Orpo Government: Government’s decisions support emerging economic growth

The Government of Prime Minister Petteri Orpo has reached a decision on its budget proposal for 2026. The Government’s decisions aim to support economic growth, which is picking up. Supporting economic growth and continuing responsible fiscal management is necessary to ensure the security of people in Finland and safeguard their access to important services going forward.

In its budget session, the Government made decisions that will implement growth measures supporting work, entrepreneurship and investments throughout Finland. Measures to boost the purchasing power of Finns include easing taxation for low-income and middle-income earners, raising the child increment for earned income deductions and lowering the highest marginal tax rate to around 52 per cent. The Government will also improve the conditions for entrepreneurship by reducing the corporate tax to 18 per cent starting in 2027. Furthermore, the Government will continue to invest in improving transport connections, enhancing expertise and promoting research and development.

“The Finnish economy is already showing many positive signs. In manufacturing, order books have been filling up faster than a year ago. Investments have picked up. Taxation has been eased, wages have risen, interest rates are low and the rise in prices has levelled off. The decisions made in today’s session will further strengthen Finnish people's confidence in the economy,” says Prime Minister Petteri Orpo.

It will take some time before the upturn in economic growth is reflected in employment. The Government will take measures to rapidly ease the employment situation, which include supporting youth employment, boosting the construction sector in 2026, improving the capacity of small-scale entrepreneurs to create jobs, and will continue to move forward with new growth measures. The Government wants to strengthen especially young people's prospects of finding a job. The Government will set aside EUR 30 million for an employment voucher for young people, with a focus on young people who have little or no work history or education and training. The purpose of the employment voucher is to enable thousands of young people to enter working life.

Construction will be boosted in 2026 by increasing the loan interest subsidy authority from the EUR 1 billion previously decided to EUR 1.135 billion and by increasing budget authorities for guarantee loans to EUR 200 million. As part of the package of measures to boost employment, it has also been agreed that the remaining loan interest subsidy authorities for this parliamentary term will be redistributed so that EUR 135 million of the authorities will be transferred from 2027 to 2026, which will lead to the amount of loan interest subsidy authorities being EUR 500 million in 2027.

The Government will continue to ensure the security of Finland and its people. Russia, whose war in Ukraine is ongoing, poses a long-term security threat to all of Europe. The budget proposal for 2026 includes new procurement authorities of EUR 6 billion for defence materiel procurement. This is many times higher than the procurement authority in this year’s budget. The Finnish Defence Forces will use the new procurement authorities to launch a modernisation of land defence.

Stabilising the general government debt ratio by the end of the government term is one of the most important fiscal policy objectives of the Government Programme. Without the measures decided on by the Government, Finland’s indebtedness would increase beyond control. Curbing indebtedness also plays an integral role in strengthening the resilience of general government finances to crises and ensuring that the services of the welfare society are available to future generations.

To stabilise the debt ratio, the Government has already agreed on measures that will strengthen general government finances by around EUR 9 billion. However, this summer’s forecast shows that general government finances have deteriorated since the spring forecast. According to an updated estimate by the Ministry of Finance, stabilising the debt ratio by the end of the parliamentary term will require further measures to strengthen general government finances by around EUR 1 billion by 2027. The Government has now decided on these measures in its budget session. Savings have been sought in ways that will affect the everyday lives of Finns as little as possible. Savings will not be sought through cuts to social security, benefits for families with children or pension recipients, or health and social services.

The Government will also not allocate savings to agricultural food production or nature conservation.

The Government wants households, especially families, to have more confidence in the future. The maternity grant, i.e. the value of the maternity package, will be increased by EUR 40 to EUR 210. Students’ daily lives will be made easier by raising the meal allowance to correspond to increased costs.

The Government stresses that efforts to correct the foundations of Finland’s general government finances will have to continue into the coming parliamentary terms. The most important economic policy debate this autumn will focus on the commitment of the parties in Parliament to the ‘debt brake’. Finland’s lowered credit rating and the EU’s common financial rules mean that Finland will have to continue its prudent economic policy.

