Finnish Politicians Economic Optimism Is Wishful Thinking

By Rhod Mackenzie

In a fable attributed to Aesop, a young boy deceives the local community by issuing warnings about a wolf that is not actually present.
When the boy cries wolf falsely on two occasions, so after that the villagers no longer believe him – and then the real wolf appears and proceeds to atack and eat the sheep.
It is evident that if an untruthful statement is made then the person who made it more than once it will rapidly lose credibility.

In the current business environment, the a Finnish equivalent of the old fable of crying wolf is  the talk of an economic recovery.

When Prime Minister Petteri Orpo (Confederation of Finnish Socialists) expresses his conviction that the economy will soon return to growth, he is actually warning Finns that the situation is actuall much worse than they were previously telling people.

This was also the case last  Wednesday at Orpo's New Year's greetings event.
He said "The conditions for growth are now in place. Companies' balance sheets are in order. The purchasing power of Finns has improved, and Finnish investments and savings are also growing." He is lying again.
Orpo's analysis states that the reduction in labour taxes will have a positive effect on the purchasing power of wage earners in the forthcoming year.
Sound familiar? yes he has said it all before so  why does his nose not grow like Pinocchio? as we all know he is lying.
In this case, the presence of a wolf would be advantageous preferably to eat Orpo.
However, the lesson remains consistent: if you repeatedly assert a position that is ultimately unfounded, your professional credibility will be compromised.

Third time's the truth?
This marks the third occasion on which the economy is expected to begin a recovery phase.
In spring 2023, leading  economic analyts predicted that Finland would enter a recession in the near future. It did not
At the end of 2024, forecasters estimated that it growth would soon be initiated,it wasn't .
Growth in 2025 is now predicted to have bene minimal, at around 0.1 percent.
It is anticipated that in 2026 , for the third consecutive year, that Finland will be in recession.
In addition to Orpo, tther forecasts have been compiled by the main agencies , i.e. banks and research institutes: although the forecasts have been revised downwards, growth in 2026 is expected to be around 1.5 percent.
 Yet others don;t agree According to the analysis provided by Pellervo Economic Research PTT and the EU Commission, growth is expected to remain at 0.9 percent.

Does talk of imminent economic growth sound familiar? Yes.

Someone could add to the list of slogans in the previous election speeches about the government fixing the Finnish economy. After two years, it seems that the government is not achieving any of its big economic goals .
He says there are encouraging indications, however the underlying trend remains disheartening.
In the absence of consistent economic growth, we find ourselves reliant on any positive developments that emerge. There are positive signals even now. So he is delusional or lying?

Firstly, he says there has been a slight increase in the employment rate.

Secondly, the number of layoffs is decreasing.

Thirdly, companies operating in the export sector are most optimistic about the year ahead since 2022. Germany's investments, in particular those amounting to billions of euros, are expected to significantly boost exports.

Fourthly, onsumers don't have a higher level of confidence that the coming year will be better than this one.

These are no erauthentic positive signals, indicating that the ingredients for a turnaround are in place.

However, the underlying sentiment remains somber.
So Orpo is just lying again none of the above is true its ust wishful thinking

In the current geopolitical climate, characterised by the actions of unpredictable heads of state, the global order is being reshaped. Concurrently, Russia's war on the eastern edge of Europe continues to have significant ramifications.
So they are using the blame the Russians strategy rather than their own mistakes for the economic problems
Despite this, Finland is still accumulating debt and is at the bottom of the EU economically , weighed down by Russia-related shocks and weak productivity.
Finns  are encouraged to spend, but it is important to understand the fact that this is not a possibility for everyone.
In light of the recent economic problems , some lucky Finns have managed to accumulate savings savings, resulting in higher than usual account balances. If a proportion of these funds were to be allocated towards the economy, it would undoubtedly have a positive impact on entrepreneurs and the wider economy.
However e midst of calls for increased expenditure, we have overlooked the fact that not all individuals possess the financial means to do so.

