Editorial|Editorial
In the near future, economic policy should focus on how consumption is kept going and how the poorest can withstand rising prices.
When the achievements of the government led by prime minister Sanna Marin (sd) in the final meters of its reign, the government’s economic policy balance remains contradictory.
The sudden difficulties that have arisen have been addressed effectively, but at the same time the sustainability of public finances has deteriorated. The coronary virus pandemic was overcome and Ukraine’s war is being responded to, but indebtedness accelerated.
The employment rate has also risen, but the long-term goals of employment policy – to reduce the mismatch problem and high structural unemployment – have not been achieved very well. There is always only a lot more work to be done than there are workers, and the workers have the wrong education or the wrong place to live.
It is very difficult to say which part of the economic and employment policy objectives set out in the government program was achieved thanks to the government and which part will be achieved even later. Part of the progress of this period came as a legacy of the previous government and part with the business cycle. Of course, some of the good employment developments are also linked to the economic emergency solutions that this government has taken.
It is also difficult to predict, because many decisions made in the name of improving the economy and employment will pay off sometime in the future – hopefully. An example of such a policy is investing in education by, among other things, raising the compulsory school age.
On the budget side the government is starting to quit. The budget for next year is the last actual budget of this government, so the overall picture of the government’s economic and employment policy can soon be drawn.
The groundwork for the budget has begun – and once again it is really hard work. As the uncertainty caused by the pandemic dissipated, it was replaced by the war in Ukraine and a sharp rise in inflation. The world is threatening to slip into a food crisis and stagflation – a time when inflation is rising but the economy is not.
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Once again, the government will mainly have to react.
The government agreed a week ago on the second supplementary budget for the year. It will increase government net borrowing by EUR 1.3 billion. The state’s net borrowing this year would be nearly nine billion. The amounts of debt are wild, but indebtedness is understandable in this situation.
But once again, the government will mainly have to react – to meet the problems ahead. It did not have time to make its own economic and employment policy.
When the government’s economic and employment policy is summarized later and the succession passed on to the successor is considered, the fact that the Finnish economy lasted surprisingly well during the coronary virus pandemic is a plus. The government and its business support played a big role in that.
In the difficulties caused by the war in Ukraine, the government’s attention seems to be on consumers instead. The government’s message seems to be that if the company ever went to Russia, it took its own risk and risk. There is no need to shout for help.
In the near future, the focus of economic policy should be on how consumption is maintained and how the poorest can withstand rising prices. Many countries have resorted to some form of price restrictions and subsidies. They are rather inefficient solutions. Well-targeted social benefits hit their targets better.
For the next the unfortunate legacy passing to the government is a mountain of debt. Finland is becoming indebted at the same time as interest rates are rising and the dependency ratio is starting to put an increasing strain on public finances. There is reason to suspect that there is no wide range of solutions in the parliamentary election campaigns that would provide a sufficiently quick solution to this equation. The attitude – correcting problems with debt – can also be inherited.
The editorials are HS’s statements on a topical issue. The writings are prepared by HS’s editorial staff and reflect the magazine principle.
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