The poor outlook for the economy is weighing on banks, households and firms. Banks have accumulated buffers for a rainy day that should be deployed now as the coronavirus buffets the economy.

The current loan-to-value cap on housing loans urgently needs to be accompanied by a new, more comprehensive cap on debt. This would take into account all a loan applicant’s debt relative to their income.

The more debt households take on during an economic upswing, the more likely they are to cut consumption when the economy begins to run out of steam.

The indebtedness of Finnish households relative to income has grown considerably since the turn of the millennium. A proportion of new residential mortgage holders have a heavy debt burden relative to their income.

Consumer credit can drive households into financial difficulties. New measures are needed to prevent increasing debt problems.

Finnish growth will continue, but at a slower pace than in recent years. There is no returning to the growth rate that preceded the financial crisis.

Finns have consumed at levels above their incomes, accumulating more debt than new wealth. Household saving is nevertheless similar to that of the other Nordic countries.

Global demand, improved competitiveness and favourable financing conditions will support growth. GDP growth forecasts for 2018–2020 stand at 2,9%, 2,2%, and 1,7%. Inflation will remain close to 1% over the years 2018–2019 before gathering pace and reaching 1.5% in 2020.