New adjustment measures target both expenditure and revenue

The new package to strengthen general government finances, decided by the Government in its autumn 2025 budget session, includes measures to both reduce expenditure and increase revenue. The measures will also affect business subsidies. The package is described in more detail in the table attached to the press release.

The annual loan interest subsidy authority for state-subsidised housing production will be reduced by EUR 365 million from 2027 onwards.

Financing of the exclusive ODA budget item administered by the Ministry for Foreign Affairs will be cut by EUR 20 million. However, this saving will not affect the development cooperation carried out by civil-society organisations. An additional EUR 20 million will be allocated to humanitarian disaster relief. EUR 5 million of this sum will be allocated to Gaza. Municipalities’ legislative obligations to integrate immigrants will be scaled back from the beginning of 2027. However, these savings will not affect language training, early childhood education and care or education services, or employment-promoting services. The appropriation will be cut by EUR 30 million at the 2027 level.

The central government funding set aside for the development of reimbursements for medical expenses throughout the entire parliamentary term will be reduced from EUR 355 million to around EUR 304 million. Reimbursements for private healthcare appointments with general practitioners or specialists paid by the Social Insurance Institution KELA will be reduced from EUR 30 to about EUR 8. The expansions made to reimbursements (including infertility treatments, dental care, gynaecologist appointments and physiotherapy) will be maintained. The pilot where the cost of private healthcare appointments will be reduced for people aged over 65 (freedom of choice pilot) will be implemented as planned.

The Government has already made a decision on a non-recurring saving of EUR 15 million for 2026 regarding the specified government transfer for healthcare and social welfare personnel’s professional specialisation education. This saving will be continued in 2027. 

With regard to research and development funding, the Government will uphold the parliamentary decision to raise the central government share of R&D expenditure to 1.2 per cent of GDP by 2030. However, the Act on Research and Development Funding will be revised to align it with the Ministry of Finance's latest economic forecast. According to the current act, the latest economic forecast would not have had a bearing on the budget proposal until 2028. This legislative amendment will be implemented so that the increase of central government R&D funding will be reduced by EUR 25 million in 2026 and by EUR 80 million in 2027. In addition, funding of R&D carried out by the Finnish Innovation Fund Sitra would be included in the central government's funding share in future, the impact amounting to EUR 15 million at the 2027 level. R&D funding will increase by about EUR 255 million in 2026 compared to the total amount in 2025, and to by about EUR 215 million in 2027 compared to 2026.

A new multi-sectoral Finnish Supervisory Agency will start operating at the beginning of next year as well as 10 new Economic Development Centres, which are based on the earlier Centres for Economic Development, Transport and the Environment (ELY Centres) and Regional State Administrative Agencies. In continuation of the central government administration reforms, the Government has decided to launch within a short timeframe an inquiry into the central government agency structure to save EUR 25 million in central government operating expenses from 2027 onwards. Based on the preparatory work, the Government will decide on the necessary structural changes in the spring 2026 government session on spending limits.

The estimate for conditional repayments, made as part of the reimbursement for medicines, will be raised to correspond to actual repayments. The EUR 60 million increase in repayments will be fully allocated to reducing the central government’s share of health insurance. As part of the new package of adjustments, EUR 30 million of this sum has been taken into account in 2026 and EUR 15 million in 2027. The remainder of this sum will be allocated to replace earlier savings decisions whose savings impact will be smaller than previously estimated.

The new adjustment measures will include an increase of EUR 50 million in environmentally and health-motivated taxes at the 2027 level. These tax increases will affect the excise duties on alcohol and tobacco products (including nicotine pouches) and/or the waste tax. The increases be drafted for the spring 2026 government session on spending limits. In addition, the decision made in the mid-term policy review session concerning the taxation of pensioners will be revised by adjusting the highest-earning pensioners’ earned income tax relief. This change would apply to pension income exceeding EUR 65,000 and would cut the reduction of the supplementary tax on pension income decided in the Government’s mid-term policy review session by EUR 20 million starting in 2026.

