Ministerial Committee on Economic Policy supports introduction of exceptional situation mechanism

The Government's Ministerial Committee on Economic Policy discussed the introduction of the exceptional situation mechanism at its meeting on 20 May.

The Ministerial Committee on Economic Policy noted that the economy is facing an exceptional downturn and that the current circumstances constitute an exceptional situation as defined in the Government Programme. The Ministerial Committee on Economic Policy therefore supports the Government’s introduction of the exceptional situation mechanism in line with the Government Programme.

Prime Minister Marin’s Government Programme includes a mechanism that can be activated in the event of an exceptional economic situation. The aim of the mechanism is to ensure that economic policy can respond in the manner required by the economic situation. The mechanism allows for an increase of up to EUR one billion in one-off expenditure.

On 8 April, the Government decided to begin preparations for the introduction of the exceptional situation mechanism. As part of the preparations, the Ministry of Finance asked the Bank of Finland and three research institutes for an overall assessment of the economic situation and whether it fulfils the definition of an exceptional situation. The three research institutes that carried out assessments were the Research Institute of the Finnish Economy the Labour Institute for Economic Research and Pellervo Economic Research Institute.

There is a consensus among the Bank of Finland and the economic research institutes that Finland, the euro area and the global economy are currently experiencing an exceptional cyclical downturn. The estimates of the institutes are based on recent forecasts and calculations of the economic impact of the COVID-19 epidemic.

Based on these assessments and its own analysis of the situation, the Ministry of Finance has determined that Finland is facing an exceptional cyclical downturn as defined in the Government Programme, which speaks in favour of introducing the exceptional situation mechanism in line with the Government Programme.

Inquiries: Mikko Spolander, Director General, Ministry of Finance, tel. +358 295 530 006, mikko.spolander(at)vm.fi