The Council of the European Union has adopted a recommendation on Finland's economic, social, employment, structural and budgetary policies, urging the country to keep net expenditure growth within the corrective path set under the excessive deficit procedure. The recommendation, issued on 22 June 2026 and scheduled for adoption at the Council meeting on 24 June 2026, sets maximum net expenditure growth at 1.3% in 2026, 1.5% in 2027, and 1.8% in 2028, while allowing flexibility for defence spending under the national escape clause.
Finland's fiscal position has deteriorated significantly. The general government deficit stood at 3.4% of GDP in 2025 and is projected to reach 4.5% in 2026 and 4.6% in 2027. Public debt rose from 82.4% of GDP at end-2024 to 88.5% at end-2025, with projections of 91.2% at end-2026 and 93.1% at end-2027. Net expenditure growth in 2025 fell by 0.7%, below the recommended maximum, but is projected to grow by 4.1% in 2026, exceeding the limit. The Council notes that this overshoot is within the flexibility granted for defence spending, which is set to rise from 1.7% of GDP in 2025 to 2.6% in 2026.
The Commission has assessed that Finland's implementation of key reforms and investments due by 30 April 2026 is broadly on track. Finland has extended the deadline for correcting deficits in wellbeing services counties to end-2029 for regions with credible adjustment plans. Public expenditure at 57.7% of GDP in 2024 was the highest in the Union, prompting the Council to call for spending reviews in 2026 and a comprehensive review ahead of the 2027 elections. Social protection expenditure at 26% of GDP in 2024 is well above the EU average of 19%; reforms to simplify the system and strengthen work incentives take effect in 2026.
On the economic front, Finland's innovation performance remains strong, but productivity growth is weak. Collaboration between firms and universities has declined, and scaling up start-ups remains a persistent challenge. The Council recommends that Finland address these issues through structural reforms.
The recommendation impacts several stakeholders. For the Finnish government, it imposes strict fiscal discipline while allowing defence spending flexibility, balancing fiscal consolidation with security needs. Finnish taxpayers may face continued austerity in social spending, though reforms aim to improve efficiency. The defence sector benefits from increased expenditure, while social protection recipients may see changes as the system is streamlined. Businesses could gain from improved productivity if reforms succeed, but weak collaboration and start-up scaling challenges persist.
The Council's recommendation is not legally binding but carries political weight as part of the European Semester. Finland is expected to incorporate these guidelines into its national budget and reform plans. The next steps include monitoring by the Commission and potential further recommendations if fiscal targets are missed.