The risk-bearing capacity of the National Pension Fund and, at the same time, the amounts it annually enters as revenue to cover pension expenditure paid from the Budget will be increased starting from 2027. The amount entered as revenue for 2027 will be increased by EUR 100 million. Other measures to increase general government revenue include increasing the strategic stockpile fee for electricity as of 1 April 2026 (EUR 56 million in 2027) and increasing the amounts entered as revenue by Metsähallitus (EUR 8 million in 2026 and EUR 20 million in 2027). The increases to the amounts entered as revenue will not be implemented through increased felling, but will be based on rising timber prices.

New adjustment measures will affect business subsidies

The government budget session has decided on a package of adjustment measures that will cut business subsidies by approximately EUR 141 million at the 2027 level, taking into account the reduction in budget authorities.

Business Finland's non-R&D subsidies will be reduced by EUR 15 million from 2026 onwards. However, the annual level of the production incentive for the audiovisual sector will be maintained at EUR 10 million. It will be ensured that a sufficient share of the remating subsidies will be available to be allocated to SMEs.

The authorities for the industrial policy provision and the Finland and Clean Energy key project, included in the Government's non-recurring investment programme, will be cut to reduce the need for appropriations by a total of EUR 90 million in 2027.  As agreed in the mid-term policy review session, the tax credit for large investments will be expanded to cover investments in the recovery, use and storage of carbon dioxide in line with the continuation EU's Temporary Crisis and Transition Framework for state aid.

A general reduction of around EUR 16 million will also be made to several other business subsidies from 2026 onwards. EUR 7.8 million of these cuts will be allocated to the Ministry of Education and Culture’s business subsidies (primarily film production grants). The Government will prepare and introduce a payment obligation for on-demand programme services enabled by EU legislation. The fee will be collected from operators that provide streaming services in Finland. The revenue from these charges will go towards supporting domestic film and TV production.

In addition, tax subsidies for businesses will be cut by a total of EUR 20 million at the 2027 level. Decisions on the more detailed allocation of this reduction in tax subsidies will be made in the government session on spending limits in spring 2026. However, the cuts will not affect energy tax subsidies for agriculture.

Government taking extensive measures to boost growth

The Government's key goal is to strengthen the foundation for economic growth. Through the decisions made in the Government Programme and in spring 2024, the Government has already implemented reforms in the labour market, made major investments in research and development, and carried out measures to boost investment. In its mid-term policy review session, the Government also decided on a major package of measures to boost economic growth. Among other things, it includes tax changes that will enter into force in 2026 to improve incentives for work and boost purchasing power.

For central government R&D funding, the objective of the Act on Research and Development Funding will remain at the 1.2 per cent of GDP in 2030. According to the latest projection, central government R&D funding would amount to approximately EUR 4.1 billion in 2030, whereas according to the previous projection, it would have been approximately EUR 4.3 billion. According to the new projection, the annual increases would be approximately EUR 240 million starting in 2026. In 2026, central government R&D funding will amount to approximately EUR 3.17 billion, which is approximately 1.07 per cent of GDP.

The biggest increases in funding will be allocated to accelerating research and development carried out by businesses. The budget authority allocated for research and development by Business Finland will grow by more than EUR 100 million. EUR 30 million will be allocated to boosting research and development at universities. Finally, the Government proposes allocating EUR 8 million to the Economic Development Centres to launch a three-year pilot aiming to increase the volume of research and development in SMEs.

Tax policy supports employment

The Government's tax policy aims to fuel the purchasing power of households, improve incentives for working, and strengthen conditions for economic growth. In line with the Government Programme, the Government's tax policy encourages work and self-employment and supports domestic ownership. Given the serious situation facing general government finances, the Government also decided in its spring 2024 spending limits discussion to introduce new tax measures to strengthen general government finances in addition to the tax measures already outlined in the Government Programme. In its spring 2025 spending limits discussion, the Government announced a number of tax measures to boost economic growth alongside tax increases to fund the growth measures.