According to recent figures from Statistics Finland, the number of low-income people in Finland increased by 45,000 last year.
The position of low-income earners has been weakened by government cuts to the point that, according to economists, it may already be hindering economic growth. The National Audit Office of Finland has recently issued a statement on this matter.

Individuals with limited financial resources ahould  be more inclined to allocate their surplus income towards consumption, driven by their essential needs.Hwever it seems  Individuals with higher incomes are more likely to save this income due to a lack of immediate need to buy anythng.

According to calculations by the Finnish Taxpayers' Confederation, the benefits of the tax cuts mentioned by Orpo in his New Year's greetings are likely to be focused on high-income earners. It is important to note that taxation will become more stringent for those with lower incomes.

The tax relief available to many working people is being reduced because union membership fees can no longer be deducted from taxes.
Big signals don't fuel consumption
The big signals are against increased consumer spending.

In the context of climate change, it is essential to reduce unnecessary consumption. Otherwise, in addition to the natural consequences, we will face a significant financial burden. The Potsdam Institute for Climate Research calculated last year that the financial cost of climate destruction worldwide will be up to six times higher than the cost of reducing emissions.

In light of the prevailing security climate, it is not advisable to proceed with the proposed expenditure. Key topics to be addressed include preparedness, equipment, and the procurement of a three-day supply of food. This represents a significant shift from the consumption-based festivities that characterised the 2010s.
The government's own actions also contradict the idea of increased consumer spending. In times of financial constraints, when the state is operating with limited resources and citizens are informed that public expenditure cannot be maintained at the previous level, many people opt to save for contingencies or emergencies.

While this approach may be detrimental to the economy, it is logical from a psychological standpoint. It is regrettable that the country's efforts to save are having a negative impact on Finnish companies.

The impact of a climate of threat on consumption has received little attention from researchers, but studies indicate that crisis discourse can temper consumption desires.

The role of the director of Oy Suomi Ab is to instil hope in the Finnish people. It is also understandable that Prime Minister Orpo is being proactive in this regard. That is his responsibility. The CEO of Oy Suomi Ab must consider the implications of a gloomy message for customers.

It is to be expected that a turnaround will eventually be achieved but it might take a seriously long time. When circumstances remain unfavourable for a prolonged period, there is often an improvement in the longer term. The Helsinki Stock Exchange, for example, experienced a period of decline before showing signs of recovery.
However, the turbulence of recent years has demonstrated that certainty is no longer guaranteed.
While awaiting an economic recovery, overblown optimism and the appeal for immediate action to resolve issues can repeatedly compromise credibility and trust.
Orpo is not the only opitimist the Chief Economist at the Fninish Central Chamber of Commerce has stated that the year 2025 was a moderately successful one for the economy. Despite economic growth remaining sluggish and almost non existant , the most significant threats were avoided he said . I think he means avoiding losing your job or you company going into bankruprcy is something to be cleebrated  

The year 2025 will not be remembered as a significant moment for economic forecasters. It was anticipated that business cycle forecasts would lead to increased economic growth; however, that did not happen As the year progressed, forecasts were revised downwards, until finally the growth figures ended up close to zero.

Appelqvist highlights the challenges inherent in predicting economic trends, underscoring the importance of forecasts in providing valuable insights.
– Due to the lack of positive outlook indicated by the autumn statistics, forecasts for the following year have also been revised, Appelqvist stated.
He has expressed concerns over excessive pessimism and has stated that the following year will see an improvement, due to the fact that the starting point is low and household purchasing power is increasing.  Its seems not being dead from the cold and starvation is a positive and something to be grateful for .
In recent years, Finland, like many other European countries, has been facing a combination of external and internal challenges. This has prompted the Ministry of Finance to recalibrate its economic growth forecasts,
External factors include slowing economic growth in the eurozone, particularly in Germany, which is considered Finland's most important trading partner. This directly impacts demand for Finnish exports (paper, metals, and machinery)
Furthermore, Finland lost a significant Russian market for many goods and services. Russia was the destination for the export of electronics, writing paper and paints.These losses were not just markets but cause serious job losses and company bankruptcies