Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Finland and delivering a Council opinion on the 2022 Stability Programme of Finland
Date: 2022-05-23
Institutions: European Commission, Secretariat-General
Subjects: Finland, digital transformation, economic policy, economic recovery, economic reform, energy policy, fiscal policy, social security, stability pact, stability programme

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   EUROPEAN COMMISSION  Brussels, 23.5.2022  COM(2022) 611 final  Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Finland and delivering a Council opinion on the 2022 Stability Programme of Finland {SWD(2022) 611 final} - {SWD(2022) 640 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the 2022 National Reform Programme of Finland and delivering a Council opinion 
on the 2022 Stability Programme of Finland 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 5(2) thereof, 

Having  regard  to  Regulation  (EU)  No  1176/2011  of  the  European  Parliament  and  of  the 
Council  of  16  November  2011  on  the  prevention  and  correction  of  macroeconomic 
imbalances2, and in particular Article 6(1) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council3,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021.  The  Recovery  and  Resilience  Facility  provides  financial  support  for  the 
implementation of reforms and investment, entailing a fiscal impulse financed by the 
Union.  It  contributes  to  the  economic  recovery  and  to  the  implementation  of 
sustainable and growth-enhancing reforms and investment, in particular to promote the 
green and digital transition, while strengthening the resilience and potential growth of 
the Member States’ economies. It also helps strengthen sustainable public finances and 
boost growth and job creation in the medium and long term. The maximum financial 
contribution  per  Member  State  under  the  Recovery  and  Resilience  Facility  [was] 
updated on [XX] June 2022, in line with Article 11(2) of Regulation (EU) 2021/241.  

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OJ L 209, 2.8.1997, p. 1. 
OJ L 306, 23.11.2011, p. 25. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
establishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, p. 17). 

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On  24  November  2021,  the  Commission  adopted  the  Annual  Sustainable  Growth 
Survey,  marking  the  start  of  the  2022  European  Semester  for  economic  policy 
coordination.  It  took  due  account  of  the  reaffirmed  joint  commitment  of  the  Porto 
Social Summit of May 2021 to further implement the European Pillar of Social Rights 
proclaimed  by  the  European  Parliament,  the  Council  and  the  Commission  on  17 
November  2017.  The  European  Council  endorsed  the  priorities  of  the  2022  Annual 
Sustainable Growth Survey on 25 March 2022. On 24 November 2021, on the basis of 
Regulation  (EU)  No  1176/2011,  the  Commission  also  adopted  the  Alert  Mechanism 
Report, in which it did not identify Finland as one of the Member States for which an 
in-depth review4 would be needed. On the same date, the Commission also adopted a 
recommendation  for  a  Council  recommendation  on  the  economic  policy  of  the  euro 
area, which was adopted on 5 April 2022 by the Council, as well as the proposal for 
the 2022 Joint Employment Report analysing the implementation of the Employment 
Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights,  which  was 
adopted by the Council on 14 March 2022. 

Russia’s  invasion  of  Ukraine,  in  the  wake  of  the  global  pandemic,  has  significantly 
altered the geopolitical and economic context. The impact of the invasion on Member 
States’ economies has been felt for example through higher energy and food prices and 
weaker  growth  prospects.  The  higher  energy  prices  weigh  particularly  on  the  most 
vulnerable households experiencing or at risk of energy poverty. The EU is also seeing 
an unprecedented inflow of people fleeing Ukraine. In this context, on 4 March 2022, 
the  Temporary  Protection  Directive  was  triggered5  for  the  first  time,  granting 
displaced persons from Ukraine the right to legally stay in the EU, as well as access to 
education and training, labour market, healthcare, housing and social welfare. 

