Finland to ramp up spending as growth cools

HELSINKI: Finnish policy makers struck an agreement to form a five-party ruling coalition with plans to increase public spending by more than €4bil (US$4.5 bil) as the economy cools.

After four years of centre-right rule, parties from the left and centre of the political spectrum agreed on a common platform that involves additional spending on road and rail projects as well as on education and innovation.

Permanent spending will be increased by €1.23bil and there will be a one-time programme amounting to €3bil, prime-minister designate Antti Rinne of the Social Democrats told reporters in Helsink.

The spending spree is to be funded through €730mil in additional tax revenue and €200mil of reallocated funds, with the rest generated by growth in employment levels.

About €3bil will be raised by selling state assets and holdings.

The government also wants to raise the employment rate to 75% of the workforce by 2023, from its current level of 72.6%.

Civil servants say at least 100,000 new jobs will have to be created over the next four years in order to offset the impact of an aging population.

Rinne, 56, won the April general election by promising to end four years of policies that included wage cuts and longer working hours. The policies were deeply unpopular but helped drag the eurozone’s northernmost economy out of a deep recession. — Bloomberg

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