Government’s fiscal policy an appropriate response to the business cycle
Despite reduction in government deficit and improvement in employment the sustainability problem remains unchanged. The social and health care reform will not fix this. The deficit continues to decrease, but from a long run perspective fiscal policy should be tighter The government has almost reached its fiscal targets. The debt to GDP ratio has started […]
Fiscal policy too loose in the current economic situation
Improved economic growth and favorable development of the labor market situation have improved the state of public finances. In the current state of the business cycle, the government should adopt a stricter fiscal policy. The Finnish Government will not reach its fiscal policy targets According to current estimates, the cyclically adjusted budget deficit will be […]
Improved jobs numbers will not be enough to fix the problems in public finances
The 72% employment rate target set by the government will not be reached. The failure to meet the employment target will make it difficult to meet targets for the public sector deficit and debt. According to forecasts the structural, cyclically adjusted deficit will still be over one percentage point of gross domestic product (GDP) in […]
The Economic Policy Council considers that the scale and timetable of the budgetary adjustment are a step in the right direction, but criticises the fiscal policy objectives
The government’s fiscal policy is one of gradual tightening and government spending cuts of almost four billion euros over the government term. Tightening fiscal policy will dampen economic growth, but is essential since government spending and revenue are not in long-term balance. Even after the spending cuts, the forecast is for a substantial deficit in […]
The Economic Policy Council does not recommend more fiscal consolidation before 2017 – 2018
The Council does not recommend a further tightening of fiscal policy for 2015 and 2016. Significant adjustments of public finances are necessary, but they should be timed in such a way that business cycles are not aggravated as a result. The current economic situation in Finland is weak with slow economic growth, growing unemployment and […]