Finland's coalition parties agree spending boost

HELSINKI (Reuters) - The five Finnish parties in talks to form a new government plan to increase public spending by 1.2 billion euros over four years, Finland's likely next prime minister Antti Rinne told reporters on Tuesday.

Rinne's Social Democrats and four smaller parties have been in talks since the April 14 general election to agree a joint program for their planned coalition.

The Social Democrats won the election on promises to preserve Finland's comprehensive welfare state, after the previous center-right government imposed austerity measures.

Rinne confirmed a report in daily Helsingin Sanomat that the coalition parties plan to increase permanent public expenditure by 1.2 billion euros ($1.34 billion) over the government's four-year term.

“Under conditions of normal economic growth, we won't incur more debt,” Rinne said, adding he meant GDP growth of around 2%.

Finland's gross domestic product grew 2.3% last year but latest forecasts for this year vary between 1.5% and 1.9%.

Rinne said the coalition's employment measures would create 60,000 new jobs, needed for the government to reach its target employment rate of 75% employment, up from 72.4% in April.

Rinne did not confirm or deny other details of Helsingin Sanomat's report, such as a claim that public assets would be sold to raise some 2-3 billion euros ($2.24-3.36 billion). The paper said those funds would be used for non-recurring items such new fast railway connections between Helsinki and Turku on the south-western coast and Tampere, north of the capital.

Rinne said the five parties had agreed on tax hikes worth 700 million euros. According to Helsingin Sanomat, the increases will mostly be to excise and environmental duties.

Other policies are still being discussed.

Rinne told reporters the five parties might be able to conclude their coalition talks by Wednesday evening, but did not say when their program for government would be announced.

“If everything plays out well, tomorrow we will begin to discuss the government's composition, its ministers and so forth ... The new government could be nominated toward the end of next week,” Rinne said.