COMMISSION STAFF WORKING DOCUMENT 2026 Country Report - Finland Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Finland
Date: 2026-06-03
Institutions: European Commission, Reform and Investment Task Force
Subjects: Finland, budget policy, economic policy, economic recovery, economic reform, employment policy, investment, labour market, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 3.6.2026  SWD(2026) 226 final  COMMISSION STAFF WORKING DOCUMENT 2026 Country Report - Finland Accompanying the document Recommendation for a COUNCIL RECOMMENDATION  on the economic, social, employment, structural and budgetary policies of Finland {COM(2026) 226 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC DEVELOPMENTS AND KEY POLICY 
CHALLENGES 

The economy is set to revive from 
stagnation but growth potential 
remains constrained 

Finland's  economy 
is  emerging  from 
stagnation and is expected to transit to a 
more broad-based growth in 2026. After a 
decline in 2023, and a small rebound in 2024, 
real  GDP  grew  only  marginally  in  2025.  This 
subdued  economic  performance 
is  mainly 
explained  by  a  decline  in  private  and  public 
consumption  in  the  context  of  low  consumer 
confidence,  which  has  offset  gains  from 
investment.  Weak 
increased  exports  and 
economic  activity  has 
rising 
in 
resulted 
unemployment  and  at  the  end  of  2025, 
Finland’s  unemployment  rate  stood  at  10.3%. 
While  this  was  the  highest  in  the  EU,  the 
in  unemployment  partly 
recent 
reflects  an 
force 
participation  while  the  employment  rate  has 
held  up  relatively  well.  Given  the  uncertainty 
about  the  economic  situation,  households 
saved more and were more careful with larger 
purchases, such as buying apartments (see the 
paragraph on household indebtedness and the 
housing market below and Annex 16). In 2026, 
the  economy  is  set  to  resume  an  expansion 
driven by domestic demand. 

increase 

increase 

labour 

in 

The  subdued  economic  conditions  have 
had  an  impact  on  public  finances.  Public 
debt has continued to rise, and the deficit has 
remained 
large,  despite  the  government’s 
efforts to stabilise the debt ratio via spending 
cuts  and  revenue  increases.  The  government 
debt-to-GDP  ratio  is  projected  to  breach  90% 
in 2026. 

there  are 

population  has  increased  by  around  17 300 
people  a  year  on  average  and  the  total 
population  rose  to  5.65  million  in  2025.  This 
increase  was  solely  driven  by  net  migration 
which  accounted  for  roughly  27 400  people 
per  year  in  2015-2025,  while  the  natural 
population  change  was  negative  as 
the 
population  ages  and 
fewer 
newborns.  A  large  part  of  the  immigration  in 
the  2020s  has  come  from  Ukraine,  and 
immigration is expected to decrease from the 
peak  of  2023-2024  in  the  coming  years. 
Across  the  country,  the  population  growth  is 
concentrated  in  urban  areas,  whereas  rural 
areas  are  shrinking  (see  Annex 18).  These 
demographic  changes  are  reflected  in  the 
labour  market.  Since  2010  employment 
growth  has  been  driven  by  an  increase  of 
foreign-born  employees  while  the  number  of 
Finnish-born  employees  has  declined,  as  the 
Finnish baby-boom generation started to reach 
their retirement age. 

Cost competitiveness is gradually 
improving 

Cost competitiveness has improved.  Since 
2020,  Finland  has  been  progressively  losing 
export  market  shares  against  advanced 
economies (Graph 1.1). This, however, does not 
seem  to  be  related  to  Finland’s  ability  to 
compete  on  prices.  Finland’s  average  wages 
relative  to  output  per  worker  compared  with 
the euro area or the same indicator also taking 
into  account  the  impact  of  exchange  rate 
changes,  compared  with  37 
industrialised 
trading  partners,  have  improved  and  reached 
their most advantageous levels since 2020 (1). 

The  growth  potential  suffers  from  rapid 
ageing and depends on migration into the 
workforce.  Over  the  past  10  years  Finland’s 

(1)  There was a temporary deterioration in average wages 
between 2021 and 2023, caused by shocks in oil 
refinery and forest industry prices. 

2 

 
 
 
Finland’s  labour  productivity  growth  has  been 
slower  than  in  peer  countries  (see  Section 2). 
As  nominal  unit  labour  cost  indicators  are 
trending lower relative to peers, it appears that 
wage  growth  has  not  exceeded  weak 
productivity  growth.  However,  the  continued 
contraction of export market shares, therefore, 
points 
non-cost 
competitiveness such as low economic activity 
in  Finland’s  traditionally 
important  export 
destinations  and  the  lack  of  new  innovative 
export products for which demand is growing. 

challenges  with 

to 

Graph 1.1: Cost competitiveness indicators 
(2010=100) and export market share change 
(%) 

Source: European Commission 

Household indebtedness is easing 
amid a contracting housing market 

The  housing  market  is  going  through  a 
contraction,  and  households  are  paying 
off  debt  more  than  borrowing.  A  large 
majority  of  household  mortgages  are  tied  to 
variable  market  interest  rates.  Following  high 
inflation 
in  2021-2022,  tighter  monetary 
policy  led  to  a  significant  rise  in  reference 
market 
lending 
rates. 
in 
conditions  coupled  with  a  decrease 
consumer  confidence  due  to  Russia’s  war  of 
aggression  against  Ukraine  led  to  a  falling 
number  of  purchases  and  lower  house  prices. 
At the same time, construction costs increased. 
This,  together  with  lower  house  prices,  led  to 
lower  incentives  for  promoters  to  start  new 

interest 

Tighter 

projects  and  hence  low  construction  activity. 
On  average,  house  prices  are  currently  some 
10%  lower  than  in  their  peak  in  2022  and 
construction activity is close to historically low 
levels  (see  Annex  16).  As  a  consequence, 
household  indebtedness  has  eased  recently. 
The  household  credit-to-GDP  ratio  reached 
58.5% in 2020 and has declined  to 51.3% of 
GDP in 2025-Q2, still above the EU average of 
43.3%.  The  outstanding  household  debt  stock 
has  declined  in  2023-2025  as  households 
have  amortised  loans  more  than  drawn  out 
new loans. (see Annex 6). 

Fiscal challenges persist 

Finland’s  public  finances  are  strained  by 
low  GDP  growth  and  a  persistent 
discrepancy  between 
revenues  and 
expenditure.  Weak  GDP  growth  since  2023 
contributed  to  the  increase  in  the  general 
government deficit over 2023-2025. This was 
caused  by 
limited  revenue  growth  from 
consumption  and  income taxes,  and  by  faster 
expenditure  growth  due  to  higher  social 
transfers  and  costs  related  to  the  ‘wellbeing 
services counties’ launched in 2023. 

the 

The  government  implemented  a  sizeable 
consolidation  programme  in  2024  and 
2025,  which  did  not  suffice  to  stabilise 
public  finances.  As  a  result,  the  excessive 
deficit procedure was opened in January 2026. 
Finland requested  and obtained  the activation 
of 
to 
accommodate the planned increase in defence 
expenditure (2), which will nevertheless require 
a  reprioritisation  of  public  spending  looking 
forward.  The  Ministry  of  Finance  estimates 
that  stabilising  public  finances  will  require  a 
consolidation  effort  for  an  amount  of  EUR 8-
11 billion (around 2.7%-3.7% of GDP) over the 

‘national 

escape 

clause’ 

(2)  Council Recommendation of 8 July 2025 allowing 

Finland to deviate from the maximum growth rates of 
net expenditure as set by the Council under Regulation 
(EU) 2024/1263 (Activation of the national escape 
clause) 

3 

-10010901001101012141618202225Index, 2010=100Nominal unit labour costs, total economy, FI vs EA, indexULC-based REER, FI vs 37 trading partners, indexExport market share change, %, right hand side 
   
 
next  parliamentary  term,  which  starts 
2027 (3). 

in 

Government  debt  approached  90%  of 
GDP  in  2025,  up  from  77%  in  2023.  The 
general  government  deficit  declined  to  3.4% 
of GDP in 2025, largely because of the impact 
of  revenue-increasing  measures  such  as  the 
increase  in  the  VAT  rate  implemented  in  late 
2024  and  modest  expenditure  growth  (Graph 
1.2).  The  Commission  Spring  2026  Forecast 
projects that the deficit will reach 4.5% of GDP 
in 2026 and 4.6% of GDP in 2027. Public debt 
is expected to increase from  around 88.5% in 
2025  to  93.1%  in  2027,  mostly  due  to  high 
and persistent general government deficits. 

Graph 1.2: Public deficit and debt, % of GDP 

Source: European Commission 

by 

followed 

finances, 

implemented 
The  Finnish  government 
sizeable  consolidation  measures,  mainly 
on  the  expenditure  side,  to  stabilise 
public 
tax 
reductions  to  stimulate  growth.  Finland 
has  the  highest  public  expenditure-to-GDP 
ratio  in  the  EU,  at  57.2%  in  2025.  Between 
2023  and  2024,  the  government  decided  a 
consolidation  programme  of  EUR 9 billion 
(around 3% of GDP), taking effect from 2024 
onward.  The  package  included  a  mix  of  lower 
expenditure,  tax  increases,  and  employment 
measures  expected  to  increase  revenues  by 
EUR 2 billion.  In  spring  2025,  the  government 

(3)  See: Target for general government finances for the 

parliamentary term 2027–2033 

decided  to  implement  personal  income  tax 
cuts  worth  around  EUR 1 billion  (around  0.3% 
of  GDP)  and  corporate  income  tax  cuts  worth 
around EUR 830 million. 

2026 

plans 

budget 

further 
The 
worth 
measures 
consolidation 
EUR 1 billion. 
unfavourable 
The 
macroeconomic  situation  has  likely  reduced 
the  fiscal  impact  of  some  of  the  measures 
implemented  during  the  government  term, 
those  supposed 
particularly 
increase 
to 
government’s 
the 
employment.  Overall, 
policies have strengthened public finances, but 
did not stabilise general government debt (4). 

to 

contribute 

implemented  during 

Reforms to the national fiscal framework 
further 
consolidation 
efforts. Public investments were supported by 
an investment programme worth EUR 4 billion 
to  be 
the  current 
parliamentary  term,  financed  mainly  through 
property  income  and  focusing  on  transport 
the 
infrastructure. 
parliament  approved  a  new  fiscal  framework 
introducing a long-term debt anchor of 40% of 
GDP, a target for the four-year electoral cycle 
and a target for the eight-year super-electoral 
cycle  covering  central  and  local  government, 
which will come on top of the EU fiscal rules. 

In  December  2025, 

the 

independent 

The  Economic  Policy  Council  was 
designated 
fiscal 
institution in  charge of  EU-related  tasks. 
Here  it  replaced  the  National  Audit  Office  of 
including  for 
Finland  on  1 January 2026, 
monitoring compliance with the EU fiscal rules 
and  with  other  national  fiscal  targets  and  for 
endorsing 
national  macroeconomic 
forecasts. 

of 

is 

Finland 
defence 
increasing 
expenditure.  Finland  is  planning  to  increase 
its  defence  expenditure  to  3%  of  GDP  by 
2029 (5), up from 2.4% in 2024 (6). The budget 

its 

(4)  See Economic Policy Council Report 2025 

(5)  See General Government Fiscal Plan for 2026–2029. 
The defence expenditure target follows the NATO 
definition of defence expenditure, which differs from 
the one used in national accounts. 

(6)  Defence Expenditure of NATO Countries (2014-2025) | 

NATO News 

4 

0.01.02.03.04.05.0506070809010020232024202520262027DebtDeficit (right hand side) 
   
 
 
of 

includes  EUR 6 billion  of  new 
for  2026 
procurement 
for  purchases  of  defence 
materiel,  with  the  related  expenditure  taking 
in  the  early  2030s.  Following  the 
place 
Finland’s 
assessment 
Commission’s 
national  defence  investment  plan,  the  Council 
adopted  a  decision 
financial 
assistance  of  up  to  EUR 1 billion  available  to 
Finland through the Security Action for Europe 
instrument.  Meanwhile,  as  part  of  the  mid-
the 
term 
policy 
programme, 
re-directed 
Finland 
EUR 310 million  of  the  existing  programme 
funds  to  defence  capabilities  and  military 
mobility. 

to  make 

cohesion 

review 

of 

of 

the 

efficiency 

Spending  reviews  are  a  key  tool  to 
improve 
public 
expenditure,  especially  in  a  context  of 
tight  finances  and  low  growth.  In  2025, 
the  Commission  recommended  that  Finland 
make  its  public  spending  more  efficient  by 
taking into account the results of the spending 
reviews.  Finland  has  already  implemented 
spending  reviews  in  the  past,  notably  the 
review  from  2023  which  proposed  measures 
that  were  then  included  in  the  government 
the  government 
programme. 
established  annual  targeted  spending  reviews 
and  confirmed  a  new  comprehensive  review 
ahead  of  the  elections  in  2027 (7).  The  first 
the  comprehensive 
targeted 
review are currently under preparation. 

reviews  and 

In  2024, 

In  2025, 

Identifying  inefficiencies  in  the  social 
security  system  could  help  reduce  public 
expenditure. 
the  Commission 
recommended  that  Finland  pursue  the  reform 
of  the  social  security  system  to  increase  the 
efficiency  of  the  social  benefits  system, 
improve  incentives  to  work  and  support  the 
long-term  sustainability  of  public  finances, 
while  addressing  the  needs  of  the  vulnerable 
groups.  At  26%  of  GDP,  Finland’s  social 
security protection expenditure exceeds the EU 
average (19% of GDP). 

(7)  Ministry of Finance, Ministry of Finance launches regular 
expenditure and structural review process - Ministry of 
Finance 

5 

The 

government 

Planned  reforms  aim  to  simplify  access 
to  social  benefits  and  intensify  the  job-
seeking  obligations  for  accessing  social 
assistance. 
has 
implemented  sizeable  cuts  to  social  security, 
and  in  2025  the  parliament  approved  the 
reform  of  the  general  social  security  benefit 
and  the  comprehensive  reform  of  social 
assistance,  both  taking  effect  in  2026.  These 
two  reforms  are  expected  to  improve  the 
efficiency of the Finnish social security system 
and  to  improve  incentives  to  work.  However, 
their  impact  on  work  incentives  and  fiscal 
sustainability  does  not  yet  seem  particularly 
sizeable (8).  Moreover,  the  cuts  to  social 
security  appear  to  have  affected  vulnerable 
groups  more  than  previously  thought (9)  (see 
Annex 12).  Cuts  in  the  wellbeing  services 
counties’  expenditure  have  improved  fiscal 
sustainability,  but  weaknesses  in  providing 
social  and  healthcare  services  affecting 
vulnerable groups remain (see Annexes 12 and 
15). 

in  Finland 

The  pension  system 
is 
adequate,  but  there  is  scope  to  increase 
the use of supplementary pensions. Social 
contributions  and  investment  income  exceed 
statutory  pension  payments, 
in 
consistent surpluses of pensions funds. At the 
same  time,  supplementary  pensions  have  a 
marginal role, which could be increased in view 
of declining replacement rates (see Annex 2). 

resulting 

Finland adapts to geopolitical 
changes 

Finland’s  eastern  border  regions  face 
the 
serious 

challenges 

hindering 

(8)  Of the two reforms, the one with the largest impact is 
the comprehensive reform of social assistance, which is 
expected  to  generate  EUR 70 million  in  fiscal  savings 
and  increase  employment  by  1 200  workers  (without 
taking  into  account  further  behavioural  effects).  See: 
Finnish  Government,  Changes  to  social  assistance  to 
take effect on 1 February 2026 - Finnish Government 

(9)  Finnish 

Government,  Memorandums 

assessing 
combined  impacts  of  Government’s  social  security 
changes now published - Finnish Government 

 
 
 
Box 1: 

UN Sustainable Development Goals (SDGs) 

While  generally  performing  well  in  productivity-related  indicators  (SDGs 4,  8  and  9),  Finland  is 
moving  away  from  its  objectives  in  decent  work  and  economic  growth  (SDG 8)  and  quality 
education  (SDG 4).  Most  notably,  these  trends  are  underpinned  by  an  increase  in  the 
unemployment rate and lower GDP  per capita,  however with a strong industrial and innovation 
environment. 