Taking  account  of  the  rapidly  changing  economic  and  geopolitical  situation,  the 
European Semester resumes its broad economic and employment policy coordination 
in 2022, while evolving in line with the implementation requirements of the Recovery 
and  Resilience  Facility,  as  outlined  in  the  2022  Annual  Sustainable  Growth  Survey. 
The  implementation  of  the  adopted  recovery  and  resilience  plans  is  essential  for  the 
delivery of the policy priorities under the European Semester, as the plans address all 
or a significant subset of the relevant country-specific recommendations issued in the 
2019  and  2020  Semester  cycles.  The  2019  and  2020  country-specific 
recommendations  remain  equally  relevant  also  for  recovery  and  resilience  plans 
revised, updated or amended in accordance with Articles 14, 18 and 21 of Regulation 
(EU) 2021/241, in addition to any country-specific recommendations issued up to the 
date of submission of the modified plan.  
The General Escape Clause has been active since March 20206. In its Communication 
of  3  March  20217,  the  Commission  set  out  its  view  that  the  decision  on  the 
deactivation or continued application of the general escape clause should be taken as 
an overall assessment of the state of the economy, with the level of economic activity 

Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 
on the prevention and correction of macroeconomic imbalances, OJ L 306, 23.11.2011, p. 25. 
Council Implementing Decision (EU) 2022/382  of 4 March 2022 establishing the existence of a mass 
influx of displaced persons from Ukraine within the meaning of Article 5 of Directive 2001/55/EC, and 
having the effect of introducing temporary protection, OJ L 71, 4.3.2022, p. 1. 
Communication from the Commission to the Council on the activation of the general escape clause of 
the Stability and Growth Pact, Brussels, 20.3.2020, COM(2020) 123 final. 
Communication  from  the  Commission  to  the  Council  on  one  year  since  the  outbreak  of  COVID-19: 
fiscal policy response, Brussels, 3.3.2021, COM(2021) 105 final. 

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in the EU or euro area compared to pre-crisis levels (end-2019) as a key quantitative 
criterion. Heightened uncertainty and strong downside risks to  the economic outlook 
in  the  context  of  war  in  Europe,  unprecedented  energy  price  hikes  and  continued 
supply  chain  disturbances  warrant  the  extension  of  the  general  escape  clause  of  the 
Stability and Growth Pact through 2023. 

Following the approach in the Council opinion of 18 June 2021 on the 2021 Stability 
Programme,  the  fiscal  stance  is  currently  best  measured  as  the  change  in  primary 
expenditure  (net  of  discretionary  revenue  measures),  excluding  COVID-19  crisis-
related  temporary  emergency  measures  but  including  expenditure  financed  by  non-
repayable  support  (grants)  from  the  Recovery  and  Resilience  Facility  and  other  EU 
funds,  relative  to  medium-term  potential  growth8.  Going  beyond  the  overall  fiscal 
stance, in order to assess whether national fiscal policy is prudent and its composition 
is conducive to a sustainable recovery consistent with the green and digital transitions, 
attention  is  also  paid  to  the  evolution  of  nationally-financed9  primary  current 
expenditure  (net  of  discretionary  revenue  measures  and  excluding  COVID-19  crisis-
related temporary emergency measures) and investment. 

On  2  March  2022,  the  Commission  adopted  a  Communication  providing  broad 
guidance  for  fiscal  policy  in  2023,  aiming  at  supporting  the  preparation  of  Member 
States’  Stability  and  Convergence  Programmes  and  thereby  strengthening  policy 
coordination10. The Commission noted that, based on the macroeconomic outlook of 
the  2022  winter  forecast,  transitioning  from  an  aggregate  supportive  fiscal  stance  in 
2020-2022  to  a  broadly  neutral  aggregate  fiscal  stance  would  appear  appropriate  in 
2023,  while  standing  ready  to  react  to  the  evolving  economic  situation.  The 
Commission announced that the fiscal recommendations for 2023 should continue to 
differentiate  across  Member  States  and  take  into  account  possible  cross-country 
spillovers. The Commission invited the Member States to reflect the guidance in their 
Stability  and  Convergence  Programmes.  The  Commission  committed  to  closely 
monitor  the  economic  developments  and  adjust  its  policy  guidance  as  needed  and  at 
the latest in its Semester spring package of late May 2022. 

