The first budget proposal of the new government sends a signal to export industries that the government aims to improve the domestic industrial operating environment and international competitiveness. The work to enhance the industrial operating environment has now started within the government. Chemical Industry Finland also considers it crucial that the government strives for fiscal sustainability and increased incentives for work.
The government’s long-term goal of achieving an 80% employment rate requires strong actions to reform the labor market ambitiously and strengthen employment. The government’s measures to restore public finances are heading in the right direction, and the timing is appropriate. The most substantial adjustment measures are expected to take place at the end of the government’s term, when the economic situation is projected to be better.
Despite the adjustment measures, the state budget deficits are substantial, clearly exceeding 10 billion euros annually, and the rising interest costs, which are expected to exceed three billion euros next year, do not help the situation. Strict measures are necessary. Reductions in unemployment and social security, as outlined in the government program, are part of an overall fiscal adjustment. In addition to direct savings, these reductions will increase tax revenue as more people find employment with fewer disincentives.
Incentive traps are also being removed by reducing the tax burden on work. This is a welcome move. Furthermore, the reduction in unemployment insurance contributions resulting from the favorable employment situation will fully decrease labor costs for companies and increase the purchasing power of employees, thus supporting employment and consumption.
Chemical Industry Finland applauds the government’s decision to increase Business Finland’s R&D funding authorization by 92 million euros. However, the increase could have been even greater, as funding targeted at universities has increased over the past decade while corporate R&D funding has decreased. The R&D funding law includes a leverage effect in which companies’ contribution to the 4% of GDP target represents two-thirds. We do not see this happening unless funding is directed to areas where R&D cooperation is driven by businesses.
Measures to streamline permitting are welcome.
Chemical Industry Finland appreciates the government’s efforts to streamline permitting, including binding deadlines. To attract investments to Finland and implement them, it is essential that permitting does not become a bottleneck. We also positively view the idea of simplified permitting for industrial parks, as it accelerates the permitting process and facilitates emissions analysis. However, adequate resourcing for permitting must be ensured, especially as a major administrative reform is being prepared at the same time.
Chemical Industry Finland believes it is positive that recovery funds are being redirected to the needs of industrial investments. Clean transition investments are currently significantly supported in key competitor countries. It is good that Finland still has access to RRF funding in 2024, but it should be targeted more towards supporting clean transition investments. Furthermore, further decisions are needed to maintain an adequate level of investment support.
In Chemical Industry Finland’s view, the inconsistent recent decisions regarding burden-sharing sector measures need predictability. A clear direction is required to secure investment and growth prospects for clean transportation solutions and ensure Finland’s competitiveness. Reducing fuel taxes based on energy content is the right choice at this point. This maintains emission-based emissions control while easing the cost pressure associated with fuels. Long-term and investment-friendly policies should be one of the cornerstones of Finland’s politics. Irresponsible decisions could lead to the goals of the burden-sharing sector slipping away, forcing Finland to purchase emissions reductions elsewhere and indirectly support clean transition investments in competitor countries.
An additional investment in university enrollment slots should be directed to fields with a need for skilled professionals.
Chemical Industry Finland thanks the government for its continued commitment to education. Raising the level of expertise is essential for industry, and therefore, we warmly support ongoing investment in basic education as it directly contributes to increasing basic skills. Strong prioritization of guidance in upper secondary education is crucial. It should be directed not only to general upper secondary education but also to vocational education, which will continue to be significant for industry. The extra investment in university enrollment slots should be directed to fields where there is a need for skilled professionals.