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.

Housing debt has grown, both in absolute terms and relative to income, especially in growth centres, where housing is more expensive and subject to greater pressures from demand than elsewhere.

When indebted households cut their spending during an economic downturn, this also increase the financial difficulties of non-financial corporations.

The aim of the loan cap is to rein in household indebtedness and prevent housing price bubbles. Finland badly needs other instruments that can also restrict indebtedness.

The Bank of Finland forecasts that Finland’s GDP will grow 3.1% in 2017, 2.5% in 2018 and 1.5% per annum in 2019–2020. Growth will be broadly based and amplified by exports. A more positive current account will lay a foundation for sustainable growth.

There are no immediate threats to the stability of the Finnish financial system. The relocation of Nordea’s corporate headquarters will, however, increase the banking sector’s exposure to structural vulnerabilities.

Households in both Finland and Sweden are carrying a record level of debt relative to their income.

A range of instruments could be deployed to restrain dangerous growth in lending for house purchase and household debt.