(8)  With  respect  to  the  fiscal  guidance  provided  on  2  March  2022,  the  fiscal 
recommendations  for  2023  take  into  account  the  worsened  economic  outlook,  the 
heightened uncertainty and further downside risks, and the higher inflation compared 
to the winter forecast. Against these considerations, the fiscal response has to expand 
public investment for the green and digital transition and energy security, and sustain 
the purchasing power of the most vulnerable households so as to cushion the impact of 
the energy price hike and help limit inflationary pressures from second round effects 
via targeted and temporary measures; fiscal policy has to remain agile so as to adjust 
to the rapidly evolving circumstances, and be differentiated across countries depending 
on their fiscal and economic situation, including as regards the exposure to the crisis 
and the inflow of displaced persons from Ukraine.  

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The  estimates  on  the  fiscal  stance  and  its  components  in  this  recommendation  are  Commission 
estimates  based  on  the  assumptions  underlying  the  Commission  2022  spring  forecast.  The 
Commission’s estimates of medium-term potential growth do not include the positive impact of reforms 
that are part of the Recovery and Resilience Plan and that can boost potential growth.  
Not financed by grants from the Recovery and Resilience Facility and other EU funds. 
Communication  from  the  Commission  to  the  Council:  Fiscal  policy  guidance  for  2023,  Brussels, 
2.3.2022, COM(2022) 85 final. 

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(9) 

On  27  May  2021,  Finland  submitted  its  national  recovery  and  resilience  plan  to  the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 
to  Article  19  of  Regulation  (EU)  2021/241,  the  Commission  assessed  the  relevance, 
effectiveness,  efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in 
accordance  with  the  assessment  guidelines  of  Annex  V  to  that  Regulation.  On  29 
October 2021, the Council adopted its Decision on the approval of the assessment of 
the recovery and resilience plan for Finland. The release of instalments is conditional 
on  a  decision  by  the  Commission,  taken  in  accordance  with  Article  24(5)  of 
Regulation  (EU)  2021/241,  that  Finland  has  satisfactorily  fulfilled  the  relevant 
milestones  and  targets  set  out  in  the  Council  Implementing  Decision.  Satisfactory 
fulfilment  presupposes  that  the  achievement  of  preceding  milestones  and  targets  has 
not been reversed. 

(10)  On  13  April  2022,  Finland  submitted  its  2022  National  Reform  Programme  and  its 
2022  Stability  Programme,  in  line  with  the  deadline  established  in  Article  4  of 
Regulation  (EC)  No  1466/97.  To  take  account  of  their  interlinkages,  the  two 
programmes have been assessed together. In accordance with Article 27 of Regulation 
(EU)  2021/241,  the  2022  National  Reform  Programme  also  reflects  Finland’s  bi-
annual reporting on the progress made in achieving its recovery and resilience plan.  

in 

the 

relevant 

addressing 

(11)  The Commission published the 2022 country report for Finland11 on 23 May 2022. It 
assessed  Finland’s  progress 
country-specific 
recommendations adopted by the Council in 2019, 2020 and 2021, and took stock of 
Finland’s  implementation  of  the  recovery  and  resilience  plan,  building  on  the 
Recovery  and  Resilience  Scoreboard.  Based  on  this  analysis,  the  country  report 
identified gaps with respect to those challenges that are not addressed or only partially 
addressed  by  the  recovery  and  resilience  plan,  as  well  as  new  and  emerging 
challenges,  including  those  emerging  from  Russia’s  invasion  of  Ukraine.  It  also 
assessed Finland’s progress on implementing the European Pillar of Social Rights and 
on achieving the EU headline targets on employment, skills and poverty reduction, as 
well as progress in achieving the UN’s Sustainable Development Goals. 