Finland is overall improving in SDGs related to environmental sustainability, showing progress in 
clean water and sanitation (SDG 6) and climate action (SDG 13). Only 4 out of 17 SDGs remain 
below  the  EU  average.  These  relate  to  environmental  sustainability  (SDGs 7,  12  and  14)  and 
macroeconomic stability (SDG 17).  

and 

social 

uneven 

including 
and 

economic 
development 
prospects (10). The border closure with Russia 
since  2023  has  weighed  on  border  regions’ 
businesses, particularly in retail, transport and 
tourism,  manufacturing  and  forestry 
(see 
Annex 18). These challenges have come on top 
of  the  existing  structural  weaknesses  of  the 
sectoral 
an 
regions, 
economic 
composition 
diversification (11), 
demographic 
trends  (12),  higher  unemployment,  lack  of 
quality jobs, and difficulties to access services 
due 
distances 
(Annexes 11, 12 and 18). Further policy action 
at  national  and  European  level  could  improve 
the 
and 
competitiveness of the eastern border regions, 
which  have  strong  strategic  importance  for 
Europe as a whole. 

geographical 

cohesion, 

negative 

security 

limited 

social 

vast 

to 

faces 

economic 

Finland 
security 
challenges  due  to  its  reliance  on  global 
value  chains  and  certain  structural 
dependencies. As a small, open economy that 
is 
advanced 
manufactured  products,  Finland  is  reliant  on 
global  value  chains.  Finland  is  dependent  on 
maritime  transport,  it  has  energy-intensive 
transport 
economic  structure,  and 

specialised 

producing 

long 

in 

(10)  The  Commission’s  2026  Communication  on  the  EU’s 
eastern  regions  bordering  Russia,  Belarus  and  Ukraine 
defines  eastern  border  regions  as  NUTS 2-level  areas 
that are geographically proximate to Russia, Belarus, or 
Ukraine. 

(11)  OECD:  Transition  Strategies  for  Finland’s  Eastern  and 

South-Eastern Border Regions (EN) 

(12)  The working-age population has fallen by 6% between 
2019-2024, and domestic net migration runs at -5,5% 
relative to 2007 population levels 

distances.  While  Finland  produces  several 
critical  raw  materials,  it  is  also  dependent  on 
imports  of  certain  materials  more  than  an 
average  EU  Member  State  (see  Annex 5). 
These  underline  the  country’s  challenges  in 
securing its critical economic flows. 

subsea 

affecting 

ICT  security 

Finland had a high level of cyber threats 
and  hybrid  disruptions.  It  had  the  EU's 
highest  percentage  (42.2%)  of  enterprises 
experiencing 
incidents  with 
consequences in 2023 (13). The series of hybrid 
incidents 
critical 
infrastructure  in  the  Baltic  Sea  Region  also 
demonstrate  the  vulnerability  of  the  critical 
infrastructure  for  carrying  data,  gas,  and 
electricity (14).  Thus, it is important for Finland 
to  continue  developing 
its  capabilities  to 
prevent, mitigate, react and adjust to possible 
disruptions 
cyber  and  hybrid 
disruptions)  to  critical  infrastructure  that  are 
vital for the economy. 

(including 

funding 

instruments 

competitiveness, 

EU 
provide 
considerable  resources  to  Finland.  They 
support investments and structural reforms to 
environmental 
increase 
sustainability,  skills,  quality 
jobs,  social 
fairness and security, while helping to address 
challenges  identified  in  the  Country  Specific 
instruments 
Recommendations 
include  the  Recovery  and  Resilience  Facility 
(see Box 2) and Cohesion policy funds (see Box 
3). In addition, the Common Agricultural Policy 
(CAP) provides Finland with an EU contribution 
of EUR 4.4 billion under the CAP strategic plan 

(CSRs).  Key 

(13)  Eurostat (2025) 

(14)  Hybrid CoE Working Paper 32, 2024 

6 

 
 
 
 
Integration  Fund 

for  2023-2027  (15).  A  further  EUR  381.4 
the  Asylum, 
million  are  available  under 
Migration  and 
(AMIF), 
together  with  the  Border  Management  and 
Internal 
Visa 
Security Fund (ISF). Other EU programmes also 
support 
for 
instance  through  open  calls  under  Horizon 
Europe and the Connecting Europe Facility.  

(BMVI)  and  the 

competitiveness 

in  Finland, 

Instrument 

Box 2: 

Key achievements of the Recovery and Resilience Facility (RRF) 

Finland’s  Recovery  and  Resilience  Plan  (RRP)  represents  a  total  investment  budget  of 
EUR 1.95 billion (corresponding to 0.8% of its 2023 GDP), aimed at (i) supporting the green 
and  digital  transitions,  (ii) strengthening  economic  resilience,  and  (iii) addressing  long-standing 
structural challenges identified in the European Semester. 

As  of  27  April  2026,  EUR 1.1 billion  (58%  of  the  total  allocation)  has  been  disbursed 
following  the  satisfactory  fulfilment  of  69 milestones  and  targets.  Implementation  has 
progressed  steadily,  with  a  growing  number  of  reforms  and  investments  already  fulfilled  and 
delivering tangible results on the ground. 

Finland  also  benefits  from  RRF  investments  in  other  Member  States.  Taking  these  spillover 
impacts  into  account,  the  RRF  is  estimated  to  increase  Finland’s  GDP  by  EUR 3.65 billion  from 
2020 to 2030, almost double the size of its initial allocation. 

Highlights and impact of the plan 

•  Clean  energy  infrastructure  and  technology  investments  correspond  to  a  combined 
increase in new renewable energy capacity, storage capacity and/or grid  connection capacity 
of at least 288 MW. 

•  Entry into force of the revised Climate Act, including emission-reduction targets for 

2030 and 2040 in line with Finland’s carbon-neutrality goals. 

•  Transition towards a Nordic model of employment services includes introducing more 
personalised services and job-seeking obligations for jobseekers. Together with other labour 
market measures it has led to 421 500 more people in employment or engaged in job search 
activities. 

•  Reform of continuous learning and investments in education aimed at developing the 
relevant skills of the labour force have led to 56 600 more people in education or training. 

•  A series of investments in research, development and innovation are contributing to 
Finland's  goal  of  increasing  total  spending  on  R&D  to  4%  of  GDP  by  2030.  Total  of 
2 557 enterprises (most of which are SMEs) have received support under all the Finnish RRF 
measures. 

•  The expansion of digital social and health services has made it easier to access these 
services, with the proportion of individuals aged 20 and over using e-social and e-healthcare 
services increasing from 25.8% in 2020 to 41.9% in 2024. 

(15)  An overview of Finland’s formally approved strategy to 

implement the EU’s common agricultural policy 
nationally can be found at 
https://agriculture.ec.europa.eu/cap-my-country/cap-
strategic-plans/finland_en 

7 

 
 
 
 
Box 3: 

Contribution of cohesion policy funds 

EU  cohesion  policy  funding  is  supporting  Finland’s  efforts  to  boost  competitiveness, 
environmental  sustainability,  skills  and  social  fairness.  In  the  2021-2027  programming 
period, EU cohesion policy funds (16) are providing EUR 1.9 billion (amounting to EUR 3.17 billion 
paired  with  national  co-financing)  to  Finland.  The  value  of  selected  projects  corresponded  to 
63% of the total allocation as of March 2026, with additional calls for projects in the pipeline. 

• 

Innovation, business environment and productivity. With EUR 520 million, the European 
Regional Development Fund (ERDF) aims to increase the productivity and competitiveness of 
Finnish  firms  and  improve  the  business  environment  through  the  promotion  of  research, 
development  and  innovation  capabilities,  the  adoption  of  new  technologies  and  the 
acceleration of growth of SMEs across regions. To date, the ERDF is helping over 5 500 SMEs 
to strengthen their business. 

•  Decarbonisation  and  sustainability.  EUR 225 million  from  the  ERDF  is  focused  on 
supporting  innovation  for  the  green  transition,  e.g.  by  helping  SMEs introduce  new  products 
and  by  improving  energy  and  resource  efficiency.  With  EUR 465 million,  the  Just  Transition 
Fund  supports  the  transition  away  from  peat  by  diversifying  regional  economies,  re-skilling 
and upskilling the workforce, and remedying adverse environmental impacts. 

•  Skills,  quality  jobs  and  social  fairness.  EUR 162 million  of  ESF+  funds  are  invested  in 
employment  promotion,  and  another EUR 162 million  in  re-skilling  and  upskilling  the  labour 
force.  EUR 139 million  is  allocated  to  increasing  social  inclusion,  specifically  on  preventing 
intergenerational exclusion and poverty and EUR 29 million is allocated to alleviating material 
deprivation. EUR 29 million is invested in reforming child protection services. Almost 90 000 
people had benefited from the programme by end of 2025. 

The mid-term review (17) increased cohesion policy’s contribution to emerging strategic priorities. 
Nearly  EUR 180 million  of  the  existing  EU  resources  were  reallocated  for  defence  purposes, 
particularly for military mobility along the EU’s main corridors and networks and strengthening 
industrial capacities to boost defence capabilities. 

(16)  The European Regional Development Fund, the 

European Social Fund Plus, the Cohesion Fund, and 
the Just Transition Fund. 

(17)  The mid-term review is carried out halfway through 
the 2021-2027 programming period. It is a formal 
assessment process required under Article 18 of the 
Common Provisions Regulation that aims to assess 
the implementation of programmes and, where 
necessary, propose adjustments to improve their 
performance, ensure their relevance in light of new 
and emerging needs and keep them aligned with 
other EU policies. 

8 

 
 
 
 
INNOVATION, BUSINESS ENVIRONMENT AND 
PRODUCTIVITY 

by 

2030 

improve 

In  2025  the  Commission  recommended 
that  Finland  pursue  the  R&D  target  of 
4% 
the 
and 
commercialisation  of 
innovation  by 
(i) stepping  up  the  cooperation  between 
businesses  and  academia  through  joint 
industry-university 
and 
(ii) improving  the  entrepreneurship  skills 
and  support  for  researchers.  Finland  has 
several instruments in place to help fund R&D 
efforts  of  firms  and  R&D  collaboration 
between  academia  and  industry.  However, 
progress in this direction has been limited, and 
there is no comprehensive strategy to increase 
researchers’ entrepreneurial skills. 

projects, 

Finland  is  progressing  toward  the  R&D 
expenditure target, but public funding for 
innovation  was  reduced.  Business  Finland’s 
funding  for  innovation  activities  other  than 
R&D has been cut, which may slow progress in 
improving the commercialisation of innovation. 
Moreover, the government budget for R&D has 
been slightly reduced in absolute value, in line 
with  a  downward  revision  of  GDP  forecast. 
Relative  to  GDP,  public  funding  for  business 
innovation  is  low  by  international  standards: 
R&D  tax  incentives  were  introduced  only  in 
2024 and their effects remain to be seen. On 
the  positive  side,  Business  Finland  total 
funding  has  been  increasing,  and  the  state-
owned 
company,  TESI,  has 
received  a  better  mandate  to  make  minority 
investments in startups. 

investment 

Innovation  Scoreboard  2025  at 
European 
125.3% of the EU average (18). It ranks first in 
the EU in categories related to individuals with 
above-basic overall digital skills, employed ICT 
specialists,  percentage  of  firms  using  cloud 
computing, and population involved in lifelong 
learning.  Other  strengths  include  international 
scientific 
capital 
expenditure, and public-private co-publications 
(see  Annex 4).  Finland  is  well  positioned  to 
take  advantage  of  AI  technologies,  with  a 
relatively 
AI-
complementary  workers  compared  with  other 
European countries (19). 

co-publication, 

percentage 

venture 

high 

of 

R&D  expenditure  continued 
increasing 
economic 
the  unfavourable 
despite 
situation, in line with the country-specific 
recommendation  received  in  2025.  R&D 
expenditure,  as  a  percentage  of  GDP,  has 
shown  an  upward  trend  since  2017,  reaching 
3.22%  of  GDP  in  2024,  around  1 percentage 
point  above  the  EU  average (20)(21),  though 
(see 
with  notable 
Annex 18).  Most  of  R&D  expenditure  came 
from  the  business  sector  (2.2%  of  GDP  in 
2024), followed by the higher education sector 
(0.8%).  Manufacturing  accounted  for  60%  of 
business R&D expenditure in 2024. 

regional  differences 

Finland  has  a  thriving  startup  scene 
focused  on  software  production,  and  an 
advantage  in  deep  tech.  Finland  has  more 
than  4 000  startup  companies  founded  after 
2010 of which 2 000 are early-stage startups, 

Finland maintains its position as 
innovation leader 

(18)  2025  European  Innovation  Scoreboard,  country  profile: 

Finland. 

(19)  IMF  Country  Report  No.  26.7,  selected  issues,  Finland: 

The  Finnish  economy  produces  high-
quality  research,  has  a  high  level  of 
digitalisation,  and  is  well  positioned  to 
benefit  from  AI.  Finland  ranks  fourth  in  the 

Selected Issues 

(20)  Eurostat, rd_e_gerdtot 

(21)  Preliminary data from Statistics Finland show a value of 
3.29%  of  GDP  (R&D  expenditure  (EUR million)  by  year, 
sector and information. PxWeb) 

9 

 
 
 
of 

totalling 

revenues 

for  50% 

around 
generating 
EUR 12 billion (22).  In  2023,  software  firms 
accounted 
newly-created 
startups (23). Deep-tech firms in areas such as 
energy 
advanced  materials, 
technologies and life sciences are growing (24). 
Overall,  high-growth  enterprises 
(including 
those less than five years old) accounted for a 
(25.2%)  of  firms  and 
higher  percentage 
employment  than  the  EU  average  in  2023 
(16%) (25). 

computing, 

Difficulties in spreading the 
benefits of innovation to the 
economy remain 

Scaling-up  innovative  firms  remains  a 
key  challenge in  Finland.  Access  to  finance 
is  generally  adequate,  with  a  solid  banking 
sector, a well-developed capital market and an 
active venture capital sector, compared to the 
EU average. However, domestic venture capital 
funds  are  too  small  to  support  large  later-
stage  rounds,  and 
initial  public  offering 
activities in the Helsinki stock market has been 
slow in recent years (see Annex 6), resulting in 
a  small  and  volatile  number  of  scale-up 
funding  rounds,  while  the  number  of  early-
stage funding has been relatively stable since 
2019 (26).  As  a  result,  innovative  firms  face 
scaling constraints and may relocate abroad. 

To  raise  aggregate  productivity,  more 
capital  needs  to  flow  to  the  most 
innovative  firms,  allowing  them  to  scale 

has 

investable  products 

up  and  spread  innovation.  In  Finland,  the 
osakesäästötili  (OST)  savings  account  is  a 
relatively  popular  product  for  retail  equity 
investment, but it has a limited scope in terms 
(see  Annex  6). 
of 
Increasing the investment options available to 
retail 
investors  could  support  channelling 
additional  funds  toward  innovative  firms,  as 
its 
Sweden 
with 
done 
Investeringssparkonto 
(ISK)  account,  which 
allows  households  to  easily  invest  in  a  wide 
variety 
the 
administrative  burden  involved  in  investing  in 
the Finnish equity market and making targeted 
changes  to  how  investments  are  taxed  could 
also  incentivise  more  foreign  investment (28). 
Other  growth-friendly  tax-related  measures 
could include changing how venture capital (29) 
and dividends from unlisted companies (30) are 
taxed. 

assets (27). 

Reducing 

of 

and 

Commercialisation  of  innovation  is  still 
academia-business 
problematic 
is  stalling. 
the 
In  2025 
cooperation 
Commission 
Finland 
that 
recommended 
improve  the  commercialisation  of  innovation 
by  stepping  up  the  cooperation  between 
joint 
businesses  and  academia 
industry-university projects. The percentage of 
innovation-active  enterprises 
collaborating 
with  universities  and  research  institutions  has 
been  declining  since  the  early  2000s  until 
2022 (31),  while  business  funding  of  higher 
education  R&D  has  stagnated  since  2014 (32). 

through 

(27)  Sweden’s 

introduced 

Investeringssparkonto  was 

in 
2012, in 2023 held assets for around 30% of GDP, and 
was used by around 45% of adults. There are no annual 
or lifetime limits, almost no investment restrictions, and 
the  tax  treatment  is  simple.  See  New  Financial  2025, 
Designing savings and investment accounts in the EU 

(22)  TESI,  Startup  Study  2025,  Finnish  startup  ecosystem 

(28)  Ministry  of  Finance,  2025,  Growth  strategy  for  the 

growing robustly - tesi.fi.  

(23)  Ibid. 

financial sector 

(29)  IMF Country Report no 26.6 

(24)  TESI,  Deep-tech  study  2025,  Study:  Record  amount  of 

funding for Finnish deep tech.  

