
Matti Lassila, Senior Adviser, Ministry for Foreign Affairs, tel. +358 50 467 9186
Nina Alatalo, Adviser to Minister of Economic Affairs, (EU and international affairs), Ministry of Economic Affairs and Employment, tel. +358 29 504 7171 
Katja Tuokko,  Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 29 504 7660
 

Source: Valtioneuvosto.fi

NordenBladet — Finland has published the online course ‘Elements of AI’ in 21 EU countries in their languages. Latvia was the first country to launch the course in May 2020, and Spain and Slovenia the last ones in April 2021.During its EU Presidency in December 2019, Finland decided to invest in the future skills of Europeans and to offer the Elements of AI online course to all Member States for free.  The objective is to train one per cent of EU citizens in the basics of artificial intelligence, thereby strengthening digital leadership within the EU. The course was designed and organised by the University of Helsinki and Reaktor, a Finnish technology company.“Digitalisation speeds up the transformation of work and requires new competencies from employees. At the same time, it offers solutions to learning new skills. An online course on the basics of artificial intelligence is a great example of how we can support the lifelong learning of Europeans. There is also a need for this course in the future,” Minister of Employment Tuula Haatainen says.“It is important for Finland to improve Europe’s digital leadership, and we believe that AI and other new technologies will increase economic growth and competitiveness in the EU. The Elements of AI course is a necessary initiative and its launch is a good starting point for long-term work,” Minister of Economic Affairs Mika Lintilä says.More than 240,000 people enrolled in the course in the EUAcross the EU, 244,902 people have enrolled in the course, which represents 0.055% of the population. Of those enrolled in the course, 15.9% complete it. About 55% of the participants are men and the rest are women.  “Approximately 2% of Finnish people have completed the course and I encourage all Europeans to explore it. A key idea at our university is that science and learning belong to everybody. This course is one way to invest in the skills of citizens, promote lifelong learning and meet the society’s need for information,” says Sari Lindblom, Rector of the University of Helsinki.Of the new countries, the proportion of the population enrolled in the course is highest in Croatia (more than 21,000 participants, or 0.5% of the population) and in Latvia (around 7,200 participants, or 0.4% of the population). Meanwhile, the number of those enrolled who completed the course is the highest in Luxembourg, the Netherlands and Italy, around 15–19%. Sweden and Estonia hold the top spots in the statistics, because the course has been available there already before Finland’s initiative. Worldwide, more than 660,000 have participated in the course.“Artificial intelligence is not a robot revolution, but an everyday thing that does not need to be mystified. The course offers a kind of science-based vaccination against all the hype and misleading click headlines on artificial intelligence. Our aim is to involve citizens in thinking about new AI applications so that artificial intelligence can be developed to meet people’s real needs,” says Professor Teemu Roos, who is responsible for teaching the course.Local partners support the course in EU countriesThere is a local academic partner and other partners in each EU country who will make the course known even after the launch. The Finnish missions in the Member States are also involved in this work.“Exporting Finnish technology expertise to Europe is one of our key objectives, and education is an important part of it. The Elements of AI has been able to reach people extensively regardless of their age, gender or educational background. We hope that the course will encourage people to go online and study other new technologies,” says Managing Director Ville Valtonen from Reaktor Education.“The project will improve Finland’s reputation as a leading country in education and digitalisation. With the help of Elements of AI, we want to ensure not only our own level of competence but also that of other EU citizens. We offer education and expertise to others too. The project is also of great value in terms of country image,” says Laura Kamras, Director of the Unit for Public Diplomacy at the Ministry for Foreign Affairs.The course has now been published in the Netherlands, Belgium, Bulgaria, Spain, Ireland, Italy, Austria, Greece, Croatia, Latvia, Lithuania, Luxembourg, Malta, Poland, Portugal, France, Romania, Slovakia, Slovenia, Denmark and the Czech Republic. The course was available in Estonia, Sweden and Germany already before Finland’s initiative during the EU Presidency.  The language translations for the course has been provided by the European Commission.

Source: Valtioneuvosto.fi

NordenBladet — On Friday 30 April, the President of the Republic and the Ministerial Committee on Foreign and Security Policy discussed Finland’s participation in NATO mission in Iraq (NMI).

