Assessment of public finances 2017 : Overall positive sentiment will not resolve structural problems in public finances

Finland’s rapid economic growth in 2017 has notably improved the situation for the public finances. With the cuts in taxes related to the Competitiveness Pact, fiscal policy will ease in 2017 and 2018 and the structural deficit will deepen. Moreover, the projected acceleration of economic growth will not resolve the longer-term problems associated with Finland’s public finances. Population ageing will push up public expenditure, while the contraction in the working-age population will rein in economic growth and thus weaken the funding base of the public finances. Growth in age-related expenditure will generate a sustainability gap that is still estimated at around 3% of GDP.