Helsinki Mayor outlines projected financial impact of coronavirus crisis

Among other things, Mayor of Helsinki Jan Vapaavuori reported that tax revenue in Finland’s capital is forecast to drop by 340 million euros and social and health care expenses will rise by 200 million euros in 2020.

The coronavirus crisis is quickly making itself apparent in the City of Helsinki’s finances, as tax revenue falls, operating expenses rise, and income resulting from various municipal activities declines. Helsinki Mayor Jan Vapaavuori outlined some of the forecasted effects of the pandemic on the city’s economy in his 21 April Mayor’s Info.

Close to 40 percent of the country’s lab-confirmed coronavirus cases have been identified in the Helsinki area. The strongly services-oriented structure of the city’s economy also contributes to the fact that the economic production capacity of the city will be reduced more substantially by the stay-at-home measures than in the rest of the country on average.

If the covid-19 situation persists, expenses will grow and revenue losses will continue, the Mayor said, adding that it is already clear that the impact of the crisis to date will extend well into the years 2021 and 2022.

Preliminary estimates of the impact of the coronavirus on Helsinki’s economy in 2020 are as follows:

-         tax revenue will fall 340 million euros

-         social and health care service expenses will rise 200 million euros

-         income from municipal rental properties will fall 30 million euros

-         Helsinki Region Transport (HSL) will develop a budget deficit of between 80 and 150 million euros

-         minimal cost savings of around 10 million euros

-         leading to an estimated total economic impact of some 500-600 million euros

Mayor Vapaavuori said that state compensation should be proportionate to the severity of the coronavirus outbreak’s economic impact in each of Finland’s municipalities, both in terms of revenue and expenditure.

Photo: Pertti Nisonen