The meeting also discussed the preparation of the Government’s Defence Report.In addition, the President and the Ministerial Committee discussed the Strategic Compass on EU security and defence cooperation for the coming years, which focuses in particular on developing the EU’s crisis management, resilience, capabilities and partnerships

NordenBladet — In its mid-term policy review, the Government published a sustainability roadmap that describes the current state of social, economic and ecological sustainability in Finland and sets goals for 2030. The roadmap gives specific form to the Government Programme’s goal of a socially, economically and ecologically sustainable society.

Development is sustainable when the objectives of ecological, social and economic sustainability are fulfilled and when they support one another. In its mid-term policy review, the Government decided to clarify its goals for these three elements of sustainability and to highlight the interdependence between them. The work will be completed before the government spending limits discussion in 2022.

The impact of the roadmap’s measures on public finances will be taken into account during the implementation. The measures will be implemented as part of the General Government Fiscal Plan within the framework of central government spending limits.

Coronavirus pandemic brought challenges to social sustainability – Government’s aim is that Finland will be the world’s most stable society by 2030
The Government’s goal is to reduce poverty and inequality, decrease income disparities and support the rule of law in Finland and globally, and to promote the economy of wellbeing and the conditions for a good life at all stages of people’s lives.

The roadmap acknowledges the challenges that the coronavirus pandemic has posed to social sustainability. The pandemic has increased inequality, because it has often been the same people who are affected by many of its adverse social impacts. In particular, the wellbeing of children, young people and families has suffered. The employment rate has fallen and unemployment has grown during the pandemic. Pandemic-related restrictions have also made it difficult for companies to operate. As a result of the restrictions, many social services have been on hold. With a growing and lengthening backlog in these services, there is a risk that people’s lives will become significantly more difficult. With regard to Finland’s global responsibility, the pandemic has brought particular challenges to the ability to meet sustainable development goals internationally.

The Government’s goal for 2030 is that Finland will be the most stable society in the world, where fundamental and human rights, democracy and the security of citizens are at a high level.

The roadmap’s social sustainability goals for 2030 are:
The level of trust and security will be high in Finland
Finland will be a global leader in gender equality Poverty and exclusion will have decreased in Finland and more people will have jobs Finland will be a country of equality and non-discrimination that looks after the wellbeing of the entire population

The level of skills, competence, education and culture will be high in Finland
Economic sustainability – reversing the upward trend in the general government debt ratio requires substantial measures

General government finances must be stable and sustainably managed if we are to provide decent, high-quality services and secure the livelihood of the population. The Government is committed to strengthening the long-term sustainability of general government finances, which is a particular focus of the sustainability roadmap. Finland’s general government finances have been in deficit since 2009. The growth in central government debt has been accelerated by the pandemic, deepening the general government deficit, although the debt has remained lower than the EU average throughout the crisis. The high level and rapid growth of central government guarantee liabilities has also increased the risks within general government finances. General government finances have been adversely affected by the ageing of the population and by the slackening growth in the economy. Finland’s gross domestic product (GDP) per capita has fallen behind that of the other Nordic countries. The employment rate is also significantly below that of the other Nordic countries, despite a favourable pre-pandemic trend that remained far better than anticipated during the crisis. Well-balanced fiscal policy has mitigated the depth of the economic crisis during the pandemic and has improved the conditions for rapid post-pandemic recovery.

Without measures to strengthen general government finances, the debt burden will continue to grow after the COVID-19 crisis is over. The increase in the number of older people in Finland will push up general government expenditure, especially expenditure on care services but also pension and health expenditure. At the same time, the working-age population is shrinking, weakening the financing base for general government finances. Economic growth in Finland is primarily generated by productivity growth, and the most important factors for productivity growth are competence and innovation. A successfully operating welfare state, effective infrastructure, education, training, research and close integration with the world economy form the foundation for Finland’s economic success and growth.

The Government’s aim is to achieve a reversal in the upward trend in the general government debt-to-GDP ratio in the mid-2020s. Stabilising the debt ratio will require the strengthening of general government finances. Measures to safeguard the long-term sustainability of government finances must also continue beyond the current parliamentary term. The measures aim to increase employment and reduce unemployment, and to improve the conditions for economic growth by strengthening the competitiveness of Finnish production, increasing work-based immigration and strengthening skill levels and continuous learning. The Government will also promote economic sustainability through measures aiming to strengthen the productivity and cost-effectiveness of public administration and by implementing the healthcare and social welfare reform.

