Proposal for a COUNCIL DECISION on the existence of an excessive deficit in Finland
Date: 2025-12-12
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Finland, budget deficit, economic policy, economic reform, gross domestic product, public debt, public finance, stability pact

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   EUROPEAN COMMISSION  Brussels, 12.12.2025  COM(2025) 778 final 2025/0416 (NLE)  Proposal for a COUNCIL DECISION on the existence of an excessive deficit in Finland  
 
 
2025/0416 (NLE) 

Proposal for a 

COUNCIL DECISION 

on the existence of an excessive deficit in Finland 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union  (TFEU),  and  in 
particular Article 126(6) thereof, 

Having regard to the proposal from the Commission, 

Having regard to the observations made by Finland, 

Whereas: 

(1)  Article 126(1) of the Treaty on the Functioning of the European Union (TFEU) 
provides that Member States shall avoid excessive government deficits. 

(2)  The  Stability  and  Growth  Pact  (SGP)  is  based  on  the  objective  of  sound  and 
sustainable government finances as a means of strengthening the conditions for 
price stability and for strong, sustainable and inclusive growth underpinned by 
financial  stability,  thereby  supporting  the  achievement  of  the  Union’s 
objectives for sustainable growth and employment. 

(3)  The excessive deficit procedure (EDP) under Article 126 TFEU, as clarified by 
Council  Regulation  (EC)  No  1467/97  on  speeding  up  and  clarifying  the 
implementation  of the excessive deficit procedure1,  which is  part of the SGP, 
provides for a decision on the existence of an excessive deficit. Protocol No 12 
on  the  excessive  deficit  procedure,  annexed  to  the  Treaty  on  the  European 
Union and the TFEU, sets out further provisions relating to the implementation 
of the excessive deficit procedure. Council Regulation (EC) No 479/20092 lays 
down detailed rules and definitions for the application of those provisions. The 
Union’s economic governance framework, which came into force on 30 April 
2024, 
includes  Council  Regulation  (EU)  2024/1264,  which  amended 
Regulation (EC) No 1467/97. The reform kept the rules of the excessive deficit 

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Council  Regulation  (EC)  No  1467/97  on  speeding  up  and  clarifying  the  implementation  of  the 
excessive deficit procedure (OJ L 209, 2.8.1997, ELI: http://data.europa.eu/eli/reg/1997/1467/2024-04-
30)  as  last  amended  by  Council  Regulation  (EU)  2024/1264  of  29  April  2024  (OJ  L,  2024/1264, 
30.4.2024). 
Council  Regulation  (EC)  No  479/2009  of  25  May  2009  on  the  application  of  the  Protocol  on  the 
excessive  deficit  procedure  annexed  to  the  Treaty  establishing  the  European  Community  (OJ  L  145, 
10.6.2009,  ELI:  http://data.europa.eu/eli/reg/2009/479/2014-09-01)  as  last  amended  by  Commission 
Regulation  (EU)  No  220/2014  of  7  March  2014  as  regards  references  to  the  European  system  of 
national and regional accounts in the European Union (OJ L 69, 8.3.2014). 

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procedure due to non-compliance with the deficit criterion broadly unchanged, 
whereas for Member States with a government debt ratio above 60% of GDP 
the excessive deficit procedure due to  non-compliance with the debt  criterion 
will focus on deviations from the recommended maximum growth rates of net 
expenditure3  set  by  the  Council  under  Articles  17  or  19  of  Regulation  (EU) 
2024/12634.  According  to  Article  22(6)  of  Regulation  (EU)  2024/1263, 
deviations  are  calculated  on  the  basis  of  outturn  data.  The  initial  year  of  the 
maximum  annual  and  cumulative  net  expenditure  growth  rates  recommended 
by  the  Council  for  Finland  is  2025.  The  assessment  of  compliance  with  the 
debt  criterion  can  only  be  undertaken  once  the  outturn  data  for  2025  are 
available,  which  will  be  in  spring  2026.  Therefore,  this  Council  Decision 
concerns the excess of the ratio of the government deficit to GDP with respect 
to the reference value of 3% of GDP. 

(4)  According  to  Article  126(5)  TFEU,  if  the  Commission  considers  that  an 
excessive  deficit  in  a  Member  State  exists  or  may  occur,  it  is  to  address  an 
opinion  to  the  Member  State  concerned  and  shall  inform  the  Council 
accordingly.  Having  taken  into  account  its  report  adopted  pursuant  to  Article 
126(3) TFEU and having regard to the opinion of the Economic and Financial 
Committee of 4 December 2025 adopted pursuant to Article 126(4) TFEU, the 
Commission  concluded  that  an  excessive  deficit  exists  in  Finland.  On  12 
December  2025,  the  Commission  therefore  addressed  such  an  opinion  to 
Finland and informed the Council accordingly.5 

(5)  Article 126(6) TFEU provides that the Council is to consider any observations 
which the Member State concerned may wish to make before deciding, after an 
overall assessment, whether an excessive deficit exists. In the case of Finland, 
the overall assessment leads to the conclusions set out below. 

