Operating environment and megatrends

A new era of uncertainty has begun. Investments in defence will increase, which will require public funds. This is particularly burdensome for countries experiencing indebtedness and weak growth.
Not all business can be outsourced to the cheapest producer; rather, diversification and risk minimisation will also be required in critical products and services. This will have an upward effect on prices.
Citizens are increasingly aware of geopolitics, and feel concerned.

In the coming years, a significant part of the wealth will change owners. Future large inheritances and a new generation of prosperity create opportunities for the financial sector.
Willingness to secure livelihood in retirement.
Labour shortage affects over time in Finland, the need for labour immigration will not disappear.
Shrinking regions and regional depreciation of property collateral values.
Access to home improvement loans has already become more difficult in many regions and will continue to become more difficult. This may have political consequences.

Expectations of an excellent digital service level.
AI has been loaded with huge expectations. The technology has not yet matched the expectations associated with it. If successful, it will enable a productivity leap.
There is a growing need for human-centred, accessible, and reliable technology.

The financial sector has become accustomed to increasing regulation.
Now the atmosphere may be different, as Trump defiantly talks about deregulation, which could give US companies a competitive edge and thus force Europe to think about its approach to regulation.
Sustainable development.
Combating climate change continues and technological development will make renewable energy more affordable.
Consumers expect more from businesses.
In investor circles, ESG has lost its glamour, but on the other hand, ESG is increasingly part of normal business.

Saving and investing has grown in popularity significantly in Finland in recent years. This trend is likely to continue.
Consumers also expect companies to act responsibly.

Some European countries are approaching their debt limits. It is politically difficult to carry through reforms, which will be evident in politics for a long time. Political uncertainty is increasing.
However, reforms are needed to accelerate growth.
Industrial policy has come to life. The idea of supporting strategically important sectors (energy, defence) is a noble one, but there is always a risk that support funds will also be guided by political objectives.
In Finland, growth work is ongoing, but time will tell how the changes help growth. Cheap and clean energy offers opportunities for Finland.

Lasse Corin
Chief economist