(25)  Eurostat,  High-growth 

and 

enterprises 

related 
employment  by  NACE  Rev.2  activity.  Eurostat  defines 
high-growth  enterprises  as  having  at 
least  10 
employees  in  the  beginning  of  their  growth,  and  the 
number of their employees growing by more than 10% 
per year, over a three-year period. 

(30)  The  current  system  is  thought  to  distort  investment 
firms’  investment  decisions,  see  ETLA,  2024,  The 
structure of Finland’s tax system for unlisted companies 
is sound – details deserve further consideration 

(31)  European  Commission,  2025,  Support  to  Finland  on 
improving  R&D 
research 
organisations  and  the  private  sector  |  Research  and 
Innovation 

collaboration  between 

(26)  TESI,  Startup  Study  2025,  Finnish  startup  ecosystem 

(32)  Eurostat, GERD by sector of performance and source of 

growing robustly - tesi.fi. 

funds 

10 

 
 
 
SMEs  in  particular  struggle  to  cooperate  with 
universities and research organisations and to 
access relevant funding instruments (33).  

innovation  has  been  cut. 
Non-R&D 
Business  Finland’s  funding  dedicated  to  non-
R&D innovation (34) has been lowered to 3% of 
its  funding  in  2026,  down  from  10%-12%  in 
2022-2024.  In  general,  public  support  for 
private  R&D  through  direct  funding  or  tax 
incentives  is  low  in  Finland  by  international 
standards 
(see  Annex 4).  However,  both 
Business  Finland  and  the  Research  Council  of 
Finland  have 
the  amount  of 
additional  funding  targeted  at  collaboration 
between companies and research organisation 
in 2024-2025 and are expected to increase it 
even  further  in  2026 (35).  In  addition,  SMEs 
benefit  from  European  Regional  Development 
Fund and, in many regions, also from the Just 
Transition  Fund  for  their  RDI  activities  (see 
Annex 18). 

increased 

that 

Entrepreneurship  skills  are  needed  to 
turn  ideas  into  products.  In  2025  the 
Commission 
Finland 
recommended 
improve  researchers’  entrepreneurship  skills 
and  funding.  Improving  their  entrepreneurship 
skills of researchers would help them turn the 
outcome  of  a  research  project  into  a  viable 
business  and  improve  the  academia-business 
collaboration (36).  Finland  has 
introduced 
entrepreneurship  education  at  various  levels, 
including  a  pilot  programme  in  2024-2027  to 
modernise  doctoral  training,  increase  mobility 
between  academia  and  business  and  improve 
employability  across  sectors  (see  Annex 4). 
Overall,  universities  have  been  developing 
entrepreneurship  education  largely  on  their 
own  initiatives.  The  government  is  preparing 
the  vision  for  higher  education  and  research 

(33)  Ministry  of  economic  affairs  and  employment,  2025  - 
From  innovation  to  growth  :  Study  on  the  innovation 
potential of SMEs 

(34)  See  OECD,  2028,  Oslo  Manual  for  a  list  of  R&D  and 

non-R&D activities. 

(35)  Research and Innovation Council, 2026 

(36)  European  Commission,  2025,  Support  to  Finland  on 
improving  R&D 
research 
organisations  and  the  private  sector  |  Research  and 
Innovation 

collaboration  between 

2040, which is expected to tackle these issues 
and should be finalised in 2026. 

Low productivity growth remains 
as a weakness 

if 

the 

lower 

Labour 

productivity 

Labour  productivity  growth  has  been 
limited  since  2010,  but  it  would  have 
been  even 
sectoral 
composition  of  the  economy  had  not 
changed. 
growth 
oscillated  around  zero  since  2010,  following 
the  collapse  of  the  electronics  sector (37). 
However,  shifts  in  the  composition  of  the 
economy 
supported  productivity  growth, 
because  even  though  the  size  of  sectors  with 
low-productivity  growth 
(e.g.  professional 
services,  and  admin  and  support  activities) 
increased,  this  was  partially  offset  by  the 
expansion  of  high-productivity  growth  sectors 
(e.g. ICT, finance and energy) in 2004-2024. If 
the  sectoral  composition  of  the  economy  had 
remained  unchanged  compared  with  2004, 
productivity  growth  would  have  been  even 
lower. 

labour  productivity  growth 

While 
in 
industries  shows  resilience,  it  has  fallen 
behind  competitors  in  services.  Labour 
productivity  growth  in  industries  contracted 
sharply  following  2010  but  recovered  to  the 
2010 level by 2016 (see Graph 2.1). Industrial 
productivity  was  then  high  and  increased 
relative  to  peers,  until  oil  and  forestry 
industry-specific  shocks  brought  it  down  in 
2022. At the same time, labour productivity in 
the  services  sectors  has  remained  constant 
throughout  the  period  while  it  has  grown  in 
peer countries. Overall, the economy’s average 
productivity 
the 
tracks  more 
developments  of  the  services  sector,  with  the 
industrial  sector’s  percentage  of  gross  value 
added declining from 23% in 2010 to 20% in 
2024. 

closely 

(37)  European Commission, 2025 Country Report – Finland 

11 

 
 
 
Graph 2.1: Real gross value added per worker 
(2010=100) 

likely  support 
single  market  would 
expansion of Finnish trade within the EU.  

the 

the 

the  misapplication  of 

Overall,  Finland’s  business  framework 
conditions  are  favourable  for  the  single 
market (42).  However,  systemic  risks  related 
to 
in-house 
exemption  (which  allows  public  authorities  to 
award  contracts  directly to  a  controlled  entity 
without  a  competitive  tender,  provided  they 
exercise control  similar to that over their own 
departments  and  the  entity  performs most  of 
its  activities  for  them)  mean  Finland  has 
challenges  in  its  otherwise  well-performing 
public  procurement  system  (see  Annex 5). 
Moreover,  late  payments  remain  a  concern  in 
in 
Finland,  and  action  should  be  taken 
particular  on  the  issue  of  unfair  payment 
practices in business-to-business transactions. 

competitive 

Finland stands to benefit from a vibrant, 
internationally 
domestic 
defence industry that also integrates new 
dual-use  technologies  and  solutions  (see 
Annex 18).  The  geopolitical  situation  supports 
the  growth  of  the  defence  and  dual-use 
technologies sector, which is rapidly growing in 
the  Nordic  region  as  a  hub  for  growth 
companies.  Finland  stands  out  in  financing 
quantum  and  space  technologies.  It  leads  the 
Nordic  countries  in  per  capita  defence  and 
dual-use  venture  capital  investment (43).  Most 
new entrants - and the fastest-growing firms - 
in  the  Finnish  defence  industry  are  dual-use 
firms  whose  solutions  can  be  used  for  both 
civil  and  defence  purposes (44).  However, 
strategic  measures  are  required  for  them  to 
achieve 
potential.  Defence-related 
production should focus on higher value added 
rather than bulk products. New players need to 
be helped to get started quickly and they need 
Technology  development  also 
guidance. 
testing  and  suitable 
requires  appropriate 
testing facilities (45). 

their 

Source: European Commission 

Finland could benefit more from 
trade and the single market 

to 

Improving  trade  integration  within  the 
single market could help Finnish firms to 
increase  demand  for  their  products.  In 
2023-2025,  the  percentage  of  Finnish  firms 
identifying  uncertainty  and  weak  demand  as 
the  main  barriers 
investment  has 
increased (38),  reflecting  Finland’s  recent  weak 
economic  performance.  Moreover,  Finland’s 
export of medium and high-tech products was 
66% of the EU average in 2024 (39). Increasing 
the  EU  single 
trade 
market (40)  (see  Annex 5),  could  help  reduce 
demand 
high-tech 
exports  and  develop  new  EU-based  supply 
chains.  At  the  same  time,  a  high  percentage 
(79%)  of  exporting 
facing 
different  regulatory  requirements,  standards 
or  consumer  protection  rules  across  EU 
(EU  average:  62%) (41). 
Member  States 
Therefore,  harmonising  regulations  within  the 

integration  within 

uncertainty, 

increase 

report 

firms 

(38)  EIB, EIB Investment Survey 2025 

(39)  2025  European  Innovation  Scoreboard,  country  profile: 

Finland. 

(40)  2025 Country Report – Finland 

(41)  EIB, EIB Investment Survey 2025 

(42)  See Single Market and Competitiveness Scoreboard 

(43)  Danske bank, Nordic defence tech report 2025 

(44)  Finnish  Industry  Investment,  Market  study  on  Finnish 

military product and dual use companies 

(45)  Finnish  Government,  Final  Report  of  the  Room  for 

Growth Project 

12 

80901001101201012141618202224Industry FIIndustry SEIndustry EUServices FIServices SEServices EU 
  
 
 
DECARBONISATION, ENERGY AFFORDABILITY AND 
SUSTAINABILITY 

In  2025 

Finland  adopted  an  ambitious  target  for 
carbon-neutrality  by  2035,  but 
the 
achievement  of  this  target  will  require 
additional  policy  action. 
the 
Commission  recommended  that  Finland  boost 
public 
in 
decarbonising industry and transport (including 
through  electrification)  to  reduce  reliance  on 
also 
fossil 
recommended  that  Finland  invest  more  in 
developing green technologies and the circular 
economy. 

investments 

Commission 

private 

fuels. 

and 

The 

through 

Finland  has  taken  several  measures  to 
reduce  the  reliance  on  fossil  fuels, 
particularly  by  increasing  investment  in 
renewable  energy  production.  Finland  has 
made some progress in decarbonising industry, 
including 
the 
European Regional Development Fund and the 
Just Transition Fund and by  launching several 
initiatives  to  attract  private  investment  for 
decarbonising 
industry. 
However,  it  is  still  too  early  to  paint  a 
complete picture of their impact on developing 
green technologies, including hydrogen. 

investments 

electrifying 

from 

and 

The 

still 

room 

there 

regarding 

for 
is 
However, 
improvement  in  the  other  policy  areas 
identified  in  the  2025  country-specific 
recommendation  and  in  the  land  use 
sector. 
the 
challenges 
decarbonisation of the transport sector remain 
sizeable  and progress has been limited. Some 
measures  have  been  adopted  to  support  the 
impact  on 
transport 
transport  emissions 
in 
emissions  data.  More  efforts  are  needed  to 
boost the circular economy to address the high 
waste levels and low recycling rates.  

is  not  yet  visible 

industry,  but 

their 

Challenges to achieving Finland's 
carbon neutrality target are 
mounting 

is 

by 

Despite  progress  on  the  recommendation 
to  reduce  reliance  on  fossil  fuels, 
Finland's  ambitious  target  for  carbon-
neutrality 
becoming 
2035 
increasingly  hard  to  achieve.  Finland 
enshrined  the  2035  target  and  other  long-
term  climate  targets  into  law  through  the 
revised  Climate  Act.  However,  net  emissions 
reductions are not progressing in line with the 
path  required  for  the  achievement  of  the 
target.  Recent  policy  announcements  include 
measures  in  transport  and  clean  energy,  and 
some  forest  actions  such  as  fertilisation, 
afforestation  and  growing  denser  forests. 
These measures are not projected to close the 
gap for Finland to meet its land use, land-use 
change  and  forestry  (LULUCF)  obligations  for 
2030  and  for  the  greater  carbon  sink  needed 
to  support 
the  2035  carbon-
neutrality target.  

reaching 

Agriculture  is  still  a  major  source  of 
greenhouse  gas  emissions,  in  particular 
from  drained  peatlands.  Only  11%  of 
agricultural land is on peat soil, but farming on 
peat soil accounts for over half of agricultural 
emissions, 
overall 
weakened situation of the LULUCF net carbon 
sink. 

contributing 

the 

to 

Finland's  forests  have  traditionally  been 
a  major  contributor  to  the  carbon  sink, 
but  since  2021  the  LULUCF  sector  has 
turned 
into  a  persistent  source  of 
emissions.  High  soil  emissions,  especially 
from  drained  peatlands,  combined  with  the 
reduced  capacity  of  Finland's  forests  to 
remove  carbon  dioxide  from  the  atmosphere 

13 

 
 
Graph 3.1: Emissions from the LULUFC sector 
1990-2024 

(1) Absolute figures in 1 000 KtCO2eq 
Source: European Environmental Agency 

for 

behind 

The  transport  sector  increasingly  risks 
lagging 
decarbonisation 
its 
targets  and  progress  on  the  country-
the 
recommendation 
specific 
decarbonisation  of  transport  is  limited. 
Transport  emissions  reductions  have  halted 
over  recent  years  and  transport  emissions 
have  increased  slightly  from  2023  to  2024. 
The slow pace of fleet renewal means Finland 
is making only limited progress on electrifying 
transport.  While  the  recharging  infrastructure 
network  is  adequately  advancing  for  light 
investments  are  still 
vehicles,  significant 
recharging 
required 
to 
infrastructure 
vehicles. 
Continued  fossil  fuel  dependence  creates 
further  risks  towards  Finland’s  2030  targets 
for  the  transport  sector.  Long  distances 
between  population  centres,  cold  weather 
conditions  and  sparsely  populated  areas, 
notably in the north (see Annex 18), may prove 
the  electrification  of 
limiting  factors 
to 
in  the 
in  particular 
passenger  transport, 
absence of additional policy incentives. 

for  heavy  duty 

develop 

the 

net 

amounted 

nearly  outweighs  the  gains  made  in  energy 
and  industry  over  the  last  two  decades.  In 
2024,  the  highest  contribution  to  greenhouse 
gas  emissions  in  Finland  came  from  the 
LULUCF  sector  (25%),  followed  by  transport 
(18%) and industry (17%). Between 2005 and 
2024,  the  sector  which  contributed  most  to 
the  16%  increase  in  net  greenhouse  gas 
emissions  was  the  LULUCF  sector,  for  which 
net  removals  declined  by  37.8 million  tonnes 
in  CO2  equivalent  (MtCO2-eq.)  and  which 
became  a  source  of  emissions.  In  2024 
to 
emissions 
LULUCF 
9.77 MtCO₂-eq (see Graph 3.1). This represents 
a  gap  of  around  15 MtCO₂-eq  between 
Finland’s  LULUCF  target  for  2030,  making  it 
the  second-largest  projected  shortfall  among 
EU  Member  States.  This  gap  reflects  a 
combination  of  increased  harvesting  levels, 
reinforce  in  recent  years  by  the  loss  of  wood 
imports  from  Russia,  high  emissions  from 
organic  soils,  declining  forest  growth  and 
methodological 
(see  Annex 10). 
revisions 
Harvesting  volumes  in  forecast  scenarios  of 
the Natural Resources Institute Finland exceed 
80 million cubic metres (46) over the upcoming 
decade,  compared  to  an  average  harvesting 
volume  of  72  million  cubic  metres  over  the 
previous  decade.  The  Finnish  Climate  Panel 
estimates sustainable logging levels (i.e. those 
allowing to achieve the 2035 carbon-neutrality 
target)  at  between  61  and  64  million  cubic 
metres,  depending  on  developments  in  other 
areas of the land use sector. 

(46)  Based on the assumption that the forest industry 

operates at high utilisation rates. 

14 

-40-30-20-1001020909500051015201000 tonnes 
 
   
Finland benefits from continued 
decarbonisation of energy and 
industry 

Decentralised,  diversified,  and  efficient 
energy  production  will  help  Finland 
maintain and develop its energy security. 
Examples  of  recent  improvement  in  energy 
security include the recently completed EU co-
financed  Aurora  Line  electricity  interconnector 
(see  Annex 9).  Moreover,  domestic  electricity 
production  in  Finland  covered  approximately 
96%  of  its  total  electricity  demand  in  2024. 
Critical  energy  infrastructure  warrants  further 
attention,  in  particular  in  the  eastern  border 
regions. 