(12)  On  23  May  2022,  the  Commission  issued  a  report  under  Article  126(3)  TFEU.  This 
report discussed the budgetary situation of Finland, as its general government debt in 
2021  exceeded  the  60%  of  GDP  Treaty  reference  value  and  did  not  respect  the  debt 
reduction benchmark. The report concluded that the debt criterion was not fulfilled. In 
line with the Communication of 2 March 2022, the Commission considered, within its 
assessment of all relevant factors, that compliance with the debt reduction benchmark 
would imply a too demanding frontloaded fiscal effort that risks to jeopardise growth. 
Therefore,  in  the  view  of  the  Commission,  compliance  with  the  debt  reduction 
benchmark  is  not  warranted  under  the  current  exceptional  economic  conditions.  As 
announced, the Commission did not propose to open new excessive deficit procedures 
in spring 2022 and it will reassess the relevance of proposing to open excessive deficit 
procedures in autumn 2022. 

(13)  On  20  July  2020,  the  Council  recommended  Finland  to  take  in  2020  and  2021  all 
necessary measures, in  line with  the general  escape clause, to  effectively  address  the 
It  also  
pandemic,  sustain 
recommended  Finland  to  pursue,  when  economic  conditions  allow,  fiscal  policies 
aimed  at  achieving  prudent  medium-term  fiscal  positions  and  ensuring  debt 

the economy  and  support 

the  ensuing  recovery. 

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SWD(2022) 611 final. 

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sustainability,  while  enhancing  investment.  In  2021,  based  on  data  validated  by 
Eurostat, Finland’s general government deficit fell from 5.5% of GDP in 2020 to 2.6% 
in  2021.  The  fiscal  policy  response  by  Finland  supported  the  economic  recovery  in 
2021,  while  temporary  emergency  support  measures  declined  from  2.8%  of  GDP  in 
2020 to 1.7% in 2021. The measures taken by Finland in 2021 have been in line with 
the Council Recommendation of 20 July 2020. The discretionary budgetary measures 
adopted by the government in 2020 and 2021 were temporary or matched by offsetting 
measures.  Based  on  data  validated  by  Eurostat,  general  government  debt  stood  at 
65.8% of GDP in 2021. 

(14)  The  macroeconomic  scenario  underpinning  the  budgetary  projections  in  the  2022 
Stability Programme is realistic. The government projects real GDP to grow by 1.5% 
in  2022  and  1.7%  in  2023.  By  comparison,  the  Commission’s  2022  spring  forecast 
projects a slightly higher real GDP growth of 1.6% in 2022 and 1.7% in 2023. In its 
2022  Stability  Programme,  the  Government  expects  that  the  headline  deficit  will 
decrease to 2.2% of GDP in 2022 and to 1.7% in 2023. The decrease in 2022 mainly 
reflects the strong growth in economic activity and the unwinding of most emergency 
measures. According to the Programme, the general government debt-to-GDP ratio is 
expected  to  increase  to  66.2%  in  2022  and  to  66.9%  in  2023. Based  on  policy 
measures  known  at  the  cut-off  date  of  the  forecast,  the  Commission  2022  spring 
forecast  projects  a  government deficit for 2022 and 2023 of  2.2% of GDP and  1.7% 
respectively. This is in line with the deficit projected in the 2022 Stability Programme. 
The Commission 2022 spring forecast projects a  similar general government debt-to-
GDP ratio, of 65.9% in 2022 and 66.6% in 2023.  

(15) 

Based  on  the  Commission  spring  2022  forecast,  the  medium-term  (10-year  average) 
potential output growth is estimated at 1.2%. However, this estimate does not include 
the  impact  of  the  reforms  that  are  part  of  the  Recovery  and  Resilience  Plan  and  can 
boost Finland’s potential growth. 

In 2022, the government phased out the majority of measures taken in response to the 
COVID-19 crisis, such that the temporary emergency support measures are projected 
to  decline  from  1.7%  of  GDP  in  2021  to  0.2%  in  2022.  The  government  deficit  is 
impacted  by  the  measures  adopted  to  counter  the  economic  and  social  impact  of  the 
increase in energy prices, which in the Commission spring 2022 forecast are estimated 
at 0.1% of GDP in 2022 and 0.0% of GDP in 2023.12 These measures mainly consist 
of temporary tax measures (e.g. deduction for travel expenses). These measures have 
been announced as temporary. However, in case energy prices remain elevated also in 
2023,  some  of  these  measures  could  be  continued.  The  government  deficit  is  also 
impacted by the costs to offer temporary protection to displaced persons from Ukraine, 
which in the Commission 2022 spring forecast are projected at 0.1% of GDP in 2022 
and 0.2% in 202313, as well as the increased cost  of defence expenditure by 0.3% of 
GDP in 2022 and 0.1% of GDP in 2023.  

