Budget review 2021: Review on central government budget proposal, October 2020
Ministry of Finance
05.10.2020
Julkaisusarja:
Publications of the Ministry of Finance 2020:69This publication is copyrighted. You may download, display and print it for Your own personal use. Commercial use is prohibited.
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The present publication examines the budget proposal for 2021, which will be submitted to Parliament in October. The aim is to provide a concise description of the central themes of the 2021 Budget. The budget proposal is based on an independent economic forecast of the Economics Department at the Ministry of Finance, which is presented in the Economic Survey.
During the first half of 2020, the ongoing coronavirus pandemic reduced the Finnish economy less compared to most European economies. The economy will gradually recover from the sudden halt occurring in the first half of 2020. GDP is expected to grow by 2.6 % in 2021. In 2021, the number of employed people will continue to slightly decrease, resulting in the projected employment rate of 71.0%.
The economic downturn triggered by the coronavirus outbreak and the measures to contain its impacts have substantially boosted Finland’s general government deficit in 2020. General government finances will not return to the pre-pandemic levels when the downturn is over. The economic growth expected in the coming years will not be enough to balance the general government budgetary position and Finland’s general government finances will remain substantially in deficit.
The appropriations in the budget proposal for 2021 amount to EUR 64.2 billion. The central government on-budget deficit is expected to be around EUR 10.8 billion, and central government debt is expected to rise to around EUR 135 billion. Temporary increases in expenditure related to the coronavirus situation will lead to higher expenditure. The expenditure will also be higher due to issues such as the increase in unemployment expenditure, statutory and contractual index increases, the central government wage agreement, and additional, previously decided investments, such as the estimated expenditure impacts of the purchase of HX fighter aircraft.
During the first half of 2020, the ongoing coronavirus pandemic reduced the Finnish economy less compared to most European economies. The economy will gradually recover from the sudden halt occurring in the first half of 2020. GDP is expected to grow by 2.6 % in 2021. In 2021, the number of employed people will continue to slightly decrease, resulting in the projected employment rate of 71.0%.
The economic downturn triggered by the coronavirus outbreak and the measures to contain its impacts have substantially boosted Finland’s general government deficit in 2020. General government finances will not return to the pre-pandemic levels when the downturn is over. The economic growth expected in the coming years will not be enough to balance the general government budgetary position and Finland’s general government finances will remain substantially in deficit.
The appropriations in the budget proposal for 2021 amount to EUR 64.2 billion. The central government on-budget deficit is expected to be around EUR 10.8 billion, and central government debt is expected to rise to around EUR 135 billion. Temporary increases in expenditure related to the coronavirus situation will lead to higher expenditure. The expenditure will also be higher due to issues such as the increase in unemployment expenditure, statutory and contractual index increases, the central government wage agreement, and additional, previously decided investments, such as the estimated expenditure impacts of the purchase of HX fighter aircraft.