A new government audit report reveals that Finland's pandemic-era spending increases created permanent budget expansions that extended far beyond coronavirus response. The report shows former Prime Minister Sanna Marin's administration increased state spending by approximately 41 billion euros over four years, with more than half representing permanent budget growth unrelated to the health crisis.
According to the National Audit Office, the government's spending level between 2020 and 2023 averaged 10 billion euros higher annually than originally planned before the pandemic. Senior economist Suvi Kangasrääsiö stated that about 23 billion euros of the total spending increases fell outside coronavirus response measures.
The initial spending increases went where expected. In 2020, nearly 70 percent of additional spending addressed pandemic management through measures like infection control, expanded unemployment benefits, household income transfers, and business support programs.
But the situation reversed dramatically over four years. By 2024, pandemic-related spending had shrunk to nearly zero. Meanwhile, other spending categories grew and remained permanently elevated. The audit office found that state budget expenditures permanently increased by 3.9 percentage points relative to gross domestic product.
The Marin government significantly increased funding for municipalities, educational institutions, and cultural organizations. Additional resources went toward immigration and integration programs, healthcare districts, education, and peat producers. Major transportation projects including the Helsinki West Metro, Raide-Jokeri light rail, and Tampere tram also received substantial funding boosts. Various local government development initiatives gained significant investments too.
Defense spending saw permanent increases as well, though these were smaller and considered justifiable according to the audit office. Government administration costs grew through various construction projects and renovations. The public sector expanded its responsibilities, adjusted salaries upward, added staff, and launched numerous programs and initiatives.
While the Marin government increased public administration operating costs, the current Petteri Orpo government has cut these as part of public finance adjustments. The audit office notes that some current government cuts essentially reduce budget buffers created during the pandemic period.
Kangasrääsiö explained that permanently raising the spending level represents one factor behind Finland's larger budget deficit in recent years. Revenue has not fully kept pace with increased expenditures. She suggested the current fiscal situation might be better if the previous government had shown more restraint in spending increases.
The substantial spending expansions became possible because Finland temporarily abandoned its spending frameworks and EU fiscal rules during 2020 due to the coronavirus emergency.
The audit office's key message emphasizes that if similar exceptions occur in the future, governments should maintain spending frameworks for expenditures not directly affected by the emergency. Kangasrääsiö stressed that governments must ensure respect for spending limits and that economic policies don't excessively increase public debt. The frameworks exist to safeguard the sustainability of public finances.
This situation reflects a common pattern in crisis response where temporary measures become permanent government expansions. Finland now faces the challenge of reconciling these new spending levels with fiscal sustainability requirements. The report highlights the tension between immediate crisis response and long-term budget discipline that many governments confronted during the pandemic.