The government presented its budget plan for next year on Thursday, with a wide array of support measures to help people cope with sharply rising costs of energy and other essentials.
Finance Minister Annika Saarikko (Cen) warned that the strong economic growth seen early this year "threatens to slow down significantly next year" and could lead to another recession.
The government intends to raise public spending to 80.5 billion euros next year, up from 79.5 billion proposed by the Finance Ministry last month.
As a result, next year's budget deficit is projected to swell to 8.1 billion euros rather than the previous estimate of 6.3 billion.
A large chunk of the expenditures, about 14 billion euros, will be shifted from municipalities to the state. This is because the responsibility for social and health care will be transferred to the new wellbeing services counties at the turn of the year as part of the sweeping 'sote' reform.
Cost-of-living support targets families, electricity bills
The government said it will lower the value-added tax (VAT) on electricity from 24 percent to 10 percent from December through next April. It will also seek to bolster households' purchasing power by offsetting high energy bills with tax deductions and slightly higher social security payments.
VAT on public transport fares will drop to zero between January and April next year, Environment Minister Maria Ohisalo (Green) said.
Municipalities will also lower public daycare fees, but in contrast to VAT reductions, this measure is permanent, according to the government.
Families with children will also receive an extra child benefit payment on 23 December. This bonus will not impact income thresholds for basic social assistance. Single parents will also see a temporary five-euro bump in the monthly child benefit.
An 80-million euro support package, which includes the expansion of rail services, is also in the works for companies hit by the loss of Russian business in eastern Finland.
Budget cuts meanwhile total 370 million euros, the majority of which—112 million euros—is coming out of the transport and communications sector.
When asked by the press whether the growing deficit indicated that this was an "election budget," Prime Minister Sanna Marin (SDP) said the war in Ukraine was impacting the Finnish economy.
This is the last budget plan of the five-party centre-left goverment's legislative term, with parliamentary elections looming in April.
The budget earmarks some 30 million euros in humanitarian aid for Ukraine. It also included a 200-million-euro provision for Ukrainian children continuing their schooling in Finland.
To be updated.