The Research Institute for the Finnish Economy (Etla) said the country’s falling birthrate will over time result in significant public deficit, imperiling economic growth.
With the Finance Ministry set to publish its latest economic survey on 17 December, Tarmo Valkonen, a research advisor at Etla, said Finland’s changing population structure may implore the ministry to issue a 10-billion-euro public deficit estimate.
During 2018, Finland is projected to see more deaths than births for the third consecutive year. The birth rate will continue to decline for the eighth year running and the number of deaths will increase despite longer life expectancy, according to a recent Statistics Finland forecast.
Valkonen said that while the current government’s austerity measures have failed to bridge the gap between government spending and tax revenue, the situation would be even worse without actions taken by the government. Last month the group asserted that some 100,000 new jobs have been created during the current administration’s term in office, and that its policies were responsible for half of jobs added.
Prime Minister Juha Sipilä’s cabinet set itself a target of 72 percent employment during its term in office. Current data suggest that it will achieve this goal.
Meanwhile Mikko Spolander, Director General at the Ministry of Finance, said fewer babies will translate into less spending on education in the 2020s. But a smaller workforce will also mean fewer taxpayers in the 2030s to support public finances.
The Finance Ministry’s economic survey, to be issued next Monday, is expected to heavily influence government priorities in the next electoral term.