The Council has opened an excessive deficit procedure (EDP) for Finland. It has also adopted a recommendation to Finland outlining the net expenditure path and timetable that the country must follow to end its excessive deficit by 2028.
The EDP mechanism aims to ensure that EU Member States maintain or restore discipline in their public budgets. Procedures are initiated when a Member State has a government deficit exceeding the 3% of GDP reference value set out in the Treaty, in accordance with Article 126(3) of the Treaty on the Functioning of the European Union.
The Council’s decision today to initiate an excessive deficit procedure is justified in view of Finland’s budget deficit of 4.4% in 2024 and the projected budget deficit of 4.3% in 2025. Finland’s use of the national safeguard clause for defence spending under the Stability and Growth Pact, whereby Member States can achieve an excessive deficit of 1.5% without triggering the excessive deficit procedure, does not fully explain Finland’s deficit.
In its Recommendation, the CounciL therefore states that Finland must take effective action and present, by 30 April 2026 at the latest, the measures necessary to reduce its deficit. Finland must also ensure that its cumulative nominal net expenditure growth rate does not exceed 2.5% in 2026, 4.1% in 2027 and 5.9% in 2028.
Context
Member States must comply with budgetary discipline by meeting the criteria and reference values set out in the EU Treaties: their deficit must not exceed 3% of their gross domestic product (GDP) and their debt must not exceed 60% of their GDP. All Member States must comply with these Treaty reference values.
If a Member State has an excessive deficit, the aim of the applicable procedure is to encourage its correction by subjecting Member States to enhanced surveillance and making recommendations for effective measures to correct the deficit. Ultimately, the aim is to strengthen the sustainability of Member States’ public finances.
Once an EDP has been initiated on the basis of a recommendation from the Commission, the Council issues a recommendation to the Member State concerned to take effective action to bring the excessive deficit situation to an end within a specified period.
In its recommendation, the Council calls on the Member State to implement a corrective net expenditure path that ensures that the government deficit is brought below and remains below the 3% of GDP reference value within the deadline set in the recommendation.
Further information: European Council.
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