Finland’s government has agreed a €92.5 billion budget for 2027, including a €12.4 billion deficit, tax cuts and about €1 billion in additional spending savings.

Prime Minister Petteri Orpo said the government had completed its final budget negotiations of the parliamentary term in one day and argued that the economy had returned to growth.

“We have now got Finland back on its feet,” Orpo said at a press conference after the talks.

Finance Minister Riikka Purra said the government would continue with spending reductions agreed earlier. Savings next year include cuts to organisation grants, integration spending and public administration.

Total spending cuts included in the budget amount to about €4.8 billion before taking account of other expenditure increases and tax reductions, according to figures presented by Purra.

The government will also proceed with previously agreed tax changes. Corporate tax will fall from 20% to 18%, while income tax for low- and middle-income earners will be reduced. Purra said the combined tax reductions amount to about €1.7 billion.

The government will abandon a planned tax benefit for data centres. It will also allow municipalities to introduce a voluntary tourist tax under new framework legislation.

Debt servicing costs remain a major pressure on the budget. Interest expenditure is expected to reach €4.4 billion next year, compared with less than €1 billion in 2022.

Purra said higher debt levels and increased interest rates had driven the increase. Defence, security and health and social care costs are also adding to spending.

The government also agreed additional funding for shelters, forests, the justice system, sports facilities and measures to combat African swine fever.

Orpo said the government expected employment to improve during the autumn as economic growth continued.

The opposition criticised the package.

Left Alliance chair Minja Koskela said the budget failed to address Finland’s unemployment problem and attacked the corporate tax cut.

She also criticised reductions in funding for social and health organisations and higher health care client fees, arguing that the measures would place more pressure on low-income households.

The government rejected calls for further fiscal tightening during the budget talks. Orpo said the coalition had already agreed almost €1 billion in additional adjustment and wanted to focus on growth and employment.

Purra said further action would follow if required by the European Commission.

HT