Finland’s finance ministry has proposed a €92.2 billion state budget for 2027, leaving a €12.9 billion deficit despite stronger growth and higher tax revenue.

Finance Minister Riikka Purra presented the plan on Tuesday after internal budget talks in Espoo. The proposal will form the basis of the government’s negotiations on 1 and 2 September.

The state expects revenue of €79.4 billion before borrowing.

Purra said no new spending cuts were planned beyond €4.8 billion in measures already approved by Prime Minister Petteri Orpo’s government.

“An austere savings programme will continue,” she said.

State interest costs are expected to rise to €4.3 billion next year, up €1.1 billion from 2026.

Automatic index increases will add about €1.2 billion to spending.

The proposal also includes tax cuts agreed earlier. Corporate tax will fall from 20 per cent to 18 per cent, while earned income tax will fall across all wage groups.

Purra said the largest reductions would apply to people earning about €20,000 to €56,000 a year.

The overall tax rate is expected to decline from 42.7 per cent in 2023 to 42.2 per cent in 2027.

Purra said growth would raise tax revenue but would not create room for new public spending.

“The state’s finances are in such chronically poor condition that even this kind of economic growth does not change them in a meaningful way,” she said.

High unemployment, care costs, defence spending and debt interest remain the main pressures on the budget.

Purra said Finland would stay on the spending path set by the European Commission under the excessive deficit procedure.

She also said the next government should prepare adjustment measures worth about €10 billion during the following parliamentary term.

Opposition parties criticised the proposal.

Centre Party deputy chair Markus Lohi said it failed to stop the rise in state debt.

Left Alliance chair Minja Koskela attacked the corporate tax cut and said the plan lacked measures to reduce unemployment.

The Central Organisation of Finnish Trade Unions, SAK, also called for more action on unemployment and long-term joblessness.

The full finance ministry proposal is due to be published on Thursday before the government finalises the budget in September.

HT