The decarbonisation of the energy system 
is  progressing  well,  highlighting  the 
progress made on the recommendation to 
reduce  reliance  on  fossil  fuels.  In  2025, 
95% of Finland's electricity supply was fossil-
free,  with  wind  power  as  the  fastest-growing 
source  of  electricity  generation.  Sizeable 
investments  have  been  made  in  solar  and 
wind  power.  As  a  result,  Finland  now  benefits 
from  the  lowest  electricity  prices  in  the  EU 
(EUR 0.0804 per kWh in the first half of 2025 
compared 
the  EU  average  price  of 
EUR 0.1902  per  kWh),  which  also  gives 
industry  a  competitive  advantage.  A  new 
environmental  permitting  system  entered  into 
force  on  1 January 2026.  This  reform,  which 
centralises  the  system  for  environmental 
permits 
is 
expected to speed up processing times. Finland 
is  planning  to  invest  EUR 5.2 billion  in  the 
transmission  grid  between  2026  and  2035 
based  on  forecasts  for  electricity  production 
and consumption to ensure sufficient capacity. 

in  a  new  national  authority, 

to 

Progress  continues  to  be  made  on  the 
recommendation  for  decarbonisation  of 
industry.  The  abundant  supply  of  cheap 
energy provides an opportunity for industry to 
accelerate 
thereby 
providing  a  strong  foundation  for  Finland's 
future  carbon-neutral  economic  base.  This  is 
also recognised in Finland's ‘Room for Growth’ 
project  -  a  government  initiative  focused  on 

decarbonisation, 

its 

revitalising  stagnant  economic  growth  (see 
Annex 5). 

Continued  investment  will  be  required  to 
achieve  emissions  reductions  targets. 
Additional 
investment  will  be  needed  to 
continue  industrial  decarbonisation  and  to 
benefit  fully  from  the  availability  of  clean 
energy.  Furthermore,  Finland  is  targeting  a 
market  share  of  10%  of  the  EU’s  green 
hydrogen  production  and  processing  capacity 
by  2030 (47).  Continued  investment  in  the 
availability  and  development  of  green  skills 
will  be  crucial  for  the  further  development  of 
these sectors. 

Improved circularity of the 
economy could boost 
sustainability and competitiveness 

Progress  on  the  circular  economy  is 
becoming  more  urgent  for  Finland,  which 
is  at  risk  of  not  meeting  most  of  its 
recycling targets. In this regard, in 2025 the 
Commission recommended that Finland invest 
in  developing  green  technologies,  including 
circular  economy  solutions.  The  country’s  new 
Circular  Economy  Act  is  still being  drafted.  Its 
stated  aim  is  to  boost  Finland’s  transition 
towards  a  circular  economy.  Current  data 
shows that, while Finland is likely to have met 
its  2025  recycling  target  for  all  packaging 
waste,  it  falls  short  of  its  target  for  the 
recycling  of  municipal  waste.  Finland  has  one 
of  the  lowest  municipal  recycling  rates  in  the 
EU  and  the  recycling  of  construction  and 
demolition  waste  as  well  as  that  of  plastic 
packaging  waste  is  also  well  below  the  EU 
average (see Annex 8). Finland still has a high 
rate  of  waste  incineration,  while  its  circular 
rate (48) 
material 
resource 
productivity (49)  are  among  the  lowest  in  the 
EU.  

and 

use 

(47)  Government Resolution TEM/2023/14 

(48)  Eurostat Circular material use rate 

(49)  Eurostat Material flows and resource 

productivity (t_env_mrp) 

15 

 
 
avoided  damages  compared 
responses (50). 

to 

reactive 

rates. 
rich 

Despite 
biodiversity, 

An investment gap exists for biodiversity 
and  ecosystems,  also  related  to  the  high 
Finland’s 
harvesting 
exceptionally 
habitat 
degradation 
increasingly  widespread. 
Eutrophication of coastal waters as a result of 
agricultural activity is a major issue in Finland. 
This is especially the case for the Archipelago 
Sea,  mainly  due  to  high  levels  of  agricultural 
runoff.  

is 

The  continued  availability  of  critical  raw 
materials  and  continued  investment  in 
the development of green technologies is 
crucial for the competitiveness of Finnish 
industry.  An  improved  circular  materials  use 
rate,  in  particular  in  industry,  could  reduce 
Finland's  dependence  on 
imports  of  key 
materials  and  other  inputs  to  the  industrial 
production process. Moreover, Finland is a key 
producer  of  critical  raw  materials,  including 
cobalt,  nickel,  copper  and  lithium.  Mineral 
extraction  therefore  plays  a  part  in  both 
Finland’s  and  the  EU’s  domestic  sourcing  of 
these materials. Six projects from Finland were 
selected  as  strategic  projects  in  2025  in  the 
context  of  the  Critical  Raw  Materials  Act  (see 
Annex 5 and Annex 18). Ensuring a competitive 
framework  for  extracting  industries  without 
putting  undue  pressure  on  the  environment 
and  ensuring  community  involvement  and 
engagement will be key. The recent increase in 
the  mining  tax  should  be  viewed  in  this 
context. 

Adapting to the changing climate 
requires tailored responses 

is 

the 

This 

Finland  is  warming  faster  than  other 
particularly 
Member  States. 
pronounced  in  the  northern  parts  of  the 
country,  which  are  in  the  Arctic  circle  and 
warming up much faster than other areas. This 
risk  of  climate  disasters. 
increases 
Moreover, it entails risks to the Sámi people’s 
traditional  ways  of 
life.  A  well-balanced 
national  governance  structure  for  climate 
adaptation, consisting of the Climate Act and a 
National Adaptation Plan, is in place. However, 
recent  estimates  suggest 
in 
climate  adaptation  of  EUR 2 billion  will  be 
needed  every  year  until  2050  to  address 
increased 
ecosystems, 
infrastructure and health, etc.. This constitutes 
0.64% of GDP, making Finland one of the five 
EU  countries  with  the  biggest  investment 
needs 
for  climate  adaptation.  Proactive 
investment  could  save  EUR 5–8  billion  in 

vulnerability 

investments 

in 

(50)  European  Commission:  Directorate-General  for  Climate 
Action, Monteleone, L., Roberti, G., Fossati, F., Davies, W. 
et al., Assessment of EU and Member States adaptation 
investment  needs  –  Study  on  the  macro-economic 
2026, 
transition, 
climate 
impacts 
https://data.europa.eu/doi/10.2834/2895769  

the 

of 

16 

 
 
SKILLS, QUALITY JOBS AND SOCIAL FAIRNESS 

Finland,  also 
light  of 
implemented or planned (51). 

in 

the  measures 

Social security reforms advanced, 
but high unemployment increases 
risks for the most vulnerable 

Finland’s  reforms  of  the  social  security 
system  have  increased  labour  market 
participation. Finland has implemented a set 
of  reforms  of  the  social  security  system  to 
address  the  country-specific  recommendation 
to increase the efficiency of the social benefits 
system, improve incentives to work, contribute 
to  the 
long-term  sustainability  of  public 
finances  and  address  the  needs  of  the 
vulnerable  groups.  Since  2023,  over  40 
legislative  reforms  to  the  social  security 
system  have  taken  effect.  They  include  the 
social assistance reform and the launch of the 
general  social  security  benefit  in  2026.  The 
reforms  also  support  the  extension  of  the 
adjustment  period  in  Finland’s  medium-term 
fiscal-structural plan. 

With  the  social  sector  contributing  to 
fiscal consolidation efforts and with high 
unemployment, further emphasis could be 
given  to  social  protection  of  the  most 
vulnerable. This aspect is important because 
of the 2025 country-specific recommendation 
on addressing the needs of vulnerable groups. 
The  social  security  reforms  may  increase  the 
risk of poverty, especially in the current period 
of  high  unemployment.  National  authorities 
have  highlighted  a 
negative 
cumulative  impact  on  the  most  vulnerable, 

potential 

(51)  European  Commission,  SWD(2026)122 

final.  The 
analysis  relies  on  all  the  available  quantitative  and 
response 
qualitative  evidence  and 
undertaken and planned. 

the  policy 

In 2025, Finland received country-specific 
recommendations  on  the  social  security 
system,  active  labour  market  policies, 
addressing  skills  shortages,  and  on 
access  to  and  cost-effectiveness  of  the 
social and healthcare services. Since then, 
several  reforms  in  the  social  security  system 
have  entered  into  force,  the  higher-education 
offer  has  been  increased,  and  the  reform  of 
social  and  healthcare  services  completed  its 
third  year  of  implementation.  In  2025,  public 
employment  services,  including  active  labour 
market policies, were transferred from central 
government to municipal level. 

Finland's  challenges  include  an  ageing 
society  affecting  public  finances  and 
workforce  skills,  rising  poverty  rates,  a 
high  percentage  of  early  school  leavers, 
and  structural  and  youth  unemployment. 
An  ageing  population  challenges  the  service 
delivery systems for the social and healthcare 
sector, foreseen to suffer from skills shortages 
labour  gaps.  Although 
and  medium-term 
poverty  rates  remain  below  the  EU  average, 
they have increased. Addressing the acute and 
upcoming  challenges  of 
the  social  and 
healthcare  sector,  structural  and  youth 
unemployment,  skills  gaps,  and  productivity 
for  strengthening 
weaknesses 
Finland’s  economic  and  social 
resilience. 
Targeted  measures  in  education,  upskilling, 
and  labour  market  activation  will  be  vital  to 
meet 
sustain 
demand 
future 
competitiveness. 

is  crucial 

and 

These  findings  are  consistent  with  the 
second-stage  analysis  in  line  with  the 
EU’s  social  convergence  framework.  The 
analysis  points  to  challenges  related  to  the 
high  unemployment  rate,  including  long-term 
unemployment,  and  the  self-reported  unmet 
needs  for  medical  care.  It  does  not  point  to 
overall  social  convergence  challenges  for 

17 

 
 
 
of 

child 

protection 

including  low-income  families  with  children. 
European  Social  Fund  Plus  (ESF+)  support  for 
social  inclusion,  including  support  for  the 
reform 
services, 
complements  the  service  offer  at  national 
level.  Finland  is  preparing  measures  to  better 
support  people  with  a  reduced  ability  to  work 
and  to  better  target  child  benefits  to  low-
income families, but these are still at an early 
stage  (see  Annex 12).  Further  measures  may 
be  warranted  following  the  findings  of  the 
next  statutory  review  of  income  protection  in 
early 2027. 

Ensuring skilled labour force is 
crucial for Finland’s 
competitiveness 

In  addition  to  cyclical  factors,  Finland 
struggles  with  structural  and  youth 
unemployment,  exacerbated  by  skills 
gaps.  In  2025,  Finland  received  a  country-
specific  recommendation  to  strengthen  active 
labour  market  policies  for  all  and  address 
skills shortages by reskilling and upskilling the 
workforce  and  widening  the  higher  education 
offer,  in  particular  for  the  skills  most  in 
demand 
labour  market.  Several 
measures  have  been  implemented  to  address 
this 
using 
European  funding  from  the  Recovery  and 
Resilience  Facility  and  the  European  Social 
Fund+,  but  further  actions  are  needed  to 
ensure growth and boost productivity. 

recommendation, 

including 

the 

in 

rate 

long-term  unemployment 

The  high  unemployment 
rate  and 
declining employment reflect the difficult 
situation  in  Finland’s labour market.    The 
unemployment  rate  reached  9.7%  in  2025. 
rose 
The 
substantially  from  1.5%  in  2020  to  2.4%  in 
2025,  above  the  EU  average  of  1.9%.  The 
youth unemployment rate was 21.8% in 2025, 
over  6 percentage  points  higher  than  the  EU 
average.  The  employment  rate  fell  further  to 
76.3%,  moving  away  from  the  2030  national 
target of 80%. (See Annex 11). The percentage 
of  involuntary  temporary  employment  was 
9.8% in 2025, above the EU average of 6.4%. 
involuntary  part-time 
The  percentage  of 

employment  remained  above  the  EU  average 
(5.1% vs 3.3%) in 2025. The recent relaxation 
of  the  rules  for  using  and  terminating  fixed-
term  contracts (52)(53)  raised  concerns  among 
trade unions (see Annex 11). 

Significant  disparities  exist  within  the 
labour  market.  The  percentage  of  young 
people neither in employment nor in education 
and  training  increased  from  9.2%  in  2023  to 
11.0%  in  2025.  Non-EU  nationals  residing  in 
Finland  continue  to  face  significantly  higher 
native 
unemployment 
population.  In  addition,  people  with  lower 
secondary  education  or  less  accounted  for 
most  of  the  increase  in  unemployment  in  the 
last  three  years,  their  unemployment  rate 
reaching 22.9% in 2025.  

rates 

than 

the 

Graph 4.1: Unemployment rate by educational 
attainment (quarterly) 

(1) Unemployment rates ages 20-64 (% of labour force), 
seasonally adjusted 
Source: Eurostat, LFS [Unemployment by sex, age and 
educational attainment - quarterly data]. 

The  Finnish  government  has  introduced 
several  measures  to  activate  the  labour 
force.  Finland  overhauled  its  active  labour 
the 
by 
market 

transferring 

policies 

(52)  Under  the  new  legislation,  employers  can  offer  fixed-
term  contracts  of  up  to  one  year  without  providing  a 
specific  reason,  but  under  the  old 
law,  a  valid 
justification was required. 

(53)  Government’s  labour  market  reforms  -  Ministry  of 

Economic Affairs and Employment. 

18 

05101520252009-Q32010-Q32011-Q32012-Q32013-Q32014-Q32015-Q32016-Q32017-Q32018-Q32019-Q32020-Q32021-Q32022-Q32023-Q32024-Q32025-Q3FIHigh skilledMedium skilledLow skilled 
  
 
employment  subsidy  supports  the  temporary 
hiring of young people in 2026-2027.  

labour. 

for  skilled 

Tertiary  educational  attainment  has 
stagnated below the EU average, while an 
ageing  population  and 
technological 
changes  are  expected  to  increase  the 
demand 
Tertiary 
educational  attainment  was  38.2%  in  2025, 
falling  short  of  Finland’s  target  of  reaching 
50%  by  2030  (See  Annex 13)  and  is  marked 
by  differences  across  regions.  In  response, 
Finland  has  taken  measures  to  widen  the 
higher education offer, such as a new funding 
model to encourage first-time admissions and 
a pilot project on micro-credentials, introduced 
in  2025.  Despite  high  enrolment  rates  in 
science, 
and 
mathematics,  the  highest  in  the  EU,  labour 
shortages continue to emerge in several high-
skilled  professions.  Several  measures  have 
been  taken  to  strengthen  school  students’ 
basic 
in 
performance  and  early  school  leaving  rates 
remain  a  concern.  Reversing  these  trends, 
which show a socio-economic component, calls 
for further policy attention. 

engineering, 

technology, 

declining 

results 

skills, 

but 

to 

for 

incentivise 

transitions 

Strengthening  the  supply  of  skills  would 
benefit productivity, competitiveness and 
economic growth. Alongside expanding study 
tertiary  education,  vocational 
places 
education and training (VET) plays a significant 
role  in  Finland’s  supply  of  skills.  Finland  is 
preparing  a  significant  reform  of  its  VET 
to 
system 
employment  or  further  study,  and  to  promote 
local  cooperation  between  VET  providers, 
administration  and  the  labour  market.  This 
aims  to  address  the  employment  rate  of 
recent  VET  graduates,  which  is  below  the  EU 
average.  Finland’s  participation 
in  adult 
learning  is  among  the  highest  in  the  EU, 
though  reaching  the  national  target  for  2030 
(60%) will require engaging under-represented 
groups.  The  RRF-funded  reform  of  continuous 
learning  supports  the  development  of  human 
capital, through digital innovations to forecast 
the  demand  and  supply  of  skills.  The  ESF+ 
contributes  to  upskilling  and  reskilling  and 
helping vulnerable groups develop digital skills. 

responsibility  for  employment  services  from 
government  to  municipal-level  employment 
areas.  The  reform  also 
included  a  new 
financial 
incentive  model  to  shorten  the 
unemployment  spells.  Under  the  new  model, 
municipalities must cover more of the costs of 
unemployment  benefits  and  employment 
services,  with  their  expenditures  increasing  by 
EUR 311 million  (approx.  66%)  in  2024-2025. 
This  combined  with  the  high  unemployment 
has  made  it  challenging  for  municipalities  to 
manage  their  responsibilities  or  develop  new 
service structures and activation measures (54). 
The  rate  of  jobseekers  taking  part  in  ALMPs 
declined  from  29.2%  in  2022  to  18.9%  in 
2025,  corresponding  to  a  decline  of  25 000 
participants (55).  Providing  effective  and  well-
coordinated  services  to  people  with  limited 
ability  to  work,  few  formal  qualifications  or 
little  work 
remains 
challenging. 

experience 

also 

and 

Under 
the  Recovery  and  Resilience 
Facility),  Finland  introduced  the  Nordic 
model  of  employment  services  in  2022 
with  a  stricter  job-search  obligation  and 
more  personalised  services  for 
the 
unemployed.  Finland  also  streamlined  the 
work 
immigration 
education-based 
process.  There  remains  scope  to  improve  the 
effectiveness  of  employment  services.  This 
applies  particularly  for  groups  that  need 
personalised support, like young people not in 
education,  employment  or  training  and  the 
long-term  unemployed  (see  Annex 11).  Social 
in 
economy  entities  have  a  pivotal  role 
integrating young people to the labour market. 

to 

efforts 

Strategic 
strengthen 
employment services and promote labour 
demand  as  well  as  supply  are  crucial  in 
the  exceptional  labour  market  situation. 
Finland receives EUR 6.8 million from the ESF+ 
to  implement  the  Youth  Guarantee  and  from 
the  RRF  to  support  multidisciplinary  services 
introduced  youth 
for  youth.  A 

recently 

(54)  Valtakunnallinen 

katsaus 

työvoimapalveluiden 

järjestämisestä 2025 

(55)  Statistics  Finland  (2026)  Aktivointiaste.  The  fall  in  the 
rate  may  be  overestimated  due  to 

participation 
technical problems and legal reforms in data provision. 

