Prime Minister’s New Year’s Message 31.12.2015

For Finns, 2016 is a moment of truth

An open and positive attitude towards each other and the surrounding world has made Finland a unique and good country. We need to find this spirit again, even though Finland’s economy has experienced a seven-year decline, and the twists and turns of global politics as well as the escalation of the refugee crisis have darkened the social atmosphere of the country.

Finland has survived the refugee crisis that surprised the whole of Europe reasonably well, despite the unfortunate events that marked an exceptional autumn. In this context, I would like to thank all of the authorities and volunteers who participated in handling the crisis. We have continuously stepped up our activities, learned the lessons from best practices, and everyone has worked commendably under intense pressure. The situation is not over, however; we must continue our efforts both at the EU level and on the domestic front.

Our ability to renew ourselves, on the other hand, cannot be praised. For years now, we have been unable to make the necessary decisions and reforms. Our labour market is inflexible and has not been able to redeem the assurance of its ability to adjust as we promised when joining the euro. An increase in the number of unemployed has been the only way to adapt. This cannot continue. Furthermore, the deficit criteria laid down by the EU have been breached and our indebtedness has rapidly increased. Yet, despite these facts, the Government has been accused of excessive gloominess.

In my televised speech on 16 September 2015, I stated that the debt of the Finnish State has grown by nearly one million euros per hour for seven years – night and day – every day of the week”. This figure is obtained by adding together the annual budget deficits approved by Parliament in the period 2009–2014. For 2015, the economic forecast of the Ministry of Finance was used. An average hourly rate over seven years of approximately EUR 950,000 is thereby obtained. This is recklessly high.

When the present Government started its work, it was obvious that decisions could no longer be postponed, and we were finally forced to face the facts. Finland’s population ageing trend is also such that continuing to live on debt at this rate is not a sustainable economic policy, nor is it fair from the perspective of future generations. The Government rolled up its sleeves on this principle. The task in hand is the EUR 10 billion sustainability gap, and the decisions required to bridge the gap will be made during this government term. Now and then, someone has to do the unpleasant chores.

Through austerity decisions, public finances will be strengthened by approximately EUR 4 billion at the 2019 level. Structural reforms such as the healthcare and social welfare reform and the cutting of municipalities’ duties and obligations will also help public finances in the long term by approximately EUR 4 billion. The major policy line on healthcare and social welfare was decided in November and the intention is to decide on the cutting of local government tasks at the beginning of 2016. The pension reform has already been approved by Parliament. The Government aims to cover the final EUR 2 billion of the sustainability gap with other measures to promote competitiveness and employment. If this is not achieved, then in spring 2017 the Government will have to make additional savings and tax increases.    

We need more bold decisions, and a belief in Finland. The first steps in the right direction are already being taken. The Äänekoski bioproduct mill is a significant single investment decision, which will hopefully contribute to encouraging further investment in new growth.

In addition to large industrial investments, we need a spirit of entrepreneurship, which will build our expertise into economic success. In many ways, we are living through a period of transition that also presents plenty of opportunities for economic success.

The Paris climate agreement is a good example of this. The agreement will create entirely new opportunities for Finnish clean technology export companies. Finland’s pathfinding status in climate measures and in the development of clean solutions can now bear fruit on a completely new level as, for example, China, India, Brazil and many other similar countries get round to strengthening their own efforts to tackle climate change. It is largely up to us how large a slice of this huge market we obtain.

We Finns can do significantly better than we are achieving right now. For all of us, 2016 is a moment of truth. When confidence in the Finnish economy and its competitiveness is restored, the economy will start to grow, driven by investment. Through unyielding determination, perseverance and problem-solving ability, we will come through this.

Thank you for all of your feedback, and a Happy New Year to everyone!

Juha Sipilä

Prime Minister