Incentives to work include easing taxation on labour for low-income and middle-income wage earners by EUR 520 million starting in 2026 and by EUR 125 million starting in 2027, raising the child increment for earned income deductions and lowering the highest marginal tax rate to around 52 per cent. In order to reduce the tax revenue losses arising from the lowering of the highest marginal tax rate, the index adjustment for earned income taxation will not apply to those income levels that are within the scope of the reduction in marginal tax rate. The index adjustment applies in full in all the rest of the income brackets. The increase in the taxation of pension income resulting from the technical implementation of the lowering of the highest marginal tax rates will be reduced by lowering the addition tax on pension income.  The tax at source paid by key persons will be lowered to 25 per cent and tax relief for Finnish citizens returning to Finland will be introduced.

Purchasing power will be boosted by the decision to lower the tax rate on commodities from the 14 per cent VAT rate to 13.5 per cent, extending the deduction for donations and increasing the forest management tax credit. In addition, the lower limits of inheritance and gift tax will be raised and the interest rate margin on late-payment interest on inheritance tax will be lowered. Tax revenue will also be decreased in 2026 by the postponement of the taxation of additional transaction prices to when the obligation to pay and the amount of the additional transaction price is confirmed. The tax subsidy for zero-emission employer-subsidised cars will be continued in line with the earlier decision for 2026-2029. The carbon dioxide component of the tax on transport fuels will also be lowered.

The tax base will be reinforced by abolishing the deductibility of membership fees in labour market organisations, the home office deduction and the tax exemption for the employer-subsidised bicycle benefit. The abolishment of the tax exemption for the employer-subsidised bicycle benefit will only apply to bicycle benefits agreed after the spring 2025 spending limits session.  The Government will block share swap arrangements designed to minimise dividend taxation. In addition, the obligation of crypto-asset service providers to provide information will be broadened. Tax revenue will grow by raising the value-added tax rate for public service broadcasting and by increases in the excise duty on tobacco products and soft drinks as well as the tax on mined minerals. The decisions made earlier to raise vehicle taxes on electric vehicles and plug-in hybrid vehicles and the propelling force tax on camper vans will also increase tax revenue. Taxes on nicotine pouches and e-cigarette liquids will also be raised.  In addition, the electricity tax subsidy for mining will be abolished as of 1 January 2026. The strategic stockpile fee will be raised as of 1 April 2026. Excise duties on wines and other fermented beverages will be raised and the excise duty on alcoholic beverages will be indexed, taking into account the previously introduced higher duties on strong alcoholic beverages.

In accordance with the Government Programme, the municipalities will be compensated for the tax revenue impact of the changes made by the Government to tax bases.

Important transport infrastructure projects to be funded under the investment programme

The government investment programme also promotes sustainable growth in all of Finland.

The budget proposal includes a total of EUR 251 million in new budget authorities and appropriations for the investment programme. A decision on the projects to be included in the programme was largely made in connection with the discussion on the General Government Fiscal Plan in spring 2025.

The Government made the following decisions on proceeding with investment projects including projects under the investment programme:

Funding is proposed to be included in the 2026 budget for the following projects:

• The modernisation of the rail traffic control system and investment in repairs (implementation phase of the Digirail project). 
• Reduction of the maintenance backlog. 
• Speed capacity upgrade on the Savo rail line. 
• Development of the main rail line, sidings in the Riihimäki-Tampere section and launching of the main line refurbishment. 
• Building a new road to the Loviisa nuclear power plant (highway 1583 (Atomitie) between highway 170 and Saaristotie). 
• Boosting the conditions for investments in the Inkoo region by improving the Satamatie junction and the Tähtelä junction. 
• Highway 749, Furuholm road (highway 7494) and Rantatie roundabout, Luoto (part of basic transport infrastructure management funding).
• Bridge over the River Lieksanjoki. 