19 

 
 
Social and healthcare reform trims 
costs but faces ageing pressures, 
and regional disparities persist  

The  social  and  healthcare  reform  has 
reduced  the  growth  in  costs,  and  the 
primary  healthcare 
accessibility  of 
services  has  improved,  despite  the  still 
high  self-reported  unmet  medical  needs. 
In  2025,  Finland  received  a  CSR  aimed  at 
improving 
the  cost-effectiveness  of  and 
access  to  social  and  healthcare  services, 
including long-term care. The reform of social 
the 
and  healthcare  services 
responsibility  for  social  welfare,  healthcare 
and rescue services to 22 entities, including 21 
newly established ‘wellbeing services counties’ 
in  2023.  Research  suggests  that  since  then, 
the rise in costs has levelled off and equitable 
access  to  primary  care  has  improved  (see 
Annex 12). 

transferred 

New  service  models  and  digital  services, 
including  AI,  have  facilitated  progress 
with  this  reform.  The  RRF  has  provided 
funding  amounting  to  EUR 356.8 million  for 
these initiatives. Under pressure to balance the 
finances  of  the  wellbeing  services  counties, 
streamlining  the  service  delivery  network  and 
services  has  started,  service  fees  have 
increased  and  savings  have  also  been  sought 
from  the  personnel  costs.  Trust  in  the  service 
delivery  system  has  weakened,  with  self-
reported unmet medical needs remaining high 
at  7.8%  in  2025,  though  this  has  improved 
from 8.5% in 2024. 

services 

counties (56). 
has 

Financial 
service 
sustainability  and 
delivery  disparities  persist  between 
A 
wellbeing 
been 
committee 
parliamentary 
established  to  explore  the  future  reform 
trajectory,  including  options  for  improving  the 
funding  model.  There  is  also  potential  for 
reform,  better 
stronger  steering  of 
integration of the IT systems, increased use of 
AI,  better  collaboration  between  different 
stakeholders,  strengthening  the  availability 

the 

and use of data to ensure effectiveness of the 
service  delivery,  improving  the  continuity  of 
care and refocusing of the service offer. 

The  ageing  population  is  a  challenge  for 
the  resilience  and  fiscal  sustainability of 
Finland’s  elderly  care  system,  which  has 
traditionally been strong. Home care is the 
foundation  of  elderly  services,  with  about 
86 000  clients  aged  75  and  over  in  2024 
(13.1%  of  this  age  group (57)).  While  the 
number  of  older  people  is  increasing,  the 
wellbeing  services  counties  have  tightened 
service  access 
to 
criteria, 
decreasing  service  coverage  and  reducing 
home visits. Communal  housing could present 
a  more  efficient  solution  than  home  care  or 
full-time  residential  care  for  people  requiring 
frequent services, but it remains underutilised. 
Meanwhile,  some  counties  have  struggled  to 
provide full-time residential services within the 
legally required three-month period.  

contributing 

Service  coverage  and  accessibility  vary 
across  regions  and  there  are  no  uniform 
national  criteria  for  care  referrals  for 
elderly  care.  Efforts  are  underway 
to 
establish  national  guidelines  during  2026.  As 
societies age, there is a need for a significant 
change  in  the  way  environments  and  services 
are  designed  to  meet  the  needs  of  older 
people.  At  the  same time,  robust  early  home-
based and communal services could help older 
people  keep  their  functional  capacities  and 
reduce reliance on more intensive care options. 

the 

sector. 

Rising  demand  for  social  and  healthcare 
services  and  the  retirement  wave  in  the 
early 2030s will increase labour needs in 
economic 
the 
Although 
environment  has  currently  eased 
labour 
shortages  also  in  social  and  healthcare,  a 
national  challenge  persists  with  insufficient 
numbers  of  specialist  doctors,  particularly 
psychiatrists. Moreover, the wellbeing services 
counties  are  experiencing additional  skills  and 
labour shortages in specific service categories 
(see Annexes 12 and 15). 

(56)  Hyvinvointialueuudistuksen väliarviointi 

(57)  Sotekuva 

20 

 
 
 
KEY FINDINGS 

In  areas  covered  by  existing  country-
specific  recommendations,  Finland  would 
benefit from: 

• 

improving  the  efficiency  of  public 
spending  by  carrying  out  regular  and 
detailed spending reviews and factoring 
their  results 
into  government  finance 
policymaking to give the government more 
flexibility  in  its  spending  choices  while 
considering 
the  most 
the  needs  of 
vulnerable groups; 

•  boosting  innovation  by  improving  its 
commercialisation 
greater 
cooperation between the private and public 
sector, aligning national, regional, and local 
innovation strategies, and by strengthening 
researchers’ entrepreneurial skills; 

through 

•  continuing  efforts  to  decarbonise 
industry  and  transport  by  incentivising 
investment, with a focus on electrification; 

•  speeding up the transition to a circular 
economy by taking action to reduce waste 
and promote recycling and reuse; 

•  continue  improving  the  efficiency  of 
the  social  and  healthcare  services 
while pursuing efforts to enhance access to 
services including for elderly care 

•  fostering  upward  social  convergence 
by  addressing  the  challenges  of  youth  and 
structural  unemployment  and  supporting 
integration  by  targeting 
labour  market 
active 
and 
policies 
labour  market 
encouraging reskilling and upskilling; 

•  promoting  human  capital  development 
in  the  context  of  ongoing 
labour 
market  transformation  by  (i) increasing 
tertiary 
and 
(ii) improving  the  quality  of  vocational 

participation, 

education 

education and training and better aligning it 
to the labour market. 

In other areas, Finland would benefit from: 

•  strengthening 

economic 

security, 
including  in  critical  infrastructure,  cyber 
security, logistics and transport chains, and 
critical raw materials;  

•  taking  targeted  strategic  actions  to 
strengthen the eastern border regions, 
in  particular  for  economic  diversification 
and renewal, and long-term resilience; 

•  unlocking  financing  for 

innovative 
start-ups  and  firms  to  scale  up, 
including  through  expanding 
investment 
options  available to  households  to  channel 
toward  Finnish  growth 
retail  savings 
in 
companies, 
financial  market  regulation,  and  targeted 
tax  reforms  to  make  the  tax  system  more 
growth-friendly and investment-friendly; 

through  other  changes 

•  promoting 
security  and  defence-
related 
by 
developing  dual-use  technologies  for  both 
military and commercial use; 

innovation, 

including 

•  reducing  emissions  from  the  land  use, 
land-use change and forestry sector to 
reverse  the  negative  trend  in  the  carbon 
sink  by 
to  strengthen 
sustainable 
forest  management  while 
enhancing forest growth and resilience and 
reduce  soil  emissions,  in  particular  from 
drained peatlands. 

taking  action 

21 

 
 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

A1.  CSR implementation 

Fiscal 

A2.  Fiscal developments and debt sustainability 

A3.  Taxation 

Productivity 

A4. 

Innovation to business 

A5.  Single market and industry 

A6.  Savings, investment and access to finance 

A7.  Effective institutional framework 

Sustainability 

A8. 

Industry decarbonisation, circularity and climate mitigation 

A9.  Affordable energy transition 

A10.  Climate adaptation, preparedness and environment 

Fairness 

A11.  Labour market 

A12.  Social policies 

A13.  Education and skills 

A14.  Social scoreboard 

A15.  Health and health systems 

A16.  Housing 

Horizontal 

A17.  Sustainable development goals 

A18.  Competitive regions 

A19.  Transport 

LIST OF TABLES 

A1.1. 
A2.1. 
A2.2. 
A2.3. 
A2.4. 
A3.1. 

CSR implementation and Commission assessment 
Projected change in ageing-related expenditure in 2025-2040 and 2025-2070 
Supplementary pension schemes - Scope for expansion 
Reforms and investments underpinning the extension of the adjustment period for Finland 
Fiscal governance database indicators and public accounting maturity 
Taxation Indicators 

25 

27 

32 

32 

36 

39 

39 

45 

55 

62 

68 

68 

74 

80 

88 

88 

92 

97 

101 

102 

106 

111 

111 

113 

119 

27 
34 
34 
35 
35 
37 

 
 
 
Key innovation indicators 
Single Market and Industry 
Savings and Investment Union summary diagnostic 
Financial sector indicators 
Finland. Selected indicators on better regulation practices for primary legislation 
Digital Decade key performance indicators: availability of digital public services 
Key clean industry and climate mitigation indicators: Finland 

A4.1. 
A5.1. 
A6.1. 
A6.2. 
A7.1. 
A7.2. 
A8.1. 
A10.1.  Key Adaptation Indicators 
A14.1.  Social Scoreboard for Finland 
A15.1.  Key health indicators 
A18.1.  Main development trends, challenges and the concentration of resources. 
A18.2.  Key regional indicators (at NUTS 2 level) for Finland 
A19.1.  ERTMS deployment in Finland. 

LIST OF GRAPHS 

Composition of non-financial companies' funding 
Capital markets and financial intermediaries 
Composition of households' financial assets 
Trust in justice, regional / local authorities and in government 

Contributions to the change in the general government balance (% of GDP) 
Public investment evolution and composition (% of GDP) 
Primary spending evolution and compositional change 
Tax revenue by economic function in 2024, FI (outer ring) and EU-27 (inner ring) 
Tax wedge for single and second earners as a % of total labour costs, 2025 
Total public support for BERD as % of GDP 

A2.1. 
A2.2. 
A2.3. 
A3.1. 
A3.2. 
A4.1. 
A5.1.  Manufacturing industry production: total and selected sector, index (2021=100), 2015-2024 
A6.1. 
A6.2. 
A6.3. 
A7.1. 
A7.2.  Most time-consuming aspects of service delivery 
A8.1. 
A9.1. 
A9.2. 
A9.3. 
A11.1.  Key labour market indicators 
A12.1.  At-risk-of-poverty or social exclusion rate by age group 
A13.1.  Unemployment rate by educational attainment (quarterly) 
A15.1.  Life expectancy at birth, years 
A15.2.  Treatable mortality 
A16.1.  House prices, rents and price-to-income evolution in FI and EU27 since 2005 
A16.2.  House supply indicators in FI since 2005 
A16.3.  Borrowing costs and housing loans, in FI and EA since 2018 
A16.4.  Housing affordability selected indicators 
A17.1.  Progress towards the SDGs in Finland 
A18.1.  Labour productivity growth (2013-2023) and labour productivity (2023), Finland (NUTS 2 regions) 

Greenhouse gas emissions in the effort sharing sectors, 2005, 2023, and 2024 
Electricity and gas prices for household and non-household consumers, first half of 2025 
Low-carbon electricity generation vs electricity wholesale prices, 2025 
Finland’s installed renewable capacity vs electricity generation mix 

LIST OF MAPS 

A18.1.  GDP per head compared with the EU average 
A18.2.  GDP per head (PPS, EU=100), NUTS3, 2024 
A19.1.  TEN-T Cross-Border & National Priority Sections in Finland. 

26 

44 
54 
55 
61 
63 
64 
73 
87 
101 
103 
114 
117 
120 

32 
33 
33 
36 
37 
41 
51 
56 
57 
57 
62 
64 
69 
74 
75 
76 
88 
92 
97 
102 
102 
106 
107 
107 
110 
111 
115 

113 
113 
120 

 
 
 
 
 
 
ANNEX 1: CSR IMPLEMENTATION  

Table A1.1:  CSR implementation and Commission assessment 

(Continued on the next page) 

27 

Finland faces challenges in a wide range of policy areas, as identified in the country-specific recommendations (CSRs). Finland was recommended, among other things, to pursue the reform of the social security system and improve incentives to work, improve the commercialisation of innovation, reduce reliance on fossil fuels and strengthen active labour market policies for all.  The Commission has assessed the degree of implementation of the 2025 CSRs considering the policy action taken by Finland to date*. To do so, the Commission has taken into account the information provided by Finland in its Annual Progress Report as well as other information sources. This annex provides summary information on the policy actions taken or planned by Finland for each CSR. More detailed information on these actions is included in the relevant chapters and other annexes of the report. *CSR 2 is not assessed in CeSaR. RRP implementation is monitored through the assessment of RRP payment requests and analysis of the bi-annual reporting on the achievement of the milestones and targets, to be reflected in the country reports. Progress with the cohesion policy is monitored in the context of the Cohesion Policy of the European Union. Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  1.1 Reinforce overall defence and security spending and readiness while ensuring debt sustainability in line with the European Council conclusions of 6 March 2025. Total general government defence expenditure in 2026 is projected at 2.6% of GDP, corresponding to an increase of 1.1 ppt. compared to 2024.  Total general government defence expenditure in 2027 is projected at 2.4% of GDP, corresponding to an increase of 0.9 ppt. compared to 2024.  Substantial progress 1.2 Adhere to the maximum growth rates of net expenditure recommended by the Council on 21 January 2025, while making use of the allowance under the national escape clause for higher defence expenditure. Cumulated deviation in 2025 vis-à-vis the Council Recommendation of 21 January 2025, amounted to -1.5% of GDP.  On 20 January 2026, the Council has adopted a new Recommendation with the view to bringing an end to the situation of an excessive deficit in Finland, covering the period 2026-2028. The cumulated deviation in 2026, vis-à-vis the Council Recommendation of 20 January 2026, is projected to 0.5% of GDP but it is fully explained by the NEC flexibility (1.4 pps. of GDP). The EDP is held in abeyance. Full implementation 1.3 Implement the set of reforms and investments underpinning the extended adjustment period as recommended by the Council on 21 January 2025. See table A.2.4 in Annex 2 of the Country Report  Substantial progress 1.4 Improve the efficiency of public spending by taking into account the results of the spending reviews.  In 2024, the establishment of targeted yearly reviews was announced, and a broader 4-year one ahead of the elections. The first annual reviews will be published this year. The preparation of the next spending review (every 4 years) and tax review underway. The first annual reviews should be published this year. One of them will cover state agencies. Some Progress 1.5 Pursue the reform of the social security system to increase the efficiency of the social benefits system,  General social security benefit reform approved by Parliament, to enter into force on 1 May 2026.  Comprehensive reform of social assistance approved by Parliament, entered into force on 1 February 2026. The Parliamentary Social Security Committee will publish its final report end 2026 for consideration of future governments.  Other measures announced, e.g. on a combined unemployment insurance for persons working both as employee and self-employed, and a model to combine working income and disability pension. Substantial Progress     
 
 
 
     
 
Table (continued) 

(Continued on the next page) 

28 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  1.6 improve incentives to work and support the long-term sustainability of public finances,  The government implemented several measures during the term tightening social benefits and increasing incentives to work. Fiscal savings were generated as a result.  Some Progress     1.7 while addressing the needs of the vulnerable groups - 3 memoranda by the Ministry of Social Affairs and Health to monitor impacts were published in September 2025. However, impacts are estimated negative on vulnerable groups. - The Social Security Committee is preparing proposals to enhance social security for young people and families with children.  - A rapporteur's report on the development of the child benefit will be published in spring 2026. - A proposal of a new flexible model for combining working income and disability pension in spring 2026. - Youth employment voucher (allocation EUR 30 million) to prevent long-term youth unemployment is expected to support hiring of about 3 300 to 4 400 young people for six months in 2026-2027. No Progress  3.1 Pursue the R&D target of 4% by 2030 Statistics Finland estimates for 2025 point to a level of R&D as % of GDP of 3.29%, up from 3.22% in 2024.  Public R&D expenditure was reduced somewhat in the 2026 budget, due to a revision in GDP forecast.  Some Progress 3.2 and improve the commercialisation of innovation by Business Finland budget for innovation activities other than R&D has been cut. More funding will be allocated to the “Research to business” funding services. Limited Progress 3.3 i) stepping up the cooperation between businesses and academia through joint industry/ university projects,  Business Finland has programmes to support business-academia cooperation.  Research Council of Finland confirmed for 2026 the “Finnish flagship programme 5”, aimed at supporting high-level scientific research, with funding targeted at competence clusters based on cooperation between organisations.  The pilot doctoral programme started in 2024 hiring 1,000 phd students aims at strengthening the link between academia and businesses. Funding for collaboration between companies and research organisations provided by Business Finland and the Research Council of Finland is expected to be increased in 2026. Limited Progress 3.4 and ii) improving the entrepreneurship skills and support for researchers The pilot doctoral programme is running since 2024, see above.  The Ministry of Education and Culture is working on a revision set for 2026 of the Entrepreneurship Education Guidelines published in 2017, which address the topic Limited Progress   
 