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The figures represent the level of annual budgetary costs of those measures taken since autumn 2021, 
including current revenue and expenditure as well as – where relevant – capital expenditure measures. 
The total number of displaced persons from Ukraine to the EU is assumed to gradually reach 6 million 
by  the  end  of  2022,  and  their  geographical  distribution  is  estimated  based  on  the  size  of  the  existing 
diaspora, the relative population of the receiving Member State, and the actual distribution of displaced 
persons from Ukraine across the EU as of March 2022. For budgetary costs per person, estimates are 
based on the Euromod microsimulation model of the Commission’s Joint Research Centre, taking into 

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(16)  On  18  June  2021,  the  Council  recommended  that  in  2022  Finland14  maintains  a 
supportive  fiscal  stance,  including  from  the  impulse  provided  by  the  Recovery  and 
Resilience  Facility,  and  preserves  nationally-financed 
It  also 
recommended  Finland  to  pursue,  when  economic  conditions  allow,  a  fiscal  policy 
aimed  at  achieving  prudent  medium-term  fiscal  positions  and  ensuring  fiscal 
sustainability  in  the  medium  term,  and  at  the  same  time,  to  enhance  investment  to 
boost growth potential. 

investment. 

(17) 

(18) 

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the 
information  incorporated  in  Finland’s  2022  Stability  Programme,  the  fiscal  stance  is 
projected  to  be  supportive  at  -0.6%  of  GDP.15  Finland  plans  to  provide  continued 
support  to  the  recovery  by  making  use  of  the  Recovery  and  Resilience  Facility  to 
finance  additional  investment  as  recommended  by  the  Council.  The  positive 
contribution to economic activity of expenditure financed by Recovery and Resilience 
Facility grants and other EU funds is projected to increase by 0.2 percentage points of 
GDP  compared  to  2021.  Nationally-financed  investment  is  projected  to  provide  an 
expansionary  contribution  to  the  fiscal  stance  of  0.2  percentage  points  in  2022.16 
Therefore, Finland plans to preserve nationally financed investment, as recommended 
by  the  Council.  At  the  same  time,  the  growth  in  nationally-financed  primary  current 
expenditure (net of new revenue measures) in 2022 is projected to provide a broadly 
neutral contribution of 0.1 percentage points to the overall fiscal stance. This includes 
the additional impact of the measures to address the economic and social impact of the 
increase  in  energy  prices  (0.1%  of  GDP)  as  well  as  the  costs  to  offer  temporary 
protection to displaced persons from Ukraine (0.1% of GDP).  

In 2023, the fiscal stance is projected in the Commission 2022 spring forecast at 0.3% 
of GDP on a no-policy change assumption.17 Finland is projected to continue using the 
grants  from  the  Recovery  and  Resilience  Facility  in  2023  to  finance  additional 
investment in support of the recovery. The positive contribution to economic activity 
of  expenditure  financed  by  Recovery  and  Resilience  Facility  grants  and  other  EU 
funds  is  projected  to  increase  by  0.2  percentage  points  of  GDP  compared  to  2022. 
Nationally-financed investment is projected to provide an expansionary contribution to 
the fiscal  stance of  0.1 percentage points  in  2023.18 At the same time, the  growth in 
nationally-financed  primary  current  expenditure  (net  of  new  revenue  measures)  in 
2023 is projected to provide a contractionary contribution of 0.4 percentage points to 
the overall fiscal stance. This includes the impact from the phasing out of the measures 
addressing  the  increased  energy  prices  (0.1%  of  GDP)  and  additional  costs  to  offer 
temporary protection to displaced persons from Ukraine (0.1% of GDP). 

