EU fiscal rules
Finland requests activation of national fiscal policy escape clause to boost defence spending

Finland is requesting that the EU activate the national escape clause in the EU’s fiscal policy rules in order to increase defence spending. The majority of EU Member States are likely to request activation of the escape clause.

Under the EU’s new fiscal policy rules, a Member State can request activation of the national escape clause. Under the escape clause, a Member State may temporarily deviate from the net expenditure path approved by the Council of the European Union.

Activation requires the existence of exceptional circumstances that are outside the control of the Member State and that have a major impact on its public finances. The deviation must not endanger fiscal sustainability over the medium term.

Increased defence expenditure will impact public finances

In a communication published in March, the European Commission proposed that interested Member States could seek coordinated activation of the escape clause for 2025–2028.

According to the Commission, Russia’s continued war of aggression against Ukraine is a threat to European security, and increasing defence expenditure will have a major impact on Member States’ public finances. The escape clause will facilitate the transition to a higher level of defence spending.

In Finland, the Government has decided that defence appropriations will be raised to at least 3 per cent of GDP by 2029.

Member States remain committed to the implementation of the EU fiscal rules throughout the duration of the activation of the escape clause. It is unclear at this stage whether the activation of the clause would affect the initiation of an excessive deficit procedure for Finland. 

Commission assessment in June, Council decision in July

On Wednesday 30 April, the Government decided as part of the General Government Fiscal Plan that Finland will request activation of the escape clause.

The Commission will publish its assessment of the Member States' requests on 4 June. The Council of the European Union will likely decide whether it recommends activating the escape clause on 8 July.

Inquiries:
Marketta Henriksson, Head of the Secretariat for EU and International Affairs, tel. +358 295 530 441 , marketta.henriksson(at)gov.fi
Antti Kekäläinen, Senior Ministerial Adviser, tel. +358 295 530 386, antti.kekalainen(at)gov.fi