As a result of the COVID-19 crisis, the Finnish economy has entered a recession and public sector debt is growing strongly. Aktia published today a report discussing the consequences of the COVID-19 crisis on Finnish public economy. The 2023 parliamentary elections will be a debt election.
Finland, like most countries in the world, has plunged into an economic downturn as a result of measures to limit the coronavirus. Due to the crisis, public spending has increased, among other things, due to support measures. At the same time, revenues have decreased e.g. due to decreased VAT and income tax accruals.
Public economy is estimated to become indebted in the same manner in the next few years as after the financial crisis in 2008. According to Lasse Corin, Aktia's new chief economist, indebtedness is problematic: “An alarming observation from past economic crises in Finland is that the level of debt has never reverted to the level preceding the crisis. The unfortunate fact is that public debt will break records in the years to come.”
Corin continues his analysis: “I believe that these issues will be strongly raised in the parliamentary elections in the spring of 2023. This will be, if not earlier, when all parties need to take a stand on the measures needed for balancing the public economy. However, voters are faced with only painful options and a lot of difficult decisions.”
Follow Aktia’s Chief Economist Lasse Corin on twitter.
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Aktia is a Finnish asset manager, bank and life insurer that has been creating wealth and wellbeing from one generation to the next for 200 years. We serve our customers in digital channels everywhere and face-to-face in our offices in the Helsinki, Turku, Tampere, Vaasa and Oulu regions. Our award-winning asset management business sells investment funds internationally. We employ approximately 750 people around Finland. Aktia's assets under management (AuM) on 31 December 2019 amounted to EUR 9.9 billion, and the balance sheet total was EUR 9.7 billion. Aktia's shares are listed on Nasdaq Helsinki Ltd (AKTIA). aktia.com.