Finnish cabinet’s future hangs in balance

Bloomberg

Finland’s government resumed talks to overcome disagreements over budget plans that pushed it to the brink of a breakup during the weekend.
The negotiations intended to hammer out a spending framework for the next four years ended up exposing tensions within the five-party coalition half way through its term.
Social Democrat Prime Minister Sanna Marin and the left-leaning parties are pushing for “social justice” and are willing to spend on job creation, while the Center Party and Swedish People’s Party seek a faster return to fiscal prudence than their peers.
Two compromise proposals are on the table as leaders of the ruling parties meet in Helsinki, Marin said as she entered the talks, without revealing details. The negotiations are intended to reveal whether they have enough common ground to still govern together.
The talks, originally scheduled to last two days, are now in their sixth day. Finland is set to hold countrywide municipal elections on June 13, putting political pressure on the ruling parties who lag behind the opposition Finns Party and National Coalition in polls.
The Center Party, which is hemorrhaging support in its traditional rural stronghold, wants the government to stick to its road map of halting the growth of public debt by 2030, though it’s also willing to continue stimulus to the Nordic nation’s economy for two more years.
The party’s lawmakers met and signalled they wanted talks to continue, its leader Annika Saarikko said.
Finland has run a deficit in public finances each year since 2008, and public debt relative to the size of the economy jumped to 70% last year from about 60% in 2019 on pandemic-related spending.
The parties also disagree on how to help struggling peat farmers as the cost of emitting carbon dioxide causes demand for the fossil fuel to plummet faster than expected.
A failure to agree on a budget framework would likely lead to the government’s resignation.