Economic Challenges and Strategic Response Faced with global conflicts, rising inflation, and increasing interest rates, Espoo’s households and businesses are navigating a tightening economic landscape. The city’s corporate tax revenues are dwindling, and a spike in construction sector bankruptcies signifies deeper financial distress. Additionally, unemployment rates are on the rise. These challenges are compounded by the health, social, and rescue services reform, which has notably reshaped Espoo’s financial structure. The city now grapples with a significant cut in tax funding, estimated at around EUR 190 million, forcing reliance on central government transfers that don’t fully account for the expenses incurred due to population growth and an increasing number of foreign-language speakers. Education and Development in the Forefront Despite these fiscal hurdles, Mayor Mäkelä remains committed to ensuring Espoo’s position as a leader in sustainable growth and quality of life. “Espoo’s growth story continues,” Mäkelä affirms, indicating the city’s unwavering focus on families and youth. The Schools in Shape program and new day care centre projects underscore this commitment. Such investments are crucial in attracting international talent and supporting the city’s burgeoning youth population, set to increase despite the national decline in birth rates. Espoo as an Economic Powerhouse Espoo’s remarkable population growth – estimated at 8,000 new residents this year – not only underscores its appeal but also its critical role in driving Finland’s economic growth. Major infrastructure projects, like the West Metro extension and the new light rail line, are catalyzing business and investment, particularly in areas like Keilaniemi, Otaniemi, and Leppävaara. These developments, aligned with Espoo’s quest to meet the UN’s Sustainable Development Goals by 2025 and its leadership in the EU-funded URBACT programme, position the city as a sustainable and competitive force regionally and internationally. Fiscal Prudence and Forward Planning The city’s 2024 budget projects a decrease in the operating margin deficit by EUR 79 million from 2023, with the annual contribution margin estimated at EUR 269 million. Although the financial result for the accounting period is set to decline by EUR 110 million, ending at EUR 66 million, a slight improvement is anticipated in the following years with potential economic recovery. Espoo’s corporate group plans to invest around EUR 500 million in 2024, focusing significantly on education facilities. Despite an expected increase in the city’s loan portfolio in 2024, Mayor Mäkelä stresses the importance of a long-term perspective on debt and investments, cautioning against potential risks. In this backdrop of change and financial caution, Mayor Mäkelä’s budget proposal positions Espoo as a city committed to both fiscal responsibility and the provision of quality services, even as it faces broader economic and demographic shifts. This approach reflects a strategic balancing act between sustaining growth and adapting to a challenging economic climate. HT

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