Dialogos

Finland to Face Excessive Deficit Procedure

Published January 20, 2026, 12:02
Finland to Face Excessive Deficit Procedure

The ECOFIN Council decided to initiate an excessive deficit procedure for Finland due to the country's deficit exceeding the 3% of GDP limit set by the Stability and Growth Pact. Finland has already utilized the national derogation clause for defense spending, but this is insufficient to justify the current deficit. The Council is requesting Finland to submit plans to correct the deficit by 2028, with specific targets for the growth rate of public expenditure in the coming years. The excessive deficit procedure is part of the EU's Stability and Growth Pact, which aims to maintain fiscal balance among member states. The Pact sets limits for the deficit (below 3% of GDP) and public debt (below 60% of GDP). The activation of the procedure for Finland marks the beginning of enhanced monitoring and recommendations from the European Commission and the Council. The country will need to take measures to reduce the deficit and ensure the sustainability of its public finances. According to the data, Finland's deficit reached 4.4% of GDP in 2024 and is expected to remain at 4.3% in 2025. The country will need to demonstrate significant progress in reducing the deficit in the coming years to avoid further penalties.