This report assesses the Finnish fiscal framework, especially from the perspective of the role and development of the spending limit procedure. While the central government expenditure ceiling has long been considered a successful tool for fiscal policy and had been adhered to until the current government term, it has not been respected since, undermining the credibility of the system. Moreover, even previously, keeping within the expenditure ceiling could not curb the growth of public indebtedness.
The project analyzed fiscal frameworks through literature reviews, numerical simulations, and expert interviews. Five reference countries were included in the interviews: Sweden, Denmark, Ireland, the Netherlands, and New Zealand. The report discusses how the framework should deal with major crises and long-term sustainability challenges, and what is the role of the revenue side, public investments, wellbeing services, and the EU fiscal policy regulations.
Publications of the Government’s analysis, assessment and research activities 2023:21.