Minister of Finance Riikka Purra:
Finland avoids EU deficit procedure, new measures may be needed in spring

Minister of Finance Riikka Purra is pleased that the European Commission does not intend to propose opening an excessive deficit procedure for Finland.

Edited on Thursday 28 November at 14.00: Added details about the Commission’s next assessments and the justifications for extending the adjustment period.

According to the Commission’s Autumn Economic Forecast, Finland’s general government deficit will be 3.0 per cent in 2025, and the Commission projects that the deficit will remain below the reference value without additional policy measures.

“The adjustment measures we have already decided will reduce the general government deficit. However, we cannot yet be sure that they will be enough. The Commission will reassess the situation towards the end of spring,” Purra said.

The Commission’s assessment in late spring 2025 will concern whether an excessive deficit procedure should be opened based on a breach of the general government deficit criterion. The Government will consider whether further adjustments to general government finances are needed in its mid-term policy review in April.

Commission publishes autumn package

The European Commission published part of its autumn package on 26 November. Among other things, the Commission’s package assesses:

• Finland’s and Austria's compliance with the deficit criterion;
• the Member States’ medium-term fiscal-structural plans, which are part of the EU’s new fiscal rules;
• the euro area Member States’ draft budgetary plans for 2025.

Commission recommends endorsement of net expenditure path 

The Commission recommends that the Council of the EU endorse the net expenditure path presented in Finland's medium-term plan.

“I am pleased that the Commission has taken a positive view of our plan. According to the Commission’s assessment, we have made sufficient and timely adjustments to public finances. However, we are not adjusting general government finances for the Commission, but because it is necessary to preserve Finland’s welfare society,” Purra said.

More justifications for extension of adjustment period

In its medium-term plan, Finland applied for an extension of the adjustment period based on a set of reforms and investments. The Commission recommends granting the extension. However, it wants the justifications for the extension to include the measures concerning wellbeing services counties that the Government has already decided.

“The Commission supports our efforts to bolster the finances of the wellbeing services counties,” Purra said.

Small deviation from net expenditure path in 2025

The Commission notes that Finland’s Draft Budgetary Plan for 2025 is not fully in line with the fiscal recommendations.

The Commission will review next year's figures in the spring. The Commission will consider whether an excessive deficit procedure should be opened due to a breach of the general government deficit criterion in spring 2026 when the data for 2025 becomes available.

Discussions to continue in Council of the EU and Eurogroup

Finland’s medium-term plan meets the requirements of the EU’s new fiscal rules. In the plan, Finland commits to complying with a net expenditure path, i.e. a maximum permitted growth rate for net expenditure. In January, the Council will endorse the recommendations for Member States’ net expenditure paths and extensions to the adjustment period.

The Draft Budgetary Plan is part of the euro area’s coordinated surveillance exercise. It is based on the Government’s budget proposal for 2025. The Eurogroup will discuss the draft budgetary plans in December. 

Inquiries:
Marketta Henriksson, Head of Secretariat for EU Affairs, tel. +358 295 530 441, marketta.henriksson(at)gov.fi
Jari Mäkäräinen, Special Adviser, tel. +358 295 530 213, jari.makarainen(at)gov.fi