Katainen: Enough stimulus for now
Focus on activating jobless and helping business
No new stimulus injections - public investments or tax cuts - are in store for this year or for next.
“The actual stimulus tap should mainly be turned off, or left to a slight trickle, if anything at all”, says Minister of Finance Jyrki Katainen (Nat. Coalition Party) in an interview with Helsingin Sanomat.
The opposition has been calling for further action from the government to fight the recession.
Katainen notes, however, that plenty of stimulus measures have been implemented around Europe, and that now is a good time to wait for them to take effect.
He says that the initial effects can already be seen. He believes that thanks to stimulus measures that have been enacted, unemployment has not grown as much as it might have done otherwise.
“Cuts in income tax, investments into construction, the deduction for domestic help, and other means have led to an increase in domestic demand, and it can be seen slightly in employment trends.”
Although he has no specific figures to back up his assertions, Katainen nevertheless says that Finland has done well compared with other EU countries in economic forecasts of the European Commission.
The government will submit a supplementary budget for this year in August, aimed at fine-tuning the main 2009 budget.
Katainen will not rule out the possibility of some measures to be taken “in the name of stimulus”, even though no actual round of stimulus measures is in store. The measures could include moving forward with investments that have been decided, or which are being planned. Appropriate targets are now being examined in a working group.
A supplementary budget will not perform any miracles, as the stimulus budget drawn up in January left only about EUR 75 million available for the purpose.
August will also be the time to draw up next year’s draft budget. Katainen has been thinking hard about what would be needed to keep the welfare state going after the current economic storm.
“The welfare state is built only through work - lots of work.”
To that end, Katainen says that investments are needed in two different areas - helping people and helping businesses.
“When the economy starts growing we need to have companies ready to grab the daylight and create jobs.”
The Ministry of Finance is currently pondering ways to help small and medium sized companies past the hardest period. Possibilities include changes to schedules for the deduction of business losses and postponing payment of costs incurred from hiring employees.
Helping people involves investments to activate the unemployed and into setting up trainee positions for young people. The aim is to avert the mistakes of the previous recession: long-term unemployment, and marginalisation of people from society.
Activation and education will not help everyone find work, but Katainen feels that it will “keep people in touch with active life while they are unemployed”.
He notes that Finland cannot afford to lose people now, in a situation in which the working-age population is shrinking anyway.
About EUR 200 million is to be set aside for helping people and companies. No new money is coming - funding for the project will be taken from the budgets of all ministries,
Previously in HS International Edition:
Economic crisis divides EU countries into rescuers and those needing rescue (23.3.2009)
Finance Ministry considers allowing deferment of corporate taxes and employer fees (8.5.2009)
No signs yet of economic upturn in Finland, despite positive glimmers in US (15.4.2009)