Funding is proposed to be included in the 2026 amendment to the budget proposal for the following projects once the plans have been approved and possible distribution of cost liability has been settled:

• Oulu-Liminka double track 
• Highway 4, Vestonmäki, Toivakka 
• Highway 152, engineering plan for the Hämeenlinnanväylä–Tuusulanväylä (ring road IV),  

Funding is proposed to be included in the 2026 first supplementary budget for the following projects once sufficient plans have been drawn up and cost information is available:

• Deepening the Loviisa fairway
• Main road 51, Kela junction

Under the investment programme, EUR 118 million is proposed for reducing the repair backlog of the transport infrastructure network and EUR 20 million for the scrapping premium scheme for passenger cars.

In addition, it is proposed that EUR 60.3 million be allocated to the central government’s share of reforming the reimbursements for medical expenses as well as for the countrywide freedom of choice pilot based on the reimbursements to persons aged 65 and over and EUR 0.8 million to the operating expenditure of the Social Insurance Institution, Kela.

The Government proposes that a total increase of around EUR 1.1 million be allocated to certain courts and the National Enforcement Authority Finland to finance their premises.
The budget proposal would increase the authorities and appropriations of the investment programme to a total of EUR 3.9 billion. The proposed appropriations for 2026 total EUR 820 million. To finance the investment programme, it is proposed that EUR 1.72 billion in revenue be budgeted for 2026.

Procurement authorities for defence materiel to receive additional billions

In spring 2025, the Government decided to increase Finland’s defence spending to 3 per cent of GDP by 2029. Finland is also committed to further raising its defence spending to 3.5 per cent by 2035 in line with the target agreed by NATO. In addition, 1.5 per cent of GDP will be allocated to defence-related expenditure by 2035.

The budget proposal for 2026 includes new procurement authorities of EUR 6 billion for defence materiel procurement. This will multiply the procurement authority of approximately EUR 0.4 billion in this year’s Budget. Of the procurement authorities, EUR 2 billion will be spent on the development of joint weapons systems and EUR 4 billion on materiel development. These procurement authorities enable the long-term development of the Finnish Defence Forces in the new security environment. The expenditure associated with the increased procurement authorities will be mainly incurred in the early 2030s. The Finnish Defence Forces will use the new procurement authorities to launch the modernisation of land defence, which will include the replacing of ageing systems and the versatile development of land defence capabilities.

Economic recovery has been slow, but there are positive signs in sight

The recovery of the Finnish economy has been slow, but there are indications that growth will speed up. A substantial slowdown in inflation and falling interest rates have boosted household purchasing power in Finland and in export markets. However, economic uncertainty has caused Finnish households to direct their additional income to saving instead of consumption. Investments are expected to show rapid growth, as projects related to the energy transition and defence will increase investments significantly. Construction is also expected to recover. However, higher US tariffs and general uncertainty will hold up economic growth.

The increase in average household real incomes is being slowed this year by weak employment, cuts in social benefits and increases to consumption taxes. The growth of real disposable income will accelerate next year as employment picks up and earned income taxation is lowered.

Selected items

The Government will reinforce assistance and safety and security for those who experience violence or are under the threat of violence. Funding for shelters for victims of domestic violence will be increased by EUR 3.5 million compared to 2025.

The Government will look into the possibility of introducing an assessment of the language skills development in Finnish or Swedish among children with an immigrant background aged 3 or 4 in connection with the maternity and child health clinic system. The possibilities of referring children into more intensive services in early childhood education and care or in different services will be examined on the basis of the assessment. The aim is to reinforce the conditions for language learning at an early stage.

The Government will allocate EUR 850,000 euros to supporting major international athletics and sports events (European athletics championships and world ski championships).

