Finance
EU starts disciplinary steps against Finland for excessive deficit
Published by Global Banking and Finance Review
Posted on January 20, 2026
2 min readLast updated: January 20, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on January 20, 2026
2 min readLast updated: January 20, 2026
EU finance ministers have initiated steps against Finland for its excessive budget deficit, demanding compliance by 2028 to avoid potential fines.
BRUSSELS, Jan 20 (Reuters) - European Union finance ministers started disciplinary steps against Finland on Tuesday for running an excessive budget deficit, giving Helsinki until 2028 to narrow the gap to within EU limits of 3% of the country's gross domestic product or potentially face fines for non-compliance.
Countries under Excessive Deficit Procedures are given deadlines and sets of fiscal measures to bring their finances back in line with the EU's goals, and if they fail to act, the EU can escalate pressure through warnings and, for euro zone members, potential financial sanctions such as fines or interest‑bearing deposits.
Finland had a budget gap equivalent to 4.4% of GDP in 2024 and 4.3% in 2025 - still smaller than some of its EU peers also under such measures but well above the bloc's 3% goal - and the country's increased defence spending to prepare against a possible Russian attack does not fully explain the excess, EU finance ministers said.
"In its recommendation, the Council (of EU finance ministers) stipulates that Finland should therefore take effective action and present by 30 April 2026 the necessary measures to reduce its deficit," they said in a statement.
The deficit will be brought down through strict controls on net spending by the government, and the ministers said limits will be set on how much such net spending in Finland is allowed to grow in the coming years to achieve that.
"Finland should also ensure that its nominal cumulative net expenditure growth rate does not exceed 2.5% in 2026, 4.1% in 2027 and 5.9% in 2028," the ministers' statement said.
(Reporting by Jan Strupczewski)
Excessive Deficit Procedures are measures taken by the EU to ensure member states maintain budget deficits below 3% of GDP, involving deadlines and fiscal measures to correct overspending.
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