EU Puts Finland on Notice for Deficit Breach

The European Commission is initiating disciplinary steps against Finland for a budget deficit exceeding the EU's 3% GDP limit. Despite permitted defense spending adjustments due to security threats, Finland's deficit remains too high, unlike Germany, which was excused due to defense-related expenses.

The European Commission has proposed initiating disciplinary measures against Finland over its budget deficit, which surpasses the European Union's 3% GDP threshold. The Commission noted that Finland's high deficit cannot be fully attributed to increased defense spending, even after accounting for the EU's defense spending exemptions.

In 2024, Finland's budget deficit stood at 4.4% of GDP, with projections indicating a rise to 4.5% this year. Although expected to decrease slightly, it will still be at 3.9% by 2027 unless policy changes are implemented. Despite allowed additional defense spending due to the Russian threat, the deficit remains excessive.

While Germany's deficit also exceeds the threshold at 3.1% this year and is set to reach 4% in 2026, its excess is solely due to defense expenditure, sparing it from disciplinary measures. Conversely, the Commission's assessment of Finland's financial situation could lead to the opening of an excessive deficit procedure.

(With inputs from agencies.)