New Year's message from Prime Minister Jyrki Katainen to the Finnish News Agency

As we embark on a new year, it is also the time when we make resolutions, related to ourselves and those close to us. We may promise to spend more time with our families or to start on a healthier lifestyle. This year, we, the decision makers, find it justified to make a promise to the people of Finland.

This is an opportune moment to promise that we will spare no effort in making the decisions necessary to defend the Finnish welfare society.

Today, more than for a long time, there is a need for such a promise. Our central government finances are still suffering from the deep economic recession experienced in 2009 because of the international financial crisis. In the past three years, Finland has borrowed an additional EUR 28 billion to finance our well-being. Over the next few years, central government net borrowing is projected to amount to EUR 6–7 billion a year.

We cannot continue to build our well-being on borrowed money. Every debt agreement we sign today will be for our children and young people to pay. And not only that: in addition to public debt, they will be faced with the pressures of growing pension expenditure as the larger older generations reach retirement age. To avoid placing an unbearable burden on our young people, we must take responsible action now.

The situation is particularly serious as, in the long run, Finland's accumulation of debt threatens to accelerate. The Finnish economy has a serious sustainability gap. In the next 20 years, our average age will rise more rapidly than that in any other EU country. The proportion of the population who are employed will decrease, and the need for public services will increase.

In the next year, we must make decisions with which to safeguard the future of the Finnish welfare society. This means safeguarding day-care centres, schools, health centres, and income transfers.

No-one is going to like the decisions required to curb borrowing. Each tax increase will be paid from the Finnish taxpayer’s purse. Similarly, every allocation means less money somewhere else.

Unfortunately, there are no better alternatives to these unpleasant decisions. Without balancing our income and expenditure, Finland will not be able to avoid over-borrowing.

The idea behind budget adjustments is that, through expenditure savings and tax increases, we can rapidly curb borrowing. By doing so, the amount of public debt and associated interest payments will not be allowed to reach unsustainable levels. Our aim is to live within our means, not on borrowed money.

In addition to short-term adjustment measures, we need a long-term solution with which to bridge the sustainability gap of the public economy. We need longer careers, improvements in the quality of working life, reforms to increase the supply of labour, greater productivity in the public sector, and other structural reforms. Structural reforms are needed on the local government level too; therefore, the reform in local government structures to ensure municipal services is of particular importance.

The purpose of budget adjustments and structural reforms is to consolidate the sustainability of our public finances so that each and every Finn may have confidence in Finland's future.

Safeguarding our welfare society calls for measures to boost economic growth also. This can be achieved by fostering growth entrepreneurship, innovation, and the green economy. It also means shifting the emphasis of taxation from taxes on work to taxes on consumption. Finland's welfare depends on internationally competitive businesses that can afford to employ people.

What remains positive and encouraging among these challenges is that we can still affect our future by our own actions. In many ways, we still hold the keys to our future.

When need so requires, we Finns have the ability to take responsibility and act decisively. In this, we have a solid track record and reason to take pride. Today, this upright moral principle of Finnish responsibility can stand us in good stead. Now is the time for less talk and more action – we need to work together for the common good.

Best wishes for the new year.

Jyrki Katainen
Prime Minister