Council Opinion of 22 January 2002 on the updated stability programme of Finland, 2001-2004
Date: 2002-01-22
Institutions: Council of the European Union
Subjects: Economic and Monetary Union, Finland, economic policy, economic stabilisation, gross domestic product

C 33/2

EN

Official Journal of the European Communities

6.2.2002

COUNCIL OPINION

of 22 January 2002

on the updated stability programme of Finland, 2001-2004

(2002/C 33/02)

The Council notes that the programme foresees a decline in the
general government surplus from its exceptionally high level in
2000 to a level of somewhat above 2 % of GDP over the
period 2002-2004. This must be seen in the light of
the
high surpluses reached in 2000 and 2001. The projected
from the strong
reduction in the surplus partly results
in
is also due,
it
downward revision of GDP growth. But
to tax cuts and to higher than originally foreseeen
2002,
thus deviating from the medium-term central
spending,
spending ceilings. Such a deviation had also
government
the
occurred in 2001. The Council
spending ceilings are firmly adhered to in coming years and
that some of the lost ground is regained in the spring 2002
review of
furthermore,
welcomes the recent adoption of
legislation requiring local
governments to balance their budgets in the medium term.
The Council recommends close surveillance of this regulation
in order to ensure that its aims are achieved. In the light of
Finland’s particular exposure to expenditure pressures related to
population ageing the Council considers it essential that high
government surpluses are maintained in the medium term
allowing the government debt ratio to decline at a sufficient
pace.

the spending ceilings. The Council,

recommends

that

The Council notes that the projected surplus in the government
accounts is fully in line with the requirements of the stability
and growth pact throughout the programme period. Moreover,
the estimated cyclically adjusted government balance of more
than 2 % of GDP should provide a sufficient safety margin
against a breach of the 3 % of GDP reference value for the
government deficit in normal cyclical fluctuations.

to

reforms.

structural

continued

The Coucnil welcomes
the updated stability programme’s
Planned
commitment
government action to start the reform of the unemployment
benefit system is welcome in the light of rising unemployment.
Also, the planned reform is welcome in order to complement
the favourable outcome of continued labour tax cuts aimed at
reducing the current heavy overall tax burden on labour to
boost employment creation. Further structural reforms in the
private service sector and in the labour market would also
support employment creation. Moreover, the reform of
the
pension system should be finalised as scheduled.

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 1466/97 of 7 July
1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic
policies (1), and in particular Article 5(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

On 22 January 2002 the Council examined Finland’s updated
stability programme, which covers the period 2001-2004. The
Council notes with satisfaction that the general government
surplus, which exceeded expectations in 2000, is projected to
remain at a fairly high level throughout the programme period.
The general government debt
to GDP ratio is expected to
continue to decline, although more moderately than previously
projected. The Council considers that the updated programme
is consistent with the broad economic policy guidelines.

The macroeconomic scenario presented in the 2001 updated
stability programme expects a strong deceleration of economic
growth in 2001, mainly due to the sharp decline in the
external balance. In the following years, GDP is assumed to
gradually accelerate attaining a rate close to potential at the
end of the period. Although considerable risks regarding the
short-term outlook prevail at the moment, most recent data
suggest that the economy has bottomed out in the second half
of 2001. As a consequence, the assumption of a revival from
2002 on appears plausible. However, this crucially hinges on
the expected upturn of employment growth which, in order to
materialise, needs to be supported by wage moderation.

(1) OJ L 209, 2.8.1997, p. 1.