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18 

account both cash transfers people may be eligible for as well as in-kind benefits such as education and 
healthcare. 
Council  Recommendation  of  18  June  2021  delivering  a  Council  opinion  on  the  2021  Stability 
Programme of Finland, OJ C 304, 29.7.2021, p. 126.  
A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 
Other  nationally-financed  capital  expenditure  is  projected  to  provide  an  expansionary  contribution  of 
0.3 percentage points of GDP. 
A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 
Other  nationally-financed  capital  expenditure  is  projected  to  provide  a  contractionary  contribution  of 
0.2 percentage points of GDP. 

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(19) 

In  the  2022  Stability  Programme,  the  general  government  deficit  is  expected  to 
gradually  decline  to  1.4%  in  2024  and  to  1.8%  by  2025.  Therefore,  the  general 
government  deficit  is  planned  to  remain  below  3%  of  GDP  over  the  programme 
horizon.  According  to  the  Programme,  the  general  government  debt-to-GDP  ratio  is 
expected  to  increase  by  2025,  specifically  with  an  increase  to  68.0%  in  2024,  and  a 
rise to  69.1%  in 2025.  Based on the Commission’s analysis, debt  sustainability risks 
appear medium over the medium term. 

(20)  Finland’s  social  security  system  provides  ample  coverage  and  effective  protection 
against  poverty,  but  it  is  also  characterised  by  high  complexity  and  some  inherent 
inefficiencies. In particular, this concerns combining work income and social benefits 
and tackling long-term unemployment. A comprehensive reform of social security will 
be  key  to  streamline  the  system,  increase  incentives  to  work  while  preserving  social 
protection,  and  raise  the  employment  rate,  in  line  with  the  government’s  long-term 
objectives.  It  should  increase  government  revenues  from  income  taxes  and  enhance 
efficiency  of  social  protection  spending,  thus  supporting  the  sustainability  of  public 
finances. In 2020, a dedicated parliamentary committee was tasked with designing the 
reform by 2027. In January 2022, the committee published the results of its problem-
mapping  work  and  the  next  stage  consists  in  developing  possible  solutions  to  the 
identified  problems  and  proposing  alternative  ways  of  organising  social  security. 
Adopting  a  government  roadmap  for  the  social  security  reform,  based  on  the 
committee’s work, should foster the progress in the preparation of the reform and pave 
the way for its implementation.  

(21) 

In accordance with Article 19(3), point (b), and Annex V, criterion 2.2, to Regulation 
(EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually 
reinforcing reforms and investments  to be implemented by 2026. These help address 
all  or  a  significant  subset  of  the  economic  and  social  challenges  outlined  in  the 
country-specific  recommendations  addressed  to  Finland  by  the  Council  in  the 
European  Semester 
to  any  country-specific 
recommendations  issued  up  to  the  date  of  adoption  of  a  plan.  In  particular,  the  plan 
comprises updating the Climate Change Act and the ongoing continuous learning and 
social and healthcare reforms. It also includes measures to boost employment, as well 
as measures to reinforce anti-money laundering and to support the establishment of a 
positive credit registry. 

in  2019  and  2020, 

in  addition 

(22)  The  implementation  of  the  recovery  and  resilience  plan  of  Finland  is  expected  to 
contribute  to  making  further  progress  on  the  green  and  digital  transition.  Measures 
supporting  the  climate  objectives  in  Finland  account  for  50.1%  of  the  plan’s  total 
allocation,  while  measures  supporting  digital  objectives  account  for  27.5%  of  the 
plan’s total allocation. The fully-fledged implementation of the recovery and resilience 
plan, in line with the relevant milestones and targets, will help Finland swiftly recover 
from  the  fallout  of  the  COVID-19  crisis,  while  strengthening  its  resilience.  The 
systematic  involvement  of  social  partners  and  other  relevant  stakeholders  remains 
important  for  the  successful  implementation  of  the  recovery  and  resilience  plan,  as 
well  as  other  economic  and  employment  policies  going  beyond  the  plan,  to  ensure 
broad ownership of the overall policy agenda. 

