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Government parties divided on post-Covid budget cuts

An Yle poll found that while most backed a decision on future budgets in this month's debate, governing MPs were split.

Eduskunnan kyselytunti 18.2.2021
127 MPs responded to Yle's questions. Image: Pekka Tynell / Yle

An Yle poll of MPs has found the government's coalition parties are split over whether or not to decide on future budget cuts this year.

Yle asked MPs whether the government should make decisions in the April financial framework debate on adjustments to public finances for the period 2023-2029.

MPs from the Centre Party and Swedish People's Party (SPP) were in favour of debating adjustments to future budgets this month, while MPs from the SDP, Left Alliance and Green Party were largely opposed.

"Adjustments" in this context usually refer to the state reducing spending and raising revenue through austerity measures like spending cuts and tax rises.

Finance Minister Matti Vanhanen (Cen) is among those who believe future spending should be up for debate this spring.

Of the 127 MPs who responded to Yle's questions, a majority of 86 were in favour of making a decision this month. 33 were against and 8 did not state their position.

Story continues after graphic.

Should the government decide on adjustments to 2023-2029 budgets in the April budget debate?
Image: Yle
Almost all MPs from the Centre Party and opposition National Coalition Party (NCP) who responded said they were in favour of deciding on cuts to public spending quickly.

"Finland is slipping away from the other Nordic countries as it falls further into debt. The government must decide on adequate employment and budget adjustment measures in the financial framework debate if we are to preserve the welfare state," said Centre Party vice-chair Petri Honkanen.

"Public finances are unbalanced and need to be addressed. Every euro borrowed has to be repaid, and coronavirus has raised the state's debt burden by a staggering amount," said SPP MP Sandra Bergqvist.

'Cuts are not the answer'

The majority of SDP MPs who responded to the survey – 16 of them – said they were opposed to austerity measures, with many saying the timing was wrong.

"We are still in the midst of exceptional circumstances and the coronavirus crisis. Reconstruction will come next. The support that Finnish people and businesses need must not be cut off prematurely, but the situation must be closely monitored," said Minister for European Affairs and Ownership Steering Tytti Tuppurainen (SDP).

"According to many economists, we have until the end of the decade to make budget adjustments," said Pia Viitanen (SDP). "Fair taxation and structural changes are also part of making adjustments. Cuts are not the answer."

Nine Social Democrat respondents said they were in favour of making a decision sooner.

"We must decide whether to choose cuts and tax increases or a bold path to growth. Personally I don't believe that the public finances will be balanced by the cures of the 2010s, meaning spending cuts and tax rises, but investment in growth, skills and people's wellbeing is necessary," said Vaasa MP Matias Mäkynen (SDP).

In the financial framework debate, the government is due to decide on the fiscal plan for 2022-2025 and complete its decade-long sustainability roadmap, many specifics of which remain unclear.

According to figures from the Ministry of Finance, the government needs to find an additional five billion euros to strengthen the public finances.

"Not even the credit rating agencies want cuts"

All Left Alliance MPs who responded to the survey said they were opposed to deciding on future austerity measures. Six Green MPS indicated they were opposed, while another six did not take a position for or against.

"It's very difficult to predict how long the coronavirus crisis will last and what the economic impact will be accurately enough to be able to draw up precise guidelines for economic policy for 2023-2029 this spring," said Green MP Iiris Suomela.

"Not even the credit ratings agencies have set out specific spending cuts," said Central Finland MP Bella Forsgrén (Green).

Two Green MPs, Atte Harjanne and Inka Hopsu, said they supported making a decision on future budget adjustments this spring.

"The government cannot hide behind the coronavirus"

Opposition MPs were almost unanimous in demanding a decision on budget adjustments.

NCP chair Petteri Orpo said the government needed to consider the future during the April framework debate.

"The government needs to present a plan on how to boost employment and the economy, and control government debt," he said.

Other NCP MPs said that the rebalancing of the public finances would not be possible without some form of austerity measures.

"Debt cannot be taken on forever and the government cannot hide behind the coronavirus year after year to avoid nasty decisions. We are already halfway through the election season and it's high time the government rolled up its sleeves," said Helsinki MP Wille Rydman.

Respondents from the Finns Party said that government borrowing should be curbed and plans made to adjust spending.

"Start adjusting public spending as as soon as possible. Growing debt threatens to weaken Finland's credit rating and raise interest rates," said Finns Party MP Sami Savio.

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