 
     
 
Table (continued) 

(Continued on the next page) 

29 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  from early childhood education through to tertiary education. 4.1 Reduce reliance on fossil fuels The new 400-kilovolt Aurora Line electricity transmission connection between Finland and Northern Sweden was commissioned on November 13, 2025. EUR 5.2 billion of investment planned in the electrical grid until 2035.   Some Progress  4.2 by boosting public and private investment in the decarbonisation of industry The environmental permitting reform has come into effect on 1.1.2026. This reform combines all different permits into a single procedure managed by a single national authority.  The Ministry of Economic Affairs and Employment and Business Finland have launched a €400 million clean-transition investment support programme for 2025, aimed at industrial decarbonisation and energy-efficiency projects.  EUR 50 million in investment aid for large new energy technology projects was carried out in 2025.   Some Progress 4.3 and transport, including through electrification,  New scrapping premium introduced. Tax benefits for EV purchase. Small measures supporting rail transport and passenger rail.  Limited Progress 4.4 as well as in the development of green technologies, including circular economy solutions. FI has adopted a new circular economy strategy, which sets a target to double resource productivity by 2035. New investments announced for Business Finland in green technologies, including solutions for zero-carbon industry, electrification and digitalisation, and will support circular economy business models across sectors such as bio and chemical industries, mining and metals.  The government has decided to examine the expansion of the tax base of the waste tax as of 1.1.2027 to also include recoverable hazardous waste. Limited Progress 5.1 Strengthen active labour market policies for all  Reform of employment services since January 2025: transferring the responsibility of employment services from government to municipalities/employment areas with a new financial incentive model. However, municipalities/employment areas have challenges in managing the responsibilities due to high unemployment and limited funding. Youth employment voucher (allocation EUR 50 million) to prevent long-term youth unemployment is expected to support hiring of young people for six months in 2026-2027.  A pilot programme (EUR 15 million) to reach and support NEET youth  and therefore to decrease youth Some Progress  
 
 
     
 
Table (continued) 

(Continued on the next page) 

30 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  Municipalities are using fewer activation measures for the unemployed, such as training and education, likely affecting more the disadvantaged groups.  Nordic employment services model (RRF) since 2022 increasing individual support to jobseekers and introducing a job search obligation. Some criticism have been raised regarding the efficiency of the new model in addressing the needs of the less active and the increased numbers of applications due to new obligations.    unemployment has been announced for 2026-2027.   In addition, the government decided on measures for long-term unemployed to support their re-entering to the labour market. These include a competence voucher for reskilling and a subsidy for the third sector to support long-term unemployed. 5.2 and address skills shortages by reskilling and upskilling the workforce and widening the higher-education offer, in particular for the skills most in demand in the labour market. Abolishment of the adult education allowance in 2024 (transition period until the end of 2025) as it was considered as not effective in terms of employment and incentivising to start studies.  SECLE (The Service Centre for Continuous Learning and Employment) measures/pilot projects aiming to combine up/re-skilling with work, particularly in healthcare and education sectors.  Continuous learning RRF measures VET reform to incentivise transitions to employment or further study.  The government has decided to reform the study benefits to improve the incentives to study and the situations of students with families.   Some Progress  5.3 Ensure that the reform of social and healthcare services: i) improves the delivery and cost-effectiveness of and access to social and healthcare services, including long-term care, and ii) addresses inefficiencies. FI has succeeded in reigning in the increase of the costs, a key objective of the social and healthcare services reform. This has been done e.g. by streamlining of the service delivery network, relaxing the legislative requirements for staffing and access to care, and introduction of new service models, including rapid expansion of digital services.  National statistics suggest that access to non-urgent primary care has somewhat improved. However, differences between regions exist in terms of progress with reducing costs and availability of services, including for long-term care. Launching personal doctor –concept is aiming to improve access, continuity and cost-effectiveness of care.  Better data for steering the reform is emerging, but comparability issues between regions persist. Parliamentary * Tweaking the current costing model of the wellbeing services counties (WSCs) to enter into force in the beginning of 2027.  * Recommendations for the 3 WSCs subject to the evaluation procedure will be made in summer 2026.  * Strengthening guidance of the WSCs.  * Improving data to inform steering of the WSCs.  Some Progress   
 
 
     
 
Table (continued) 

Source: Finland's reporting and Commission assessment 

31 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  committee has been established for preparing the next steps of the social and health care reform, including options for improving the WSC funding model.    
 
   
 
FISCAL 
ANNEX 2: FISCAL DEVELOPMENTS AND DEBT SUSTAINABILITY 

in 

in 

strategy 

developments 

This annex discusses selected topics in public 
finance  and 
fiscal-
structural  country-specific  recommendations 
(CSRs)  addressed  to  Finland  in  July  2025. 
These  CSRs  include  a  call  to  strengthen  defence 
spending  and  readiness  while  implementing  a 
the  Council 
fiscal 
Recommendation  of  6 March 2025.  Finland  also 
received  a  recommendation 
to  make  public 
spending more efficient by taking into account the 
results of spending reviews, pursue reform of the 
social security system to increase the efficiency of 
the  social  benefits  system,  improve  incentives  to 
work  and  make  public  finances  more  sustainable 
in the long term, all while addressing the needs of 
the vulnerable groups. 

line  with 

[ 

On 21 January 2025, the Council  of the European 
Union  adopted  the  Recommendation  endorsing 
Finland’s  medium-term  fiscal-structural  plan  (58). 
The  plan  includes  an  extended  fiscal  adjustment 
over seven years, underpinned by a set of reforms 
and investments. On 8 July 2025, the Council also 
activated  the  national  escape  clause  for  Finland 
facilitate  an 
in  public  spending  on 
defence  (59).  On  21 January 2026,  the  Council 
adopted  a  Recommendation  under  Article  126(7) 
TFEU  to  correct  the  excessive  deficit  in  Finland 
(60)(61). 

increase 

Developments in the government 
balance, debt and public 
expenditure(62) 

Finland’s  government  deficit  was  equivalent 
to 3.4% of GDP and the government debt-to-
GDP  ratio  amounted  to  88.5%  at  the  end  of 
2025.  Based  on  the  Commission  Spring  2026 
Forecast, Finland’s government deficit is projected 
to  increase  to  4.5%  of GDP  in  2026  and  4.6%  of 
GDP  in  2027.  The  decline  in  the  deficit  in  2025 
was largely driven by an increase in revenues and 
slow growth in expenditure, which nonetheless was 
the highest in the EU as a share of GDP, at 57.5%. 
Expenditure  is  expected  to  increase  over  the 
forecast  period,  reaching  57.9%  of  GDP  in  2027, 
remaining the highest in the EU.  

Graph A2.1: Contributions to the change in the 
general government balance (% of GDP) 

Source: European Commission Autumn Forecast 

Public investment is expected to increase due 
to  the  purchase  of  defence  equipment.  The 
level of public investment remained broadly stable 
at  around  4%  of  GDP  in  2019-2025.  Defence 
investment is expected to increase significantly in 
2026-2027  as  a  result  of  the  purchase  of  F35s 
fighter jets, which will raise total public investment 
above  5%  of  GDP  (see  Graph  A2.2).  Non-defence 
nationally  financed  public  investment  is  expected 

(62)  Figures underpinning fiscal surveillance (net expenditure 
growth) are provided in the Fiscal Statistical Tables 
(SWD(2026)200) providing background data relevant for the 
assessment of the budgetary policies of the Member States. 

(58)  OJ C, C/2025/656, ELI: 

http://data.europa.eu/eli/C/2025/656/oj. 

(59)  OJ C, C/2025/3966, ELI: 

http://data.europa.eu/eli/C/2025/3966/oj. 

(60)  Council Recommendation with a view to bringing an end to 
the situation of an excessive deficit in Finland, adopted on 
20 January 2026. 

(61)  Compliance by Finland with the maximum growth rates of 

net expenditure recommended by the Council is assessed in 
COM(2026)200. 

32 

-4-3-2-10123452021202220232024202520262027RevenueExpenditureChange in budget balance% of GDP 
 
 
 
     
 
 
 
to remain broadly stable at around 4% of GDP in 
2025-2027.  

of GDP below the EU average (0.8% of GDP vs an 
EU average of 0.9% of GDP) (see Annex 3).  

Graph A2.2: Public investment evolution and 
composition (% of GDP) 

Graph A2.3: Primary spending evolution and 
compositional change 

Source: European Commission Autumn Forecast 

The  type  of  expenditure  that  has  a  greater 
impact  on  GDP  had  remained  broadly  stable 
over  three  decades  in  Finland,  but  has 
slightly  increased  since  2019  (see  Graph 
A2.3a).  This  may  be  related  to  the  impact  of  the 
Recovery  and  Resilience  Facility  (RRF),  which 
possibly  facilitated  a  more  quality-based  fiscal 
strategy.  Zooming 
in  on  the  composition  of 
spending, social protection accounts for the largest 
share  of  total  expenditure  (46%),  followed  by 
health, general public services and education, each 
above 10% of total spending. Since 2019, interest 
spending  has  experienced  the  most  significant 
relative increase among all COFOG categories (see 
Graph A2.3b). The share of spending on education, 
culture,  defence,  housing  and  transport  has  risen 
more  modestly  since  2019,  with  the  rise  in 
recent  security 
defence  spending 
developments.  By  contrast,  the  share  of  spending 
on education and health expenditure has declined. 
This  trend  deserves  attention,  as  these  spending 
categories  are  generally  considered  growth-
friendly.  

reflecting 

with 

total 

Finland has relatively high tax revenues as a 
tax 
share  of  GDP. In  2025, Finland’s 
revenues  as  a  percentage  of  GDP  (including 
compulsory  social  contributions)  amounted  to 
42.7% compared 
EU 
are 
average of 39.9%. Total 
projected  to  remain  constant  as  a  percentage  of 
GDP  in  2026  and  to  decline  to  42.4%  of  GDP  in 
2027 according to the Spring 2026 Forecast. While 
the 
relatively 
diversified, some  tax  types  that  are  considered 
least  detrimental  to  growth,  such  as  recurrent 
property taxes, yield a tax revenue as a percentage 

the 
revenues 

tax  mix 

Finland 

tax 

in 

is 

Source: Eurostat 
Note: Based on economic literature, the categories considered 
to have a greater growth impact include education, R&D, 
health, transport and communication (See Barbiero and 
Cournede (2013), Gemmel et al. (2016), Lupu et al. (2018), 
Cepparulo and Mourre (2020) and OECD (2025)).  

The costs of ageing 

Total  ageing-related  spending  in  Finland  is 
projected to be stable in the coming decades 
but  to  rise  by  around  2.5 pps  by  2070  (see 
Table A2.1). The increase in the long term stems 
from  a  projected  rise  in  long-term  care,  pension 
and  healthcare  spending.  Ageing-related  spending 
would  reach  29%  of  GDP  in  2070,  one  of  the 
highest levels in the EU.  

Public pension spending as a share of GDP is 
projected  to  decline  by  around  0.5 pps 
between  now  and  2040  but  to  increase  by 
about  1 pp.  in  the  long  term.  By  2070,  public 
pension  outlays  would  represent  around  14%  of 
GDP, compared with an EU average of about 12%. 
In Finland, the pension system is sizeable, both in 
terms  of  assets  held  and  participation.  The 
statutory  pension  system  consists  mainly  of 

33 

-0,50,51,52,53,54,55,5201920202021202220232024202520262027Other nationally-financedRRF grants and other EU fundsDefence5101520254045505560200720082009201020112012201320142015201620172018201920202021202220232024a) Evolution (% of GDP)Primary expenditureSpending with higher impact on GDP (rhs)-1.60-1.20-0.80-0.400.000.400.801.20GeneralservicesHealthEducationSocialprotectionOther economicEnvironmentPublicorderCommunicationR&DCultureHousingDefenceTransportInterestspendingb) Compositional change 2024-2019 (% of total spending) 
     
  
Table A2.1:  Projected change in ageing-related expenditure in 2025-2040 and 2025-2070 

Source: 2024 Ageing Report (EC/EPC). 

Table A2.2:  Supplementary pension schemes - Scope for expansion 

Note(s): (1) Supplementary pension schemes in Finland play a marginal role. According to financial accounts (Statistics Finland), 
employment pension schemes outside the statutory system (sector S129) account for around 1% of assets of the entire pension 
system (sector S129 “Pension funds” plus sector S13141 “Employment pension schemes”). Data on participation broken down by 
statutory-supplementary schemes are not readily available. (2) The value for the replacement rate shown in the table refers to 
statutory pensions. 
Source: European Commission. 

financed 

pensions 

paid  by 

through  workers’ 

private 
earnings-related 
social 
providers 
contributions  and  providers’  own 
investment 
income. A minimum level of pension is paid by the 
State  using  tax  revenues  if  the  earnings-related 
pension falls below a certain threshold. At the end 
of  2024,  private  pension  assets  amounted  to 
around  65%  of  GDP  and  participation  covered 
around  93%  of  the  working-age  population  (63). 
This 
coincides  with  declining  medium-term 
pressures on public pension spending; at the same 
time,  the  replacement  rate  is  projected  to  decline 
by  6 pps  between  2025  and  2040  (Tables  A2.1 
and A2.2). (64) 

Supplementary  pension  schemes  can  make 
the  pension  system  more  resilient  by 
diversifying  retirement  income  sources.  The 
Finnish  system  is  focused  on  statutory  pensions, 

(63)  Source: OECD Pension Market in Focus 2025. The figures 
includes all private pension including supplementary 
pensions. The latter have a marginal size, as described 
below. 

(64)  The (gross) replacement rate refers, depending on data 

availability, to both public and private pensions. It is based 
on projections from the 2024 Ageing Report.  

34 

with  occupational  and  individual  pensions  playing 
a  marginal  role  (65).  Expanding  these  types  of 
pensions could further diversify retirement income 
sources  without  weighing  on  public  finances, 
especially  in  view  of  declining  projections  for  the 
statutory replacement rates, as mentioned above.  

Public healthcare expenditure is projected to 
be  6.2%  of  GDP  in  2025  (below  the  EU 
average of 6.6%) and is expected to increase 
by  0.3  pps  between  now  and  2040  and  by  a 
further 0.3 pps between 2040 and 2070.  

Public  expenditure  on  long-term  care  is 
projected to be 2.2% of GDP in 2025 (above 
the  EU  average  of  1.7%)  and  is  expected  to 
increase by 0.9 pps of GDP between now and 
2040  and  by  a  further  0.8  pps  of  GDP 
between 2040 and 2070. This increase in long-
to  fiscal 
term  care  expenditure  contributes 
sustainability  risks.  The  policy  measures  that  the 
Finnish  authorities  have  implemented  to  improve 
efficiency and the further scope for improvements 

(65)  Supplementary Pensions - Finnish Centre for Pensions. 

FI26,7-0,60,30,9-0,60,026,7FIEU24,30,50,30,4-0,30,925,2EUFI26,70,90,61,7-0,92,329,0FIEU24,30,20,60,8-0,31,325,6EUageing-related expenditure change in 2025-2040 (pps GDP) due to:ageing-related expenditure pensionshealthcarelong-term careeducationtotalageing-related expenditure change in 2025-2070 (pps GDP) due to:ageing-related expenditure pensionshealthcarelong-term careeducationtotalAssets in 2024 (% GDP)Participation in 2024 (% working-age population)FIn.a.-6,0n.a.FIEU32,4-2,855,9EUGross replacement rate at retirement: (pps change 2025-2040)  
 
 
 
 
       
 
 
      
 
in  cooperation  with 

of  climate  change  and  climate  policies.  This  work 
line 
will  be  carried  out 
ministries, the  academic  sector  and  the  statistical 
authorities. The working group will review available 
methodologies  for  assessing  the  macroeconomic 
and public finance impacts of climate change and 
climate  objectives  and  will  design  a  plan  to 
implement  such  assessments 
in  the  Finnish 
context. 

are  described  in  detail  in  the  ‘Skills,  Quality  Jobs 
And Social Fairness’ section. 