The roadmap’s economic sustainability goals for 2030 are:

There will be an increase of 80,000 in the number of people working in Finland following the Government’s employment measures, and the employment rate will be at a good Nordic level

Finland will be an attractive place to live and work and to run a business
Finland’s public services will be of the highest level in terms of quality and cost-effectiveness.Ecological sustainability requires reducing the absolute consumption of natural resources and a transition to a carbon-neutral circular economy and bioeconomy

The aim of ecological sustainability is to ensure the wellbeing of nature and the environment, the functioning of ecosystems and their regeneration capacity now and in the future. Climate change, loss of biodiversity and overconsumption of natural resources are among the greatest challenges humankind is facing, and they have major impacts on the achievement of ecological sustainability.

The Government aims to make Finland carbon neutral by 2035, halt biodiversity loss, advance the bioeconomy and circular economy, increase the sustainability of the food system and improve animal welfare. The Government aims to reduce the consumption of non-renewable natural resources and to replace it with the sustainable use of renewable natural resources. The Government also aims to reduce the use of fossil-based energy sources and to promote the use of renewable energy and the sustainable renewal of the business sector. The Government is striving for ecological sustainability in Finland and globally.

In Finland, progress towards combating climate change is encouraging, but further actions are needed. Since 2000, the overall trend in biodiversity has been negative. The use of natural resources has major impacts on biodiversity. According to Statistics Finland, the absolute use of natural resources in Finland has more than doubled from the level in 1975. Finland’s domestic material consumption per capita is the highest in Europe.

The roadmap’s ecological sustainability goals for 2030 are:
Finland will make fast progress towards a carbon-neutral society
Biodiversity loss will have been halted
The ecological status of Finland’s waters and especially coastal waters will be improving
Resource productivity and the circular material use rate (CMU) will have improved and domestic consumption of non-renewable natural resources will be on the decline
Public decision-making in Finland will respect nature

NordenBladet — In its mid-term policy review, the Government outlined extensive measures to strengthen employment and public finances and to promote people’s wellbeing in Finland in the aftermath of the COVID-19 pandemic.

The decisions in the mid-term review include policies to strengthen growth, to continue on the path to carbon neutrality and to reduce inequality. The measures have been integrated into the 2022–2025 General Government Fiscal Plan, on which the Government determined its policy positions in connection with the mid-term policy review. In addition, the Government carried out a mid-term review of its climate measures.

The aim of the Government is to strengthen general government finances by means of growth, employment and moderate adjustment measures. The Government aims at a 75% employment rate and at turning the rising debt ratio onto a declining path by the middle of the decade.The Government’s work on climate change has progressed on schedule and the distance to the carbon neutrality target is now much shorter. The Government is committed to making decisions on further measures that are needed to achieve carbon neutrality by 2035.

In its mid-term policy review, the Government published a sustainability roadmap that describes the current state of social, economic and ecological sustainability in Finland and sets goals for 2030.

The policy positions approved by the Government at its mid-term policy review and spending limits discussion are set out in detail in Appendix 1.

1. Sustainable growth and fiscal balance
Government’s employment measures
The Government is committed to a long-term approach in its work to raise the employment rate through decisions that will bring an estimated 80,000 new jobs. The Government will continue the preparation of employment measures within the Ministerial Working Group on Promoting Employment. Decisions were already made by the Government at an earlier date on measures designed to bring 31,000–33,000 new jobs.

The measures decided in the mid-term policy review are aimed at achieving 40,000–44,500 new jobs. In addition, decisions on employment measures that will strengthen general government finances by EUR 110 million will be made before the end of the government term. The Government’s objective is that by the middle of the decade the employment rate will be 75%.

The Government’s employment measures and their job-creating impacts are presented in more detail in Appendix 1 (section 2).

General Government Fiscal Plan sets objectives for public financesThe General Government Fiscal Plan and, within it, Finland’s Stability Programme set out multiannual targets for general government finances concerning the general government budgetary position, public debt and public expenditure, and targets for the budgetary positions of general government subsectors.

