Budget Review 2021 : Review on central government budget, January 2021
Ministry of Finance
18.01.2021
Julkaisusarja:
Publications of the Ministry of Finance 2021:4Julkaisun pysyvä osoite on
http://urn.fi/URN:ISBN:978-952-367-496-7Julkaisun muut kieliversiot:
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Tiivistelmä
The present publication examines the central government budget for 2021, which was approved by Parliament in December 2020. The aim is to provide a concise description of the central themes of the 2021 Budget. The budget is based on an independent economic forecast of the Economics Department at the Ministry of Finance, which is presented in the Economic Survey.
The economy will fall by 3.3 % in 2020 and grow by 2.5 % in 2021. Suppressing the coronavirus pandemic in 2021 will bring the economy closer to level during normal times. In the meantime, economic growth will remain slow due to an increase in restrictive measures, a lack of confidence among those making spending decisions, and increased uncertainty. Finland’s GDP is projected to increase by 2.0% in 2022 and 1.4% in 2023.
The deficit of general government finances grew substantially in 2020 because of the weak business cycle conditions and the support measures taken in response to the coronavirus pandemic. While the economy will recover in 2021, public finances will be left in a more feeble state than before the onset of the pandemic. The economic growth foreseen for the next few years will not be enough to restore general government finances to pre-crisis levels; instead, a clear deficit will persist. There is a structural imbalance between revenue and expenditure.
The appropriations in the budget for 2021 amount to EUR 65.2 billion. The central government on-budget deficit is expected to be around EUR 11.7 billion, and central government debt is expected to rise to around EUR 138 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.
The economy will fall by 3.3 % in 2020 and grow by 2.5 % in 2021. Suppressing the coronavirus pandemic in 2021 will bring the economy closer to level during normal times. In the meantime, economic growth will remain slow due to an increase in restrictive measures, a lack of confidence among those making spending decisions, and increased uncertainty. Finland’s GDP is projected to increase by 2.0% in 2022 and 1.4% in 2023.
The deficit of general government finances grew substantially in 2020 because of the weak business cycle conditions and the support measures taken in response to the coronavirus pandemic. While the economy will recover in 2021, public finances will be left in a more feeble state than before the onset of the pandemic. The economic growth foreseen for the next few years will not be enough to restore general government finances to pre-crisis levels; instead, a clear deficit will persist. There is a structural imbalance between revenue and expenditure.
The appropriations in the budget for 2021 amount to EUR 65.2 billion. The central government on-budget deficit is expected to be around EUR 11.7 billion, and central government debt is expected to rise to around EUR 138 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.