National fiscal framework  

Finland  established  a  general  government  system 
of  comprehensive  expenditure  and  structural 
reviews  conducted  every  four  years  ahead  of 
general  elections,  complemented  by  expenditure 
category  level  reviews  conducted  at  line  ministry 
level. Terms of reference are set by the Ministerial 
Committee  on  Economic  Policy  on  the  basis  of  a 
proposal  by  the  Ministry  of  Finance.  The  nature 
and  public  availability  of  the  deliverables  is 
uncertain. 

the  new 

In December 2025, the parliament adopted a 
fiscal 
legislation  establishing 
framework.  The  framework  includes  a  numerical 
fiscal  rule  and  a  debt  reduction  benchmark  that 
come on top of the EU fiscal rules. The framework 
includes  a  long-term  debt  target  of  40%  of  GDP, 
with  two  medium-term  targets  (a  target  for  a 
four-year  electoral  cycle  and  a  target  for  eight-
year  super-electoral  cycles)  covering  the  central 
and  local  government.  A  0.75  pps  of  GDP  debt 
reduction  per  year  towards  the  debt  anchor value 
would  enter  into  force  as  of  2033.  The  Economic 
Policy  Council  is  the  independent  fiscal  institution 
which  will  monitor  compliance  with  the  EU  fiscal 
rules and other national fiscal targets. A correction 
mechanism,  triggered  in  case  of  deviations  from 
EU  rules  and  from  the  debt  reduction benchmark, 
is also part of the framework. 

Since 
the  start  of  2026,  EU-related 
independent  fiscal  institution  (IFI)  functions 
are  assigned  to  the  Finnish  Economic  Policy 
Council,  a  five-member  institution  consisting  of 
professors  set  up  in  2014  and  with  a  secretariat 
of five persons. Until the end of 2025, IFI functions 
were  covered  by  the  Fiscal  Policy  Monitoring 
Department  of  the  National  Audit  Office  of 
Finland,  which  had  a  relatively  narrow  mandate 
focusing  on  monitoring  compliance  with  fiscal 
rules.  It  kept  a  fairly  low  media  profile  and 
government  reactions  to  IFI  recommendations 
were not well publicised.  

The  Ministry  of Finance  also  established  an  inter-
ministerial  working  group  in  January  2026  to 
develop assessments of the macro –fiscal impacts 

35 

 
 
 
Table A2.3:  Reforms and investments underpinning the extension of the adjustment period for Finland 

Note: The progress of each backward-looking key step (i.e., those scheduled for completion by 30 April 2026) is classified as 
either ‘completed’ or factual information is provided. The status of forward-looking key steps in 2026 not yet completed remains 
blank and those due after December 2026 do not appear in the table, as these will be assessed by the Commission in future 
Country Reports. 
*These key steps correspond to milestones/targets 3, 4, 6, 7, 16, 17, 22, 23, 24, 77, 78, 79, 80, 100, 101, 133, 134 and 135 of 
Finland’s RRP, which have been assessed as fulfilled as part of a payment request under the RRF.   
** These key steps correspond milestones/targets 18, 18bis and139 of Finland’s RRP, whose assessment is still pending in the 
context of a payment request under the RRF and the table does not prejudge its assessment.is still pending as part of a payment 
request under the RRF. The information in the table does not prejudge that assessment. 
Source: Annual Progress Report of Finland and Commission’s assessment. 

36 

MeasuresKey stepsRecommended implementation dateCOM assessment 2026Entry into force of the Act on Public Employment and Business ServicesQ2 2022Completed *Increase in the annual number of job search interviewsQ4 2023Completed *Digital functionalities integratedQ4 2023Completed *Removal of additional days of unemployment allowanceEntry into forceQ2 2023Completed *Entry into force of the initial legal framework Q3 2021Completed *Entry into force of the additional legal frameworkQ1 2023Completed *Operationalisation of regional welfare areas Q2 2023Completed *Publication of the first call for applications Q4 2021Completed *Award of all grantsQ4 2023Completed *Completion of at least 4 supported projects Q2 2026Part of RRF measure, on track based on currently available informationFirst national call for applicationsQ4 2021Completed *Implementing Agreement Q4 2025Completed *Ministry has completed the investment Q2 2026Completed **Legal agreements signed Q2 2026Completed **Transfer of 127 MEUR to Business FinlandsQ2 2026Completed **First call for applications Q4 2021Completed *Award of all grants Q4 2023Completed *Completion of 10 supported projectsQ2 2026Completed *Publication of a call for applications Q2 2022Completed *Award of 5 grants Q4 2023Completed *90% of projects completedQ4 2025Part of RRF measure whose deadline was postponed to Q2 2026, on track with new deadline based on currently available information.Publication of the first call for applications Q4 2021Completed *Award of all grants Q4 2024Completed *Stakeholder consultations Q2 2024CompletedSetting up of plans Q4 2025CompletedEntry into force of relevant legislative amendments Q4 2025CompletedCorrection of the deficits Q4 2026In certain counties it is not possible to correct the deficit by the deadline without jeopardising service provision. Government proposed an extension of the deadline for counties with credible plans.Impact assessment Q3 2025CompletedStakeholders consultationQ3 2025CompletedLegislation voted Q4 2025CompletedImpact assessment Q3 2025CompletedStakeholders consultationQ3 2025CompletedLegislation voted Q4 2025CompletedIncrease of the share of population using social welfare and health care e-services Q4 2025Completed **Completion of at least 4 projectsQ2 2026Part of RRF measure, on track based on currently available informationComprehensive reform of social security and the general benefitmodel Comprehensive reform of social assistanceInvestments in new energy technologiesLow-carbon hydrogen and carbon capture and utilisationRe-use and recycling of key materials and industrial side streamRDI funding package promoting the green transition – Leading companiesEnergy infrastructure investmentsAdjustments to the functions and procedures of the establishedwellbeing services counties Introduction of the Nordic model of employment servicesPreparation of the social welfare and health care reform in support of implementing the care guaranteeIntroducing digital innovation in social and healthcare  
 
 
   
 
Table A2.4:  Fiscal governance database indicators and public accounting maturity 

(1) "The Country Fiscal Rule Strength Index (C-FRSI) shows the strength of national fiscal rules aggregated at the country level 
based on: i) the legal base; ii) how binding the rule is; iii) monitoring bodies; iv) correction mechanisms; and v) resilience to shocks. 
The Medium-Term Budgetary Framework Index (MTBFI) shows the strength of the national MTBF based on: i) coverage of the 
targets/ceilings included in the national medium-term fiscal plans; ii) connectedness between these targets/ceilings and the 
annual budgets; iii) involvement of the national parliament in the preparation of the plans; iv) involvement of independent fiscal 
institutions in their preparation; and v) their level of detail. A higher score is associated with higher rule and MTBF strength. 
The score for public accounting reflects the degree of maturity in relation to the International Public Sector Accounting Standards 
(IPSAS). Countries with an accounting maturity of 70% or more in relation to IPSAS are deemed to apply accrual accounting. For 
more information, see the report on public accounting in the EU (COM(2025)746 and accompanying Staff Working Document 
SWD(2025)396)." 
Source: Fiscal Governance Database, European Commission 

37 

2024FinlandEU AverageCountry Fiscal Rule Strength Index (C-FRSI)13.8014.81Medium-Term Budgetary Framework Index (MTBFI)0.830.722025 Public accounting maturity of general government77%65% 
 
 
 
   
 
ANNEX 3: TAXATION 

This  annex  provides  an 
indicator-based 
overview  of  Finland’s  tax  system.  It  includes 
information  on  the  tax  mix,  on  competitiveness 
and fairness aspects of the tax system, and on tax 
collection  and  compliance.  Finland  did  not  receive 
a  tax-related  country-specific  recommendation  in 
2025.  The  set  of  reforms  and 
investments 
underpinning  the  extended  adjustment  period  for 
fiscal-structural  plan 
Finland’s  medium-term 
(MTFSP) neither contain tax elements. 

Finland needs to trim expenditures due to the 
consolidation  needs  that  the  country  faces 
(see  Annex 2).  Ideally,  it  would  also  find  new 
revenue  sources  to  offset  its  relatively  high  tax 
burden. 

The tax burden in Finland in 2024 was 42.2% 
of  GDP,  compared  to  the  EU  average  of 
39.4%.  Finland  had  the  sixth  highest  tax  burden 
among  the  EU  Member  States  in  2024,  slightly 
decreasing  from  42.8%  of  GDP  in  2023  (see 
Table 3.1). Labour taxes are the primary source of 
Finland's  tax  revenues,  accounting  for  51%  of 
total  tax  revenues,  broadly  in  line  with  the  EU 
average  of  51.5%  (see  Graph 3.1).  Consumption 
taxes  contribute  31.2%  to  Finland's  tax  revenues 
(EU  average  of  26.8%),  while  capital  taxes  make 
up  17.8%  (EU  average  of  21.6%).  Despite  the 
prevalence  of  labour  taxes,  Finland  maintains 
some  degree  of  tax  revenue  diversification  with 
substantial  revenue  intake  from  other  sources, 
especially 
This 
diversification  creates  a  broad  tax  base,  implying 
stability for tax collection.  

excise 

taxes. 

VAT 

and 

Graph A3.1: Tax revenue by economic function in 
2024, FI (outer ring) and EU-27 (inner ring) 

Source: Taxation Trends Data, DG TAXUD 

the  Finnish  tax  mix.  In  late  2024,  Finland 
increased  the  standard  VAT  rate  from  24%  to 
25.5%.  In  2025,  the  reduced  rate  was  increased 
from 10% to 14% (in early 2026 the reduced rate 
was  then  lowered  to  13.5%).  The  excise  rate  on 
alcohol  was  increased  by  9%  and  the  overall 
excise  duty  on  tobacco  by  27%  as  of  1 January 
2026. Finland has also announced the introduction 
of excise duties on soft drinks from April 2026 (66). 
The  shift  of  the  tax  burden  towards  consumption 
taxes is in line with a recent recommendation from 
the  IMF  in  Article IV  consultations,  suggesting 
increasing use of indirect taxes (67).  

Environmental  tax  revenues  in  Finland  have 
fallen  in  recent  years,  from  2.8%  of  GDP  in 
2019 to 2.2% in 2024 (EU average of 2.2%). 
Finland  still  has  the  fifth  highest  net  effective 
carbon  rate  in  the  EU  (EUR 94.37  per  tonne  of 
carbon  in  2023  vs  EU  average  of  EUR 75.87). 
Finland  stepwise  reduces  the  CO2  price  from 
EUR 62 to EUR 51 per tonne by end 2027.   

Finland  has  adopted  several  measures  that 
increase  environmentally-related  tax 
will 
revenues,  countering  the  aforementioned 
reductions. There will  be higher electricity  excise 
for  mining  (moving  from  the  reduced  to  the 
general  bracket),  a  substantial  rise  in  the  tax  on 
mined  minerals  (from  0.6%  to  2.5%  for  metallic 
ores and from EUR 0.20 to EUR 0.60 per tonne for 
other minerals), and a higher electricity excise for 
data  centres  from  July  2026.  The  latter  results 
from  changes  to  the  electricity  tax  subsidy  for 
data  centres.  The  tax  refund  for  energy-intensive 
companies will also be abolished.  

Revenues  from  property  taxes  have  been 
relatively  stable  and  will  likely  increase  in 
the  medium  term,  with  planned  property 
valuation reforms to be phased in over eight 
years.  Related  increases  in  property  tax  liabilities 
are  limited  to  20%  per  year  and  to  a  maximum 
threefold  increase  overall.  Total  revenues  from 
property  taxes  have  been  relatively  stable  over 
time  in  Finland  amounting  to  1.5%  in  2024 
compared  to  1.6%  of  GDP  in  2019.  The  EU 
average is somewhat higher but decreasing (from 
2.2% of GDP in 2019 to 1.8% in 2024). Revenues 
from  recurrent  immovable  property  taxes  remain 
stable  at  the  comparatively  low  level  of  0.8%  of 

Recent  and  ongoing  tax  reforms  further 
strengthen  the  role  of  consumption  taxes  in 

(66)  Changes in Taxation 2026, Finnish Tax Administration. 
(67)  IMF Article IV consultation, Finland. 

38 

51.526.821.651.031.217.8Taxes on labourTaxes on consumptionTaxes on capital 
 
      
 
 
 
Table A3.1:  Taxation Indicators 

(1) Forward-looking effective tax rate (KPMG). 
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average. 
(**) Forecast value for 2024. EU-27 refers to the median value. For more data on tax revenues as well as the methodology 
applied, see the Data on Taxation Trends webpage 
Source: European Commission, OECD, ISORA. 

GDP.  While  the  EU  average  was  1.2%  of  GDP  in 
2019, it declined to 0.9% of GDP in 2024.  

Graph A3.2: Tax wedge for single and second 
earners as a % of total labour costs, 2025 

Note: The second earner tax wedge shows a household’s tax 
wedge resulting from the wage that a second earner taking 
up a job at 67% of the average wage receives. It does not 
show the total tax wedge of the household. The household is 
assumed to have a first earner at 100% of the average wage 
and no children. For the methodology of the tax wedge for 
second earners, see OECD (2024), Taxing Wages 2024. 
Source: European Commission 

Finland  is  planning  to  reform  corporate 
taxation  to  support  competitiveness  and 
growth.  The  Finnish  government  announced  a 
reduction  in  the  corporate  income  tax  (CIT)  rate 
from the current 20% to 18%, which is planned to 

39 

take  effect  from  1 January  2027.  It  has  also 
extended  the  tax  credit  for  large  investments 
aimed  at  a  climate-neutral  economy  that  came 
into effect in 2025. This tax credit is only available 
for eligible investments of at least EUR 50 million 
and may only be deducted from corporate income 
tax  from  2028  onwards.  The  2026  statutory  CIT 
rate  stands  at  20%.  The  effective  CIT  rate  was 
19.4% in 2024. International comparisons confirm 
the  relative  competitiveness  of  the  Finnish  tax 
system:  Finland  ranked  second  in  the  EU  (and 
eighth globally) in the Tax Complexity Index and 5th 
in  the  EU  (and  fourteenth  globally)  in  the  IMD 
2025 World Competitiveness Ranking (68).  

Finland’s labour tax burden is close to the EU 
average for low-wage earners but higher for 
median- and high-income earners. In 2025, the 
labour tax wedge for single earners at 50% of the 
average  wage  was  slightly  below  the  EU-27 
average  (28.4%  in  Finland  compared  with  31.6% 
in the EU-27). It was also above the EU average at 
67% of the average wage (33.3% compared to an 
EU average of 35.8%), in line with the EU average 
for  earners  at  the  average  wage  (40.1%  versus 
40.0%) and above the EU average at 167% of the 
average  wage  (48.2%  versus  44.1%)  (see  Graph 

(68)  Tax Complexity Index 2024, IMD Competitiveness Ranking 

2025 

28.433.340.148.233.32025303540455050100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - FISingle earner - EU averageSecond earner -  FISecond earner -  EU average2019202220232024202520192022202320242025Tax structureTotal taxes (including compulsory actual social contributions) (% of GDP)42.543.442.842.239.939.739.039.4Taxes on labour (% of GDP)21.221.522.021.520.620.119.920.3of which, social security contributions (SSC, % of GDP)11.912.012.411.813.012.712.713.0Taxes on consumption (% of GDP)14.113.713.113.211.210.910.510.6of which, value added taxes (VAT, % of GDP)9.29.49.29.47.17.47.17.1Taxes on capital (% of GDP)7.28.27.67.58.18.78.58.5Personal income taxes (PIT, % of GDP)12.313.012.713.19.69.49.39.6Corporate income taxes (CIT, % of GDP)2.53.02.92.62.63.23.23.1Total property taxes (% of GDP)1.61.61.51.52.22.11.91.8Recurrent taxes on immovable property (% of GDP)0.80.80.80.81.21.00.90.9Environmental taxes (% of GDP)2.82.52.32.22.62.12.12.1Effective carbon rate in EUR per tonne of CO2 equivalentsnana94.4nanana84.8naTax wedge at 50% of average wage (single person) (*)30.330.330.128.728.432.431.631.531.531.6Tax wedge at 100% of average wage (single person) (*)40.741.041.039.840.140.139.739.939.940.0Corporate income tax - effective average tax rates (1) (*)19.419.419.420.320.019.219.019.3Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)11.513.211.311.47.88.07.97.8Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)5.04.14.7na31.832.630.7naVAT gap (% of VAT total tax liability, VTTL) (**)4.72.13.01.510.57.38.2naEU-27FinlandProgressivity & fairnessTax administration & complianceBy tax baseSome tax types 
 
  
 
 
      
 
income 

A3.2) (69).  Aggregate  tax  expenditures  have  a 
substantial  impact  on  the  foregone  revenue  from 
personal 
taxation.  Recent  estimates 
suggest that simulated tax expenditures related to 
employment, housing, education, health and family 
policy  could  reduce  personal  income  tax  revenues 
by  up  to  19%,  equivalent  to  around  2.4%  of 
GDP (70). 

