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Austerity on the way with Sipilä government plan

Finland has taken a big step towards the formation of a new government with the announcement that negotiators from the three parties involved in talks have reached an agreement on a new coalition programme. That programme will now go to party boards to be rubber-stamped before the government is officially formed.

Timo Soini, Juha Sipilä ja Alexander Stubb.
From left to right: Timo Soini, Juha Sipilä and Alexander Stubb.

Centre Party leader Juha Sipilä has taken a big step towards becoming the next Prime Minister of Finland, after agreeing a government programme with his Finns Party and National Coalition (NCP) counterparts.

At a press conference in Helsinki on Wednesday, Sipilä said he was looking to make big savings in the government budget—but also kick-start growth in a stalling Finnish economy. As part of that effort the new administration will introduce a 1.6 billion euro package of infrastructure spending to try and offset some of the billions of euros in savings required over the next parliamentary term.

That will be financed, according to Stubb, by "utilising state assets".

He's also looking to cut 6 billion euros of spending by 2021 through a combination of freezing the level of some benefit payments and increasing the size of service charges, as well as cutting education and business support. On the other hand, the government plans to increase the basic pension.

If employers' organisations and trades unions can agree a so-called 'social contract' to increase competitiveness, then the government has promised a one billion euro tax cut. If such a deal isn't agreed, the government will make an extra 1.5 billion euros in cuts.

Known as something of an outsider in politics, having entered parliament in 2011 after a successful business career, Sipilä often refers to himself as an ‘engineer’ who seeks simple solutions and cuts through endless political wrangling.

As part of his vaunted efficiency drive he plans to cut the number of ministers compared to the Katainen government that took office after the previous election. Two positions have been allocated: Finns Party leader Timo Soini is to be Foreign Minister and Alexander Stubb will be the finance minister, and there will be a total of 14 ministers under Juha Sipilä.

The exact line-up of ministers remains unclear, but according to Tampere daily Aamulehti NCP MP Sanni Grahn-Laasonen will be the Education minister. The Finns Party hope to officially announce their choices on Wednesday evening, as does the National Coalition (in both cases subject to the approval of the respective party boards), while the Centre Party will announce their ministers on Thursday.

If the party’s decision-making bodies approve the government plan, they Finns Party is set to join government for the first time since they were formed in the mid-90s, while the Centre is returning to power after four years out of office. The National Coalition party has been in government since 2007.

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