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(23)  The Commission approved the cohesion policy programming documents19 for Finland, 
except for the Just Transition Fund and the cohesion policy programme for the Åland 
Islands,  on  5  May  2022.  The  Åland  Islands  have  submitted  the  cohesion  policy 
programme on 4 April 2022. In line with Regulation (EU) 2021/1060 of the European 
Parliament  and  of  the  Council  of  24  June  2021,  Finland  has  taken  into  account  the 
relevant  country-specific  recommendations  in  the  programming  of  the  2021-2027 
cohesion  policy  funds.  This  is  a  prerequisite  for  improving  the  effectiveness  and 
maximising  the  added  value  of  the  financial  support  to  be  received  from  cohesion 
policy  funds,  while  promoting  the  coordination,  complementarity  and  coherence 
between  these  funds  and  other  Union  instruments  and  funds.  The  successful 
implementation  of  the  Recovery  and  Resilience  Facility  and  cohesion  policy 
programmes also depends on the removal of bottlenecks to investment  to support the 
green and digital transition and balanced territorial development. 

(24) 

In  response  to  the  mandate  by  the  EU  Heads  of  State  or  Government  set  out  in  the 
Versailles Declaration, the REPowerEU plan aims to phase out the European Union’s 
dependence on fossil fuel imports from Russia as soon as possible. For this purpose, 
the most suitable projects, investments and reforms at national, regional and EU level 
are being identified in dialogue with the Member States. These measures aim to reduce 
overall reliance on fossil fuels and shift fossil fuel imports away from Russia. 

(25)  While the Finnish economy is one of the most energy-intensive in the EU, Finland set 
the  objective  to  become  carbon-neutral  and  the  first  fossil-free  welfare  society  by 
2035. Energy, industry, transport and buildings are the main sectors  that will need to 
contribute to major reductions in greenhouse gas emissions. Challenges to achieve this 
objective include a significant private and public investment gap as well as delays for 
renewable energy investments caused by a backlog of environmental permits in need 
of processing. According to 2020 data, Finland is highly dependent on Russia for its 
imports of gas (67% vs 44% in the EU), oil (84% vs 26% in the EU) and coal (55% vs 
54% in the EU).20 However, the Finnish economy only  has  a limited dependency on 
gas imports (which accounted for 6.9% of the energy mix in 2020), and imports of all 
three resources can be substituted to a large extent by other fuels or imports from other 
countries. Finland has contingency measures in place to ensure that sectors dependent 
on  these  fuels  can  continue  operating  in  case  of  supply  disturbances  and  is  taking 
action  to  diversify  its  energy  imports  away  from  Russia.  Finland  uses  minimal 
amounts of gas for heating homes, while power plants can generally replace their use 
of gas with other fuels. Finland does not have access to domestic gas storage facilities, 
but the Balticconnector bi-directional gas pipeline became operational in 2020 and the 
country expects to complete its third LNG terminal during the second half of this year. 
Together with two already existing LNG terminals and potential future projects, total 
gas import capacity is soon expected to cover a significant share of Finnish gas import 
needs. New infrastructure and network investments related to gas are recommended to 

19 

20 

Regulation  (EU)  2021/1060  of  the  European  Parliament  and  of  the  Council  of  24  June  2021  laying 
down  common  provisions  on  the  European  Regional  Development  Fund,  the  European  Social  Fund 
Plus,  the  Cohesion  Fund,  the  Just  Transition  Fund  and  the  European  Maritime,  Fisheries  and 
Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the 
Internal  Security  Fund  and  the  Instrument  for  Financial  Support  for  Border  Management  and  Visa 
Policy. OJ L 231, 30.6.2021, p. 159. 
Eurostat (2020), share of Russian imports over total imports of natural gas, crude oil and hard coal. For 
the EU27 average, the total imports are based on extra-EU27 imports. For Finland, total imports include 
intra-EU trade. Crude oil does not include refined oil products. 