(6)  According to  the data provided by Eurostat on 21 October 20256, the general 
government  deficit  in  Finland  reached  4.4%  of  GDP  in  2024  and  general 
government  debt  stood  at  82.5%  of  GDP  at  end-2024.  In  2025,  Finland’s 
general  government  deficit  is  planned  to  reach  4.3%  of  GDP.7  The  actual 
government deficit in 2024 and the planned deficit for 2025 are above and not 
close to the Treaty reference value of 3% of GDP, and the deficits in excess of 

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According  to  Article  2(2)  of  Regulation  (EU)  2024/1263,  'net  expenditure'  means  government 
expenditure net of interest expenditure, discretionary revenue measures, expenditure on programmes of 
the  Union  fully  matched  by  revenue  from  Union  funds,  national  expenditure  on  co-financing  of 
programmes funded by the Union, cyclical elements of unemployment benefit expenditure, and one-offs 
and other temporary measures. 
Regulation (EU) 2024/1263 of the European Parliament and of the Council of 29 April 2024 on the 
effective coordination of economic policies and on multilateral budgetary surveillance and repealing 
Council Regulation (EC) No 1466/97 (OJ L, 2024/1263, 30.4.2024, ELI: 
http://data.europa.eu/eli/reg/2024/1263/oj). 
All EDP-related documents for Finland can be found at: https://economy-
finance.ec.europa.eu/economic-governance-framework/stability-and-growth-pact/corrective-arm-
excessive-deficit-procedure/excessive-deficit-procedures-overview/finland_en 
Eurostat Euro Indicators published on  21 October 2025 (https://ec.europa.eu/eurostat/en/web/products-
euro-indicators/w/2-21102025-AP),  in  accordance  with  Article  14  of  Council  Regulation  (EC)  No 
479/2009. 
Planned  deficit  as  reported  to  Eurostat  in  the  context  of  the  Autumn  2025  fiscal  notification.  See: 
https://ec.europa.eu/eurostat/web/government-finance-statistics/excessive-deficit-procedure/edp-
notification-tables. 

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(7) 

the  reference  value  are  not  considered  temporary.  Based  on  the  Commission 
Autumn 2025 Forecast8, the general government deficit is projected to remain 
above  3%  of  GDP  in  2025,  2026  and  2027.  The  Commission’s  report  under 
Article  126(3)  TFEU  considered  that  the  deficits  in  excess  of  the  reference 
value  in  2024  and  2025  are  exceptional,  due  to  the  impact  of  adverse 
macroeconomic  developments  and  the  impact  on  public  finances  of  Russia’s 
war of aggression against Ukraine.  

In  line  with  the  requirements  of  Article  126(3)  TFEU,  the  Commission  also 
analysed  all  the  relevant  factors  in  its  report  under  Article  126(3)  TFEU.  As 
laid  down  in  Article  2(4)  of  Regulation  (EC)  No  1467/97,  when  assessing 
compliance on the basis of the deficit criterion, if the ratio of the government 
debt  to  GDP  exceeds  the  reference  value,  relevant  factors  shall  be  taken  into 
account  in  the  steps  following  the  report  under  Article  126(3)  TFEU  and 
leading to the decision on the existence of an excessive deficit only if – before 
these relevant  factors are taken into account  – the general  government  deficit 
remains close to the reference value and its excess over the reference value is 
temporary. In the case of Finland, the double condition is not met. Therefore, 
relevant factors are not taken into account. 

(8)  Thus,  the  deficit  criterion  as  defined  by  the  Treaty  and  Regulation  (EC)  No 

1467/97 is not fulfilled. 

(9)  On 8 July 2025, the Council activated a national escape clause to facilitate an 
increase  in  defence  expenditure  in  Finland9,  during  the  period  2025-2028. 
Article  2(5)  of  Regulation  (EU)  No  1467/97  establishes  that,  if  a  national 
escape clause is activated, the Commission and the Council may decide not to 
reach  a  conclusion  regarding  the  existence  of  an  excessive  deficit.  However, 
based  on  the  Commission  Autumn  2025  Forecast,  the  deficit  in  2025  for 
Finland  is  projected  at  3.4%  of  GDP  without  the  increase  in  defence 
expenditure  since  2021.  Thus,  the  deficit  in  excess  of  the  reference  value  in 
Finland  in  2025  cannot  be  fully  explained  by  an  increase  in  defence 
expenditure since the reference year of 2021. As a result, Article 2(5) does not 
apply. 

HAS ADOPTED THIS DECISION: 

Article 1 

From an overall assessment, it follows that an excessive deficit exists in Finland due to non-
compliance with the deficit criterion. 

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European Economic Forecast – Autumn 2025, European Economy-Institutional Paper, No 327, 17 
November 2025. 
Council  recommendation  allowing  Finland  to  deviate  from,  and  exceed,  the  recommended  net 
expenditure  path  (Activation  of  the  national  escape  clause),  (OJ  C,  C/2025/3966,  20.8.2025,  ELI: 
http://data.europa.eu/eli/C/2025/3966/oj). 

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This decision is addressed to the Republic of Finland. 

Done at Brussels, 

Article 2 

For the Council 
The President 

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