A New Year message from Prime Minister Vanhanen
We enter the new year without knowing how the global economy will develop. The world has never, in modern economic conditions, experienced anything similar to what we are now witnessing. After several good years, we have harder times ahead of us. But we have always survived – even in situations much more difficult than the present. However, the present situation calls for exceptionally close cooperation between the Finnish State, municipalities, businesses, employees and employers.
Our economy is facing a threat from the outside, which means that we have limited possibilities to control the effects of the international economic crisis upon us. We do, however, have our own instruments of influence, and we must use them wisely.
While making efforts to support corporate financing and revive those business areas facing an immediate threat, we have to pursue exceptionally active international cooperation. The clouds over the Finnish economy will not clear until the international economy resumes an upward trend. Cooperation in the EU is of particular importance, and the EU is also the best forum for us to exert influence on a global scale. Recovery plans being developed in a number of EU countries may amount to a resource a hundred times larger than our own, also creating fresh demand important for exports.
All of us Finns, however, can also influence the situation by making sensible and necessary purchases, and using services when we need them. Finnish labour is promoted from home. Domestic market demand creates two-thirds of our jobs, so let’s join forces to protect that. This is an exceptional plea from a Prime Minister. At the moment it is still possible, with healthy self-confidence, to make efforts to prevent a number of the most negative consequences of the downturn. Normal domestic consumption and preparation of investment plans constitute households' and businesses' most important input into our joint challenge.
When discussing methods, it is good to bear in mind that households and businesses play a key role when it comes to making decisions about how to behave in the economic situation. Besides this, the Government, serving as a joint fund, can borrow money from the next few years and increase consumption by 1 - 1.5 percentage points. This will also help. Key decisions on these stimulus measures were made at the autumn budget meeting, and they will enter into force at the beginning of 2009.
Since the budget session held in August, the Government has prepared a number of stimulus packages as required by the prevailing conditions. We will put together the next package in the winter and then proceed as necessary. In parallel with short-term stimulus activity, it is also important to consider the future. In securing our future, we need to exercise patience in terms of wages during the next labour market negotiations, invest in knowledge and R&D activities, and make investments supporting growth.
We need to take measures to ensure that we are in the best possible position when the international economy starts to recover. This crisis is not the end of the world. It is true that some people are painting doomsday scenarios, but eventually the economy will pick up again and at that time we will need to reclaim our markets.
We are better prepared to accept the challenges of the coming year than most other countries. Our employment situation has improved substantially over the past few years, creating well-being in all parts of Finland. At the same time, we have kept good care of our national finances, and this will also make it easier for us respond to future difficulties.
It is now paramount to maintain our high employment rates, as in a few years we will be faced with the retirement of a large number of people. I therefore expect businesses to take measures similar to those that the State has taken – utilising the good results of recent years to carry us over the downturn. Investment in employment will also help us maintain a cohesive society.
We also need to have the courage to take decisions to promote our future well-being. And as we take the measures required, we need to ensure that the promises of well-being can be kept without imposing excessive tax burdens on any future generation.
The vulnerable members of society are often the ones to suffer most during economically hard times. They must be taken care of under all circumstances. This is the time to foster solidarity.
While seeking the most effective stimulus measures, the Government is also making preparations for the largest social security reform in decades. The key words of the reform are important to us all: employment and security. Solidarity stands for sustainably improving basic security in a way that encourages people to work diligently. The terms diligence and responsibility towards our fellow people might sound old-fashioned. However, their content tells us all that matters, especially during insecure times.
With these thoughts, I wish everyone a Happy New Year and believe that in the next 12 months we will hear the first encouraging messages from the world.
Matti Vanhanen
Prime Minister