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be  future-proof  where  possible,  in  order  to  facilitate  their  long-term  sustainability 
through  future  repurposing  for  sustainable  fuels.  Approximately  a  third  of  Finland’s 
energy  mix  still  consists  of  oil  and  coal,  although  Finland  is  also  diversifying  its 
imports  of  oil  and  coal  away  from  Russia.  Nuclear  power  represented  17%  in  the 
energy mix in 2020, with Russia being an important source of nuclear fuel. Finland's 
electricity interconnection rate is currently 29%, but this is expected to increase in the 
medium  term.  Finland's  national  transmission  of  electricity  could  be  strengthened. 
Overall,  while  Finland  is  moving  away  from  its  limited  dependency  on  fossil  fuel 
imports  from  Russia,  the  current  circumstances  demand  speeding  up  and  increasing 
investment in decarbonisation and ensuring energy efficiency and security of supply. 
This  includes  further  streamlining  permitting  procedures  to  clear  the  backlog  of 
pending  energy  projects  and  to  facilitate  additional  priority  investments.  Further 
increase in ambition for reducing greenhouse gas emissions and increasing renewables 
and  energy  efficiency  will  be  needed  for  Finland  to  be  in  line  with  the  ‘Fit  for  55’ 
objectives. 

(26)  While the acceleration of the transition towards carbon neutrality and away from fossil 
fuels will create significant restructuring costs in several sectors, Finland can make use 
of  the  Just  Transition  Mechanism  in  the  context  of  cohesion  policy  to  alleviate  the 
socio-economic  impact  of  the  transition  in  the  most  affected  regions.  In  addition, 
Finland  can  make  use  of  the  European  Social  Fund  Plus  to  improve  employment 
opportunities and strengthen social cohesion. 

(27) 

(28) 

In  the  light  of  the  Commission’s  assessment,  the  Council  has  examined  the  2022 
Stability Programme and its opinion21 is reflected in recommendation (1) below. 

In view of the close interlinkages between the economies of euro area Member States 
and  their  collective  contribution  to  the  functioning  of  the  Economic  and  Monetary 
Union,  the  Council  recommended  that  the  euro  area  Member  States  take  action, 
including 
the 
recommendation on the economic policy of the euro area. For Finland, this is reflected 
in particular in recommendations (1) and (2) below. 

resilience  plans, 

recovery  and 

implement 

through 

their 

to 

HEREBY RECOMMENDS that Finland take action in 2022 and 2023 to:  

1. 

2. 

In 2023, ensure that the growth of nationally-financed current expenditure is in line 
with  an  overall  neutral  policy  stance,  taking  into  account  continued  temporary  and 
targeted support to households and firms most vulnerable to energy price hikes and 
to  people  fleeing  Ukraine.  Stand  ready  to  adjust  current  spending  to  the  evolving 
situation.  Expand  public  investment  for  the  green  and  digital  transition  and  for 
energy  security,  including  by  making  use  of  the  RRF,  RePowerEU  and  other  EU 
funds. For the period beyond 2023, pursue a fiscal policy aimed at achieving prudent 
medium-term fiscal positions. Present policy proposals for the social security reform, 
aiming  to  increase  the  efficiency  of  the  system  of  social  benefits,  improving 
incentives to work, and also supporting long-term sustainability of public finances. 

Proceed with the implementation of its recovery and resilience plan, in line with the 
milestones  and 
the  Council  Implementing  Decision  of 
29 October 2021.  Proceed  with  the  implementation  of  the  agreed  2021-2027 
cohesion policy programme for Finland, and swiftly finalise the negotiations with the 
Commission  of  the  2021-2027  cohesion  policy  programming  documents  for  the 

included 

targets 

in 

21 

Under Article 5(2) of Council Regulation (EC) No 1466/97. 

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Åland  Islands  and  the  Just  Transition  Fund  with  a  view  to  starting  their 
implementation. 

3. 

Reduce  overall  reliance  on  and  diversify  imports  of  fossil  fuels  by  accelerating  the 
deployment of renewables, including by further streamlining permitting procedures, 
and boost investment in the decarbonisation of industry and electrification transport. 
Develop energy infrastructure to increase security of supply. 

Done at Brussels, 

For the Council 
The President 

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