Finland to spend more on defence, NATO and security

HELSINKI (Reuters) - Finland's ruling centre-right coalition plans to spend more on NATO membership, defence and security in 2025, while scaling back on welfare spending to tame the Nordic country's fiscal deficit, it said on Tuesday.

Prime Minister Petteri Orpo's coalition has introduced labour market reforms and cuts to social welfare that angered labour unions, which launched widespread strikes in March and April.

Finland's economy has been in recession since last year, hit by high interest rates and the fallout from neighbouring Russia's invasion of Ukraine, and the government has said reforms were needed to boost productivity and cut the deficit.

State fiscal spending in 2025 is set to increase to 88.8 billion euros ($98.08 billion) from 88.0 billion euros projected for this year, with the deficit set to fall to 12.2 billion euros from 12.7 billion in the latest projection for 2024, Finance Minister Riikka Purra said on Tuesday.

The government said Finland's defence spending will increase by 488 million euros to 6.5 billion mainly due to the acquisition of a new fighter jet fleet.

Expenditure stemming from Finland's membership in NATO, which it joined last year in response to Russia's invasion of Ukraine, would increase by 67 million euros from this year, the government said, while also promising more money to the border guard and police forces.

"In this age, we spend a lot of resources and time to guarantee and build security for our citizens and our home country," Orpo told reporters.

Orpo's coalition, which took office last year, had already introduced austerity measures and taxes that are intended to balance the budget by 9 billion euros by 2027.

($1 = 0.9054 euros)

(Reporting by Elviira Luoma in Helsinki; editing by Anne Kauranen, Stine Jacobsen and Leslie Adler)