Impact of earlier savings decisions will intensify in 2026

As the measures taken by the Government to strengthen general government finances enter into force gradually during the parliamentary term, the impact of the adjustment measures will not be felt fully in 2026. The measures directly affecting on-budget entities included in the EUR 9 billion package of measures previously decided by the Government together with the new adjustment measures now decided will reduce on-budget expenditure by a total of around EUR 3.5 billion. This is approximately EUR 1.1 billion more than in 2025. In addition, the tax changes will bolster tax revenue by about EUR 1.3 billion at the 2026 level.

The package of growth measures decided in the mid-term policy review session held in spring 2025 will weaken the on-budget balance by about 0.5 billion in 2026. This includes the tax reductions and the expenditure savings, tax increases and other additional revenue decided on to fund them.

Since the packages of measures outlined in the Government Programme and spending limits session and the new adjustments now decided cover general government finances as a whole, the measures encompass public finances more widely than just on-budget entities.

The new additional adjustment measures decided in connection with this government budget session are described in the press release above and in the table appended to this press release. The impact of previously decided packages on on-budget appropriations is discussed below.

The implementation of the central government productivity programme decided in the Government Programme and the savings in operating expenses subsequently decided are proceeding according to plan. In the 2025 spending limits session, the Government decided to allocate EUR 130 million in additional annual savings to central government operating expenses. These savings have been allocated in this budget proposal based on the ministries’ draft budgets. A total of EUR 399 million in savings have been allocated to operating expenses in 2026, representing an increase of EUR 127 million from 2025.

The savings in discretionary government grants decided in the Government Programme and in the spring of 2024 will also increase in 2026. The amount of discretionary government grants in the Ministry of Education and Culture’s branch of government will be reduced by EUR 65 million. These savings will be allocated as follows: EUR 52.7 million to higher education, EUR 4 million to investment grants for construction, EUR 7 million to central government transfers for before-school and after-school activities, and EUR 1.3 million to continuous learning. In addition to the above savings allocated to higher education institutions, their core funding will be reduced by EUR 30 million. As part of the growth measures outlined in the mid-term policy review session, preparations are under way for funding for increasing the number of available student places in higher education institutions in growth sectors and for study vouchers for open higher education studies to be included in the supplementary budget proposal.

Discretionary government grants in the Ministry of Agriculture and Forestry's branch of government will be reduced by EUR 6.5 million. The amount of discretionary grants in the Ministry of Social Affairs and Health's branch of government will be reduced by EUR 35 million, of which EUR 10 million will be used to finance the growth package decided in the spring of 2025.

The decisions made in the Government Programme and in the spring of 2025 will generate savings of EUR 123 million in the appropriations for the exclusive ODA budget item administered by the Ministry for Foreign Affairs. A non-recurring reduction of EUR 10 million is also proposed for membership fees and funding contributions to international organisations.

The transfer of students from the general housing allowance to the student housing supplement took effect in August 2025. The related savings will increase by about EUR 20 million compared to the 2025 Budget.

The functions and obligations of wellbeing services counties will be scaled back in order to strengthen public finances and ensure sufficient personnel in the future. Changes include using technology to develop minimum staffing levels and in home care (EUR 50.9 million), clarifying the scope of application of the Disability Services Act to maintain the act as a special act (EUR 13.8 million) and reducing financial support for county council groups (EUR 5 million).

Central government transfers to municipalities will be reduced by EUR 75 million as part of the adjustments laid out to fund the growth measures decided in the 2025 spending limits session.

The overall reform of social assistance would impose a stronger obligation on social assistance applicants to apply for primary benefits, such as unemployment-related benefits. The reform would strengthen public finances by EUR 48 million in 2026. A non-recurring saving of EUR 50 million will be allocated to Kela’s operating expenses.

Index-linked savings packages include the freezing of index increases and the implementation of index increases only partially. Index increases to benefits linked to the national pension index and the consumer price index will be frozen for the period of 2024–2027, excluding social assistance, pensions, front-line veterans’ supplements, disability benefits, the annual maximum limit on out-of-pocket costs for medicines, and the child maintenance allowance.

