Bloomberg News

Finland Cuts 2013 Forecast as Euro Woes Sap Economic Expansion

August 06, 2012

Finland’s economy may stall next year as Europe’s debt woes damp growth in the northernmost euro country, Finance Minister Jutta Urpilainen said.

Economic growth next year may be between zero and 1 percent, Urpilainen said today in Helsinki as the ministry began forming its proposal for next year’s budget. The government in June forecast growth of 1.2 percent next year.

Urpilainen said that the government plans no new tax increases or spending cuts even as it needs to stay prepared for a potential worsening of the economic turmoil.

Finland has kept its budget deficit within European Union rules since 1996 and targets a balanced budget by 2015. The government has announced 1.2 billion euros ($1.5 billion) in tax increases and 1.2 billion euros in spending cuts to help reach that target.

Finland, which charges investors to hold its two-year debt, is the euro area’s top-rated country at Moody’s Investors Service. The nation has a Aaa rating with a stable outlook after the rating company last month reduced the outlook on German, Dutch and Luxembourg debt to negative.

The government will decide on the budget on Aug. 29 to Aug. 30 and its proposal will be sent to parliament on Sept. 17, according to a schedule posted on the Finance Ministry website.

To contact the reporters on this story: Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net; Kasper Viita in Helsinki at kviita1@bloomberg.net

To contact the editors responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net; Christian Wienberg at cwienberg@bloomberg.net


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