Spending limits for central government finances
Not least as a result of the COVID-19 crisis, the overall picture of the Finnish economy and of the country’s financial policy needs diverges significantly from the autumn 2019 situation when the spending limits for the parliamentary term were set. The Government has pursued an exceptionally expansionary fiscal policy that has underpinned growth and employment, prevented a permanent loss of production capacity and temporarily raised spending in areas that fall within the expenditure ceiling.  Regarding the parliamentary term spending limits, the Government is in a situation where the room for manoeuvre within the spending limits does not allow the inclusion of unforeseen changes in expenditure and the implementation of all the reforms considered necessary by the Government.

Consequently, as part of the solutions determined in the mid-term policy review, the Government has decided that the parliamentary term spending limits will be raised for 2022–2023. The expenditure line will gradually descend towards the end of the parliamentary term and will continue on this path after the parliamentary term is over. The expenditure ceiling will be raised by EUR 900 million for 2022 and by EUR 500 million for 2023. In addition, the exceptional situation mechanism included in the spending limits rule under the Government Programme is available in 2021 and 2022, allowing an annual EUR 500 million for one-off expenditure. Direct COVID-19 related costs, i.e. health security costs, such as expenditure on testing and vaccination, will be covered as expenditure outside the spending limits in each of the years 2021–2023.

In connection with raising the spending limits, the Government has decided on a reallocation of expenditure, in which certain expenditure under the spending limits will be permanently reduced by EUR 370 million from 2023 onwards. As the savings are continuous, this will also reduce the expenditure covered by the spending limits from 2024 onwards.
(APPENDIX 1, heading 1.1. economic policy positions)

Tax base protection and investment-friendly environment
The Government’s aim is to strengthen the tax base, promote business investment and enhance competitiveness. The 2021 government budget session will decide on a tax package to strengthen central government finances by EUR 100–150 million and, in addition, on other tax changes to encourage investment and enhance competitiveness.

The Government will, for example, continue the double right of depreciation concerning investments in machinery and equipment for the years 2024–2025, which was decided earlier in 2020–2023. In addition, to broaden the tax liability of foreign investors, the Government will ensure that profits made by foreign funds in real estate investments are taxed as widely as possible in Finland. Taxation decisions will be used to encourage the replacement of heating systems that operate on fossil fuels. To foster switching heating systems and relinquishing the use of oil as a form of heating, the maximum domestic deduction will be raised from EUR 2,250 to EUR 3,500 and the compensation percentage from 40 to 60. The change is temporary and effective from 2022 to 2027. To assess the employment impact of the household expenses tax credit, a two-year trial will be outlined in the 2021 government budget session, whereby the maximum amount of household and nursing and care work that qualifies for the tax credit will be significantly increased.Implementation of the tax policy principles set out in the Government Programme will continue. Taxation of tobacco will be raised by a total of EUR 100 million in 2022–2023. In line with the decisions of the autumn 2019 government budget session, the tax expenditure on synthetic diesel will be removed in 2021–2023, which is estimated to increase tax revenue by a total of EUR 87 million in 2022–2023. An index adjustment will be made annually to the tax basis for earned income taxation, to ensure there is no rise in taxation as a result of a general rise in earnings. The creation of the wellbeing services counties will mean that a proportion of local government tax revenues will instead go to central government as the municipalities’ cost burden and duties are reduced substantially. In connection with this, taxation of earned income will be reduced to ensure that the reform does not lead to higher taxation for any group of earners. Without the effects of the reform, central government tax revenue in 2021–2025 would increase by an average of 2.8% annually.

The Government’s tax policy positions are given in more detail in Appendix 1, heading 1.2. Tax itemsCentral government on-budget revenue, expenditure and balance, EUR billion

NordenBladet — The Finnish authorities have responded to the query sent by the European Commission on 11 February 2021 under the Pilot mechanism concerning the regulation of retail sales of alcoholic beverages containing a maximum of 5.5 percentages by volume ethyl.

The Commission expressly requested Finland to clarify whether retail licenses were available to sellers established in another Member State who were interested in selling at distance beverages with a maximum alcohol content of 5.5% by volume. Prior to submitting the responses, the Ministry of Social Affairs and Health and representatives of the European Commission engaged in constructive discussions at a remote meeting. If necessary, the Finnish authorities are prepared to continue the dialogue with the Commission on the matter. The Ministry of Social Affairs and Health will publish Finland’s response on its website.