“The root cause of inflation is the high price of energy, so we need to focus on two things in particular. We need to rapidly increase energy production to solve this supply problem. And another thing we need to discuss and find solutions for is energy pricing,” he said quoted saying from STT.
He considered that politicians should also be able to discuss the coordination of economic policy, which is currently “unfortunately limited”, so that political decisions do not make the situation even worse.
He added that the European political community is likely to discuss aid packages developed by independent countries to support citizens struggling with rising energy prices.
“This is exactly the kind of lack of coordination we see in Europe today. When energy prices are high, governments naturally want to offer compensation to consumers. This could possibly worsen inflation, which means there is no joint coordination,” he stated, adding that further accelerating price increases could push the continent into recession.
Marin’s statement contradicts the decisions made by his government. Last month, the government announced its budget proposal for next year. representational it aims to secure purchasing power, compensate for electricity price increases and strengthen the conditions for sustainable growth.
“We are worried about people’s purchasing power due to high inflation. We are concerned about people’s ability to pay very large electricity bills this coming winter, he said press conference On the 1st of September.
The budget of 80.5 billion euros has a deficit of 8.1 billion euros. It includes measures to support households with the highest increase in energy costs, either with income tax reductions or direct financial support, as well as with a temporary reduction in the value added tax on electricity.
Finnish economists warned the government against taking further stimulus measures in an inflationary environment both before and after the budget proposal was announced.
“We have high inflation and a tight labor market. We don’t need extra incentives” Sanna Kurroneneconomist at the Finnish Business Forum (EVA), stated For Helsingin Sanomat in September. “Accelerating inflation while the EU is trying to tighten monetary policy is particularly irresponsible.”
“Disappointing reaction from the government,” he repeated Niku Määttänen, professor of economics at the University of Helsinki. “Taxation relaxation should be combined with spending cuts.”
The European Central Bank has announced that it plans to continue raising its benchmark interest rates to curb inflation. Eurozone inflation is expected to accelerate by 0.9 percentage points to 10.0% in September. According to Eurostat.
In Finland, inflation is estimated to have risen by half a percentage point to 8.4 percent.
Aleksi Teivainen – HT
Source: The Nordic Page