"Finland, traditionally one of the European Union's most fiscally disciplined countries, has received a wake-up call from Brussels. The European Commission, the bloc's executive arm, last week ordered Helsinki to devise a credible plan to resolve the country's budget deficit, which has crossed the EU's limit of 3% of gross domestic product (GDP). The Commission said Finland's deficit was projected to reach 4.5% of GDP in 2025,"
"The collapse of mobile phone maker Nokia, once the engine of growth, left the economy without a clear driver. That challenge was deepened in recent years by high welfare costs, a huge increase in defense spending and the economic shock of severing energy and trade ties with neighbor Russia over the war in Ukraine. In 2021, before Russian tanks rolled into Ukraine, bilateral trade between Moscow and Helsinki reached 12.71 billion and made up 4.3% of the Finnish economy."
Finland's budget deficit has exceeded the EU 3% of GDP limit and is projected at 4.5% in 2025, while public debt is set to reach 90% of GDP next year. The European Commission has placed Finland under the Excessive Deficit Procedure, exposing the country to potential fines, suspended EU funds and closer fiscal oversight. Longstanding low growth since the 2008/09 crisis, the collapse of Nokia, rising welfare costs and a large increase in defense spending have weakened public finances. Severing energy and trade ties with Russia after the invasion of Ukraine precipitated a near-collapse of bilateral trade and hit border regions hard.
#finland-fiscal-crisis #excessive-deficit-procedure-eu #trade-collapse-with-russia #defense-and-welfare-spending
Read at www.dw.com
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