Finance Minister Alexander Stubb has defended his government’s handling of the economy and sought to reassure the European Commission that Finland’s finances will get back on track.
In March the Commission sent Finland a warning over the state of its economy, after an in-depth review identified risks in the sustainability of the public finances, a worsening labour-market situation, and increasing poverty and joblessness. The warning also criticised the government’s lack of progress in reforming the health and social care system, and called for the retail, transport and construction sectors to be opened up to more competition.
On Thursday Stubb replied to the criticisms in a three-page letter, in which he argued that Finland is fulfilling the criteria of the EU’s growth and stability pact, pointing out that public debt remained below the 60 percent of GDP target level in 2015. Meanwhile Stubb said that March’s budget deficit was 2.7 percent of GDP, and forecast to contract further this year– therefore sticking below the 3 percent target set out by the pact.
Stubb also insisted that “vital reforms” to the social care and pensions systems are progressing, and pointed also to the government’s planned “competitiveness pact” with unions and employers as signs that the coalition is turning around the country’s finances.
On Thursday the Finance Ministry also published its growth forecast for 2016, predicting that the economy will expand by 0.9%, moving up to 1.2% during the following two years, and forecasting a drop in unemployment. The impacts of a possible social contract aimed at improving competitiveness are not included in the figures. However the ministry says exports will remain weaker than growth in global trade, so the loss of market shares will continue.