Budget proposal diminishes deficit

Overall appropriations in the 2026 budget proposal amount to EUR 90.3 billion, which is EUR 0.2 billion higher than the sum budgeted for 2025, including the second supplementary budget. The savings decisions made by the Government will lower the level of expenditure, but index adjustments to statutory and agreement-based indexed expenditure will increase spending. Interest expenditure on central government debt is estimated at EUR 3.2 billion, which is EUR 0.3 billion more than budgeted for this year (including the second supplementary budget).

The budget proposal shows a deficit of EUR 8.7 billion. However, this does not provide an accurate picture of indebtedness, as the deficit will be reduced by entering the remaining cash receipts of the National Housing Fund as revenue to the central government budget. This non-recurring amount entered as revenue will not reduce central government and general government indebtedness. Excluding the one-off item of EUR 2.3 billion from the National Housing Fund that is entered as revenue, the deficit is EUR 11.0 billion. This is approximately EUR 2.3 billion less than this year (including the second supplementary budget).

Compared to the General Government Fiscal Plan from the spring, the deficit has increased by EUR 1.7 billion. Tax revenue estimates have decreased by around EUR 1.7 billion compared to the estimates drawn up in the spring. The decrease in tax revenue estimates is explained by lower than forecast tax revenue in 2025 and the update of the macroeconomic forecast.

Central government on-budget revenue, expenditure and balance, EUR billion

Finances of the wellbeing services counties

Approximately EUR 27.1 billion is proposed for the universal funding of wellbeing services counties. The funding will increase by approximately EUR 0.9 billion compared to the 2025 Budget. The transition to the 2026 cost level is the main reason for the growth in funding. The index increase will be 3.25 per cent in 2026. This will increase the financial resources of the wellbeing services counties by around EUR 853 million. The estimated growth in the need for healthcare and social welfare services is taken into account in the funding, which will increase funding by approximately EUR 248 million in 2026. The difference between the actual and imputed costs of the wellbeing services counties was lower in 2024 than in 2023, which means that the ex-post adjustment made for 2026 will reduce the funding by around EUR 184 million relative to 2025.

The Government will continue the measures outlined in the Government Programme to scale back the obligations of the wellbeing services counties. The changes in statutory obligations will reduce the funding for the wellbeing services counties by approximately EUR 75 million relative to 2025. This sum also includes new tasks that are expected to arise, the biggest of which is an increase of around EUR 16 million for informal and family care.

Municipal finances

Central government will allocate approximately EUR 5.9 billion in central government transfers and other government grants and subsidies to municipalities in 2026. The Ministry of Finance proposes a total of EUR 3.6 billion in central government transfers to municipalities for basic public services, which is about EUR 185 million more than the amount in the 2025 Budget. Central government transfers will be cut by EUR 75 million, as decided in the spring. The 2026 revision of the division of costs between central government and the municipalities will increase the central government transfer by EUR 127 million. The index increase of central government transfers to municipalities for basic public services is approximately EUR 80 million, taking into account that, in line with the Government Programme, a reduction corresponding to one percentage point will be made to the index increase in central government transfers for basic public services.

Overall, the decisions made during the government term will strengthen municipal finances over the period of 2026 to 2029.

Next steps in the preparation of the budget proposal for 2026

The 2026 budget proposal will be submitted to Parliament at a government plenary session on Monday 22 September. The budget proposal will then be published online at budjetti.vm.fi. The Economic Survey by the Ministry of Finance will be published in connection with the budget proposal on 22 September.

Inquiries: Mikko Martikkala, Special Adviser to the Prime Minister in Economic Affairs, tel. +358 295 161 171, Jussi Lindgren, Special Adviser to the Minister of Finance in Economic Affairs, tel. +358 295 530 514, Johanna Mantere, Special Adviser to the Minister of Education in Economic Affairs, tel. +358 295 330 330, Sonja Falk, Special Adviser to the Minister of Agriculture and Forestry, tel. +358 295 162 024

The name of the Special Adviser to the Minister of Education in Economic Affairs has been corrected on 3 September.