Brussels, Belgium. The EU’s Economic and Financial Affairs Council on Tuesday launched an excessive deficit procedure for Finland after its state deficit breached limits under EU fiscal rules. The Council said Finland’s deficit exceeded the 3% of GDP threshold set by the Stability and Growth Pact.
Decision and recommendations
The decision was taken by ECOFIN, which determined that Finland’s deficit had exceeded the 3% of GDP threshold established by the Stability and Growth Pact. Alongside the decision, the Council issued a formal recommendation setting out the required fiscal adjustment path and a timetable for public spending to correct the excessive deficit by 2028.
Deficit figures and outlook
Finland’s deficit reached 4.4% of GDP in 2024 and is expected to remain elevated at 4.3% in 2025, according to the Council’s assessment.
National escape clause for defence spending
Although Finland has made use of the national escape clause for defence spending, which allows an excessive deficit of up to 1.5% without triggering the procedure, the Council said this was not sufficient to fully justify the current deficit level.
Required measures and expenditure limits
The Council called on Finland to take effective corrective measures and submit the necessary plans by April 30, 2026. It also instructed the country to ensure that the growth rate of net public expenditure does not exceed 2.5% in 2026, 4.1% in 2027 and 5.9% in 2028.
EU fiscal rules and procedure
Under the Stability and Growth Pact, EU member states are required to keep their budget deficits below 3% of GDP and public debt below 60% of GDP. The excessive deficit procedure is designed to support member states in correcting fiscal imbalances through enhanced monitoring and targeted recommendations, with the aim of strengthening the sustainability of public finances.
Meeting chair
The decision on Finland was adopted at the conclusion of the ECOFIN meeting chaired by Finance Minister Makis Keravnos, who was presiding over the Council session as part of his official duties.
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