BRUSSELS (Reuters) -The European Commission proposed on Tuesday to start disciplinary steps against Finland for running too high a budget deficit, that cannot be full explained by only higher defence spending.
Under European Union rules, governments cannot run budget deficits higher than 3% of GDP. If they do, EU finance ministers, on a recommendation from the Commission, set a deadline for its reduction. Repeated failure to comply could result in fines.
Finland had a budget gap of 4.4% of GDP in 2024, which is expected to rise to 4.5% of GDP this year, remain at 4.0% next year and ease only to 3.9% in 2027, unless policies change.
Because of the threat of a Russian attack, the Commission has allowed all EU countries to spend an extra 1.5% of GDP on defence without being included in the excessive deficit calculation — in what the EU calls the national escape clause. But despite that exemption, Finland’s deficit was still too high, the Commission said.
“In Finland’s situation, the deficit in excess of 3% of GDP in 2025 can only be partly explained by the increase in defence spending and the flexibility granted under the national escape clause. Therefore … the Commission will consider proposing to open an excessive deficit procedure for Finland,” the Commission said.
Germany, which is to have a deficit if 3.1% this year, 4.0% in 2026 and 3.8% in 2027, is also above the 3% limit, but the Commission said all of the excess was explained by increased defence expenditure, so no disciplinary steps would follow.
(Reporting by Jan Strupczewski)
