Finland dodges government collapse with last-minute budget deal

Finland has managed to avoid, for the moment, the collapse of the governing 5-party coalition after the leaders reached a framework for an agreement on the national budget for the next two years.

The agreement comes after 8 days of tough negotiations and after the Center Party leaders declared themselves willing to break the government coalition.

The growing public deficit, employment policies and climate objectives concerning clean energy were at the center of the controversy, which made it impossible for the center-left wing (Social Democrats, Left Alliance and Greens) to agree with their liberal colleagues of the Center Party (Keskusta).

Keskusta's leader, Minister Annika Saarikko, had threatened to force the fall of the government if a deal was not reached.

After eight days of disagreements and failed negotiations, on Wednesday Prime Minister Sanna Marin appeared before the media in Helsinki to announce that the central points of the pact have been resolved. However, there are still some outstanding issues that will have to be resolved, she pointed out.

"I believe that the government can continue its work after these framework negotiations," Marin said.

A central point of the problem was the level of government spending.

According to the Finnish media, Prime Minister Marin proposes to increase the 2023 budget framework by more than 500 million euros. An increase that the members of the Center Party consider unaffordable.

Energy, climate, employment

Marin's partners have complained about Finland's rigidity in applying the emissions reduction schedule, which is causing severe losses to the peat industry.

Liberals demanded tax reliefs for those businesses. But other government partners, particularly the Greens of Interior Minister Maria Ohisalo, are in favor of a rapid phasing out of peat burning in energy production, which emits large amounts of carbon dioxide. Finland aspires to become carbon neutral by 2035.

The Center Party also called for more determined measures to combat rising unemployment, including staggering income-linked unemployment benefits.