All but one of the parties in the Finnish Parliament have agreed on calculations for how much public finances must be tightened during the next four-year legislative term, beginning in 2027.
The parliamentary groups have committed to a general framework of 8–11 billion euros in adjustments, to be made through an unspecified combination of spending cuts and increases in revenue, i.e. tax hikes. The plan, dubbed 'the debt brake' was published by a multiparty working group on Wednesday.
The opposition Left Alliance was the only party not to sign on to the deal.
"All of the parliamentary groups, except one, were able to commit to common goals," the group’s chair, MP Ville Valkonen (NCP), said on Wednesday.
The adjustment measures aim to reduce the state and local government deficit to 2–2.5 percent of GDP by 2031. According to a Finance Ministry forecast, next year's public finance shortfall will be around 4.5 percent.
The Left Alliance filed a dissenting opinion, arguing that it does not make sense to set a common goal before next spring's elections.
"The goal is to unnecessarily limit the room for manoeuvre," said MP Hanna Sarkkinen (Left).
She said that the Left would be prepared to accept a deficit target of 2–3 percent and the adjustments demanded by the European Commission late last year. The party plans to announce its own adjustment targets before the parliamentary elections.
MP Joona Räsänen of the main opposition Social Democratic Party – which polls suggest could well lead the next government – told Yle that he does not understand the Left Alliance's position.
"It seems that they just don't want to admit what their commitment means and tell people about it before the elections," Räsänen said.
According to Sarkkinen, opting out of the adjustment target will not automatically sideline the Left Alliance in the upcoming government negotiations. Räsänen also declined to take a direct stance on the Left Alliance's prospects as a government partner. The two parties have often been in coalitions together.
Implementation remains fuzzy
The working group's report does not go into detail on how the adjustments should be implemented. It merely states that adjustments should be carried out in a way that hinders economic growth and sustainable social development as little as possible.
Markus Lohi of the opposition Centre Party called on the current government to abandon its plan to reduce corporate tax by two percentage points.
The SDP has also proposed cancelling the corporate tax decision and demanded that the current government implement the 1.4 billion euro savings next year.
The need for adjustment in the upcoming legislative term may be significantly steeper than the working group's proposal calls for if the EU does not grant Finland additional time and requires it to reimpose spending discipline within four years instead of seven years.
Finland's adjustment needs in the coming years are primarily determined by the EU's deficit procedure. The deficit target for 2031 set by the working group is only about 0.1 percentage points tighter than the figure currently required by the EU.
Valkonen's working group is to agree on a specific estimate of the needed adjustments by December. Advance voting for the next Parliament begins on 7 April 2027.
