Finland plans to spend about 800 million euros ($800 million) on measures to help the households suffering the most from surging electricity prices.
(Bloomberg) — Finland plans to spend about 800 million euros ($800 million) on measures to help the households suffering the most from surging electricity prices.
The steps are part of a budget deal hammered out by the five-party governing coalition for next year with a target to ease the blow dealt by accelerating inflation and the rising cost of energy. At stake is energy poverty so drastic that it may threaten lives in the Nordic country, where many use direct electrical heating during the freezing months of winter.
The government also plans to help low- and middle-income people endure the higher cost of living with measures such as an extra child benefit to be paid in December, according to a statement on Thursday.
The 2023 budget will be 8.1 billion euros in deficit, with spending totaling 80.5 billion euros, pushing central-government debt to an estimated 146 billion euros next year, the government said.
“Energy was a large theme in these budget talks, and so was finding ways to provide security in the coming autumn and winter,” Prime Minister Sanna Marin said. Russia “is using energy as a weapon against Europe,” she said.
Finland’s economic prospects are souring as the fallout from Russia’s invasion of Ukraine continues to roil energy markets, spurring price growth and stalling economic expansion. With inflation now hovering at multi-decade highs, a recession can no longer be ruled out, Finance Minister Annika Saarikko said in early August, followed by a similar warning from the country’s biggest mortgage lender OP Group.
Power Package
The household energy package includes a tax deduction worth 300 million euros, a cut in value added tax during the winter months that will amount to 200 million euros, as well as spending of 300 million euros in handouts for those struggling to pay their power bills. No one’s electricity costs will be compensated 100%, Marin said. Details on the aid will be decided at a later stage, the government said.
“We want to help people to ensure they continue to support Ukraine,” Marin said. “We are living in a war economy and this war is now hurting people in Europe.”
(Updates with details on the power package from seventh paragraph)
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