Prime Minister Katainen: Fiscal policy expert group's assessment provides sound basis for economic decisions this spring
Today, the fiscal policy expert group, appointed by Prime Minister Katainen in December, delivered its assessment of fiscal policy choices commissioned by the Economic Council. According to Prime Minister Katainen, the expert group assessment provides a sound basis for economic policy decisions this spring.
- The expert group assessment provides a good foundation for creating a national consensus on the ways to stop the rise in the central government debt ratio. The central message is that it will be impossible to moderate the growth of central government debt without new spending cuts and tax increases worth around EUR 3 billion, Katainen says.
- As the expert group in its report states, the adjustment measures must be specified precisely so that adverse effects on employment and growth are minimised.
In its Government Programme, the Government is committed to bringing central government debt-to-GDP ratio into a downturn by 2015. However, the expert group is of the opinion that the implementation of EUR 3 billion adjustment measures in 2015 would considerably weaken economic growth and employment. For that reason, the expert group supports the phasing of the adjustment over 20152017 provided that the Government specify the adjustment measures precisely and implement the structural policy programme purposefully and in a front-loaded way. In addition, the Government should submit the necessary legislative proposals relating to the adjustment measures so that they can be decided on in the current parliamentary term.
- The Government will make decisions on the adjustment measures in line with the earlier announced timetable. The Economic Council will discuss the results of the expert group's work in an extraordinary meeting on Tuesday, 25 February. Taking into account the recent economic forecast issued by the Ministry of Finance, the Government will then make decisions on the adjustment measures and possible phasing at the Government spending limits discussion at the end of March, Katainen says.
- In all cases, the effects of the Government's decisions will extend beyond the current parliamentary term. Should the adjustment measures be implemented in full in 2015, the next Government will take office in a context of extremely weak economic growth. If the adjustment measures are phased over a certain period of time, then a part of the decisions will enter into force during the next electoral period, Katainen says.
- I will invite the leaders of both opposition parties to a discussion with the Government party leaders at the end of February. The aim is to gauge the opposition party leader's opinions on the phasing of the adjustment measures. It would be very valuable to reach a consensus on a reasonable timetable for bringing central government debt-to-GDP ratio into a downturn and for implementing the adjustment measures, Katainen says.
Inquiries: Joonas Turunen, Special Adviser (Economic Policy Affairs), tel. +358 40 542 5935