Overall,  labour  taxation  in  Finland  is  more 
progressive  than  in  the  EU.  This  is  reflected  a 
larger  tax-wedge  differential  between  high-  and 
low-income earners in Finland as compared to the 
EU  average.  The  tax-benefit  system  significantly 
reduces 
lowering  the  Gini 
coefficient  by  11.4 pps  in  2024  compared  to  an 
EU average reduction of 7.8 pps (71). 

inequality, 

income 

In  2026  Finland  is  introducing  some  tax 
measures  aimed  at  reducing  the  overall  tax 
burden on labour. The highest marginal tax rates 
on  earned 
income  will  be  cut,  bringing  the 
effective  top  rate  down  from  59%  to  52%.  In 
addition, the tax withheld at the source for foreign 
employees  will  be  reduced  from  32%  to  25%.  At 
the  same  time,  some  deductions  (such  as  those 
for  social  partner  organisation  membership  fees 
and  for  home  offices)  have  been  eliminated, 
slightly offsetting the benefits for some taxpayers. 

(69)  The  tax  wedge  is  an  indicator  of  the  tax  burden  on  labour 
that  can  be  assessed  at  various  levels  of  earnings.  It  is 
defined as the sum of personal income taxes, employee and 
employer  social-security  contributions  and  other  mandatory 
contributions,  expressed  as  a  percentage  of  total  labour 
costs  (composed  of  the  net  wage, personal  income  tax, 
social 
contributions,  and  other  mandatory 
contributions).  Tax  wedge  data  in  the  2026  country  reports 
are calculated by the Joint Research Centre of the European 
Commission and based on the EUROMOD model, while in the 
past  country  reports  they  were  based  on  the  OECD  tax  and 
benefit  model.  While  the  underlying  methodology  is  very 
similar, differences in the assumptions can lead to different 
results between both models.   

security 

(70)  Turrini, A., Guigue, J., Kiss, A., Leodolter, A., Van Herck, K., 
Neher, F., Leventi, C., Papini, A., Picos, F., Ricci, M. and 
F. Lanterna (2024). Tax Expenditures in the EU: Recent Trends 
& New Policy Challenges. Discussion Paper 212, European 
Commission 

(71)  The Gini  coefficient measures  the  extent  to  which  the 
distribution  of  income  within  a  country  deviates  from  a 
perfectly  equal  distribution.  A  coefficient  of  0  expresses 
perfect equality where everyone has the same income, while 
a coefficient of 100 expresses full inequality where only one 
person has all the income. 

Finland  has  no  established  procedure  for 
regular  tax  expenditure  assessments.  While 
Finland  regularly  reports  on  tax  expenditures,  it 
does not systematically evaluate all tax subsidies. 
In  2023,  Finland  published  a  detailed  tax  report 
laying  out  the  foundation  of  a  wide  set  of  the 
most  important  taxes  and  discussing  the  impact 
and  effectiveness  of  related  tax  expenditures.  A 
similar  report  is  planned  before  the  next  election 
cycle. The National Audit Office (which is in charge 
issued  a 
of  reviewing  general  fiscal  policy) 
recommendation 
the 
in  2018 
information  available  on  the  appropriateness  of 
tax 
impact 
through 
assessments (72). 

expenditures 

improve 

regular 

to 

The  Finnish  tax  administration  is  developing 
tax gap analysis methods to estimate the CIT 
and  PIT  compliance  gaps (73).  Finland  has 
published  CIT  compliance  gap  estimates  since 
2024.  These  currently  cover  a  subset  of 
companies  and  are  planned  to  be  extended  to  all 
businesses.  The  latest  figures  published  in  2025 
are based on random audit data and report a CIT 
compliance  gap  of  about  3%  of  declared  CIT  for 
small and medium-sized enterprises for the years 
2021-2022 (74).  The  Finnish  tax  administration  is 
also  developing  a  method  to  estimate  the  PIT 
compliance gap based on random audits. The first 
results are expected in 2026.  

tax 

Finnish 

administration 

is 
The 
characterised  by  its  high  efficiency,  its  high 
level  of  digitalisation  and 
its  strong 
customer  orientation.  Finland  has  an  effective 
strategy  to  ensure  tax  revenues  and  reduce  the 
size  of  the  grey  economy  (well  below  the  EU 
average).  In  Finland,  the  outstanding  tax  arrears 
was  4.7%  in  2023,  one  of  the  lowest  in  the  EU 
(30.7%  EU-wide).  The  VAT  compliance  gap 
decreased  by  1.5 pps 
in  2024, 
significantly below the EU-wide gap of 8.0% (2023 
latest data). According to the 2025 VAT gap report, 
the  VAT  compliance  gap  in  Finland  has  remained 
stable  and  was  one  of  the  lowest  in  the  EU  from 
2019  to  2024.  Finland  has  a  comprehensive  and 
highly  automated  e-filing  environment.  In  2023, 

to  1.5% 

(72)  NOAF Audit Report 19/2018: Impact assessments of tax 

changes and tax subsidies. 

(73)  European Commission, Directorate-General for Taxation and 

Customs Union, Mind the gap - 2025 report.  

(74)  Finnish Government’s Annual Report 2024 (08/05/2025). 

40 

 
 
 
the  e-filing  rate  was  98.1%  for  CIT  returns  and 
97.7%  for  PIT  returns,  both  rates  above  the  EU 
average. 

41 

 
PRODUCTIVITY 
ANNEX 4: INNOVATION TO BUSINESS  

Innovation  Scoreboard  2025 

Finland  continues  to  be  an 
'innovation 
leader',  sustained  by  a  dynamic  business 
sector  and  committed  public  research  and 
innovation  (R&I)  governance.  According  to  the 
(75), 
European 
Finland’s innovation performance stood at 125.3% 
of the EU average, with a slightly downward trend 
compared  to  2024,  and  below  the  average  of 
innovation  leaders  in  the  EU  (131.9%).  Finland’s 
research  and  development  (R&D)  intensity  (76) 
increased  to  3.22%  of  GDP  in 2024  (77)  from 
3.09%  in  2023,  moving  towards  the  country’s 
ambitious target of 4% R&D expenditure to GDP in 
2030  and  in  line  with  last  year's  country-specific 
recommendation  (CSR).  Fulfilment  of  this  target 
depends  not  only  on  increased  public  and  private 
expenditure, but also on the ability to address key 
bottlenecks in the national R&I system, as stressed 
science-business 
in 
collaboration to researchers' entrepreneurial skills, 
from  scaling  up  of  high-growth  startups  to 
effective  commercialisation  of  innovation.  Finland 
can leverage the digital agility of its businesses to 
boost  their  innovation.  Firms  are  continuously 
excelling  among  their  EU  counterparts  when  it 
comes  to  both  basic  digital  intensity  and  the 
adoption  of  advanced  technologies.  Continued 
efforts on R&I would lay the ground for the Finnish 
economy  to  remain  competitive  in  the  current 
turbulent  geopolitical 
times  and  domestic 
budgetary restrictions.  

the  2025  CSR, 

from 

Excellent science 

Finland’s  R&I  system  builds  on  a  solid 
to 
science  base.  The 
demonstrate  strong  research  capabilities  and 
sustained  public  commitment  to  R&D. 
  14 
universities,  24  universities  of  applied  sciences 
(UAS)  and  12  government  research  institutes 

continues 

country 

(75)  2025  European 

Innovation  Scoreboard,  country  profile: 
Finland.  The  scoreboard  provides  a  comparative  analysis  of 
innovation performance in EU countries, including the relative 
strengths  and  weaknesses  of  their  national  innovation 
systems (also compared to the EU average). 

(76)  Gross domestic expenditure on R&D as a percentage of GDP. 

(77)  Statistics Finland shows preliminary data for 2025: 3.29% of 
GDP (R&D expenditure (EUR million) by year and information. 
PxWeb) 

42 

ensure  structured  doctoral  education  and  good 
integration into European research frameworks, as 
well  as  solid  public  funding  instruments  (78).  The 
number  of  researchers  employed  by  public  sector 
per  thousand  active  population  is  7.0  in  2024, 
higher  than  the  EU  average  of  4.3.  In  2022, 
national  scientific  publications  in  the  top  10% 
most-cited worldwide stood at 11.91%, above the 
EU  average  (9.44%)  but  behind  many  other  EU 
leaders.  Finland  performs  well  on 
innovation 
internationalisation, 
co-
since 
publications  were  65.64%  of  total  number  of 
publications in 2024, with an increasing trend over 
the  years.  However,  Finland  has 
recently 
experienced a negative trend in academic freedom 
(79).  The  latest  score  of  the  Academic  Freedom 
Index  from  2024  is  the  lowest  value  ever  scored 
by the country (80): despite this, Finland still ranks 
among  the  best  performing  countries.  This  aspect 
would require further assessment. 

international 

Finland  has  the  second-highest  public  R&D 
intensity  in  the  EU.  Public  expenditure  on  R&D 
has  increased  over  time  and  stood  at  1.02%  of 
GDP in 2024, well above the EU average (0.72%), 
following the approval of the multiannual plan for 
the use of government research and development 
(81)  and  the  Act  on  Research  and 
funding 
Development  Funding  2024–2030.  In  2026,  the 
R&D  budget  further  increased  to  approximately 
1.07% of GDP, yet this is lower than expected (82). 
The  Finnish  government  has  also  announced  an 

(78)  Research  Council  of  Finland  (2024),  State  of  scientific 
research  in  Finland  2024:  Statistics  on  research  funding, 
research personnel and scientific publishing 

(79)  The Academic Freedom Index rests on five key indicators: the 
freedom  to  research  and  teach;  the  freedom  of  academic 
exchange  and  dissemination;  the  institutional  autonomy  of 
universities;  campus  integrity  and  the  freedom  of  academic 
and cultural expression. 

(80)  Finland’s value is 0.832 index points in 2024, representing a 
decline  from  0.93  index  points  in  2023,  the  world  average 
based  on  171  countries  was  0.569 
index  points: 
https://academic-freedom-
index.net/research/Academic_Freedom_Index_Update_2025.
pdf  

(81)  Finnish Government Helsinki (2024). Multiannual plan for the 
use of government research and development funding. ISBN 
pdf: 978-952-383-985-4 

(82)  The  increase  of  central  government  R&D  funding  will  be 
reduced by EUR 25 million in 2026 and by EUR 80 million in 
2027  (Government’s  decisions  support  emerging  economic 
growth) 

 
 
 
 
 
 
 
upcoming  new vision  for  higher  education  and 
research 2040 (VHER) addressing societal changes 
and setting  out long-term  guidelines  up  to  2040 
(83),  and  a  stakeholder  consultation  was  launched 
in  2025  (84). 
In  addition,  the  Research  and 
Innovation Council recently presented the strategic 
choices for RDI, in order to maximise investments 
in  key  sectors  (85).  The  commitment  to  increase 
R&D  expenditure  is  key  to  addressing  the  2025 
CSR on continuing pursuing the 4% target of R&D 
GDP intensity.   

Business innovation   

The  innovation  system  in  Finland  is  solid, 
despite  some  recent  signs  of  weakening. 
Business  expenditure  on  R&D  has  consolidated 
over time, now amounting to 2.19%, compared to 
the  EU  average  of  1.49%  (86).  While  the  spending 
on  R&D  is  still  mainly  anchored  to  the  ICT  sector 
(87),  R&D  activity  in  the  service  sector  remains 
limited,  partly  because  many 
comparatively 
existing  policy 
instruments  were  originally 
designed  for  hardware-based  and  extractive 
industries.(88)  Despite  the  proportion  of  business 
expenditure  on  R&D  performed  by  SMEs  as  a 
percentage  of  GDP  being  higher  than  the  EU 
average,  it  has  stagnated  since  2020  (decreased 
to  0.68  in  2023,  compared  to  0.72  in  2020)  (89). 
Furthermore,  Finland  also  performs  well  in  the 
its  patent 
intellectual  assets,  with 
area  of 

(83)  Vision for higher education and research - OKM - Ministry of 

Education and Culture, Finland 

(84)  Public invited to comment on vision for higher education and 
research - OKM - Ministry of Education and Culture, Finland. 

(85)  National  strategic  choices  for  research,  development  and 

innovation policy and activities 

(86)  Eurostat, [rd_e_gerdtot] GERD by sector of performance 

(87)  According  to  the  2025  edition  of  ‘The  EU  Industrial  R&D 
Investment Scoreboard’, the largest Finnish company, Nokia, 
accounts for 67% of the overall nominal R&D investment of 
Scoreboard  companies  headquartered  in  Finland  and  has 
increased  its  R&D  investments  by  2.6%  with  respect  to 
2023. 

(88)  Policy Support Facility Finland (2025), Final report. Support to 
Finland  on  improving  R&D  collaboration  between  research 
organisations and  the private sector - Publications Office of 
the EU 

(89)  Business expenditure on R&D (BERD) performed by SMEs as 
%  of  GDP in  2023  was  for  Finland  0.68, vs  EU-27  of 0.47, 
yet it has decreased compared to 0.72 in 2020. 

applications  filed  under  PCT  per  billion  GDP 
standing at 4.9 in 2022 (90), above the EU average 
of  2.8,  but  decreasing  in  comparison  with  recent 
years. According to the IMF, there is evidence that 
the formation of high-growth firms, 'gazelles', has 
slowed in recent years (91).  

is 

in  Finland 

The  uptake  of  digital  technologies  by 
continuously 
businesses 
increasing,  reaching  top  levels  compared  to 
its  EU  counterparts.  In  2025,  close  to  95%  of 
SMEs had at least a basic level of digital intensity, 
the  highest  result  in  the  EU.  The  use  of  AI 
(37.82%),  data  analytics  (45.14%)  and  cloud 
(73.12%)  by  companies  continued 
to  grow, 
achieving  results  not  only  above  EU  average  but 
also  the  highest  in  the  EU,  as  shown  by  the 
example  of  AI  use  by  firms.  To  support  further 
adoption and development of digital technologies, 
Finland is focusing on reinforcing its AI ecosystem 
through implementation of the LUMI AI factory (92) 
and  coordination  of  public  and  private  efforts 
related to AI development. The country has started 
implementing 
growth 
data 
programme  to  increase  the  impact  of  earlier 
actions and funding for data economy provided by 
Business Finland.  

economy 

the 

in  Finland  for  business 
Public  support 
innovation  is  low,  and  it  almost  completely 
relies  on  direct  support  to  companies.  Total 
public sector support for BERD as a percentage of 
GDP  was  0.09  in  2023  is  well  below  the  EU 
average of 0.21. This is mainly due to low indirect 
support:  even  though  Finland’s  tax  incentives  for 
increased, 
R&D 
available  data  proves  them  to  still  be  low  in 
comparison  to  the  EU  average  (93).  Business 
Finland  has  in  recent  years  provided  business 
innovation  support  for  large-scale  collaboration 
(‘Locomotive’) 
projects 

expenditure  have 

recently 

‘Veturi’ 

under 

the 

(90)  Eurostat,[rd_e_gerdtot] GERD by sector of performance 

(91)  International Monetary Fund (2025), country report n. 25/10, 

Finland. 

(92)  LUMI AI Factory’s Hub dedicated to AI innovation has opened 
at Aalto University’s Otaniemi campus in Espoo, Finland. The 
LUMI AI factory hub is designed to meet the practical needs 
of  students,  startups  and  SMEs,  offering  an  environment 
where people and organisations can network and  turn ideas 
into  tangible  innovations.  The  hub  is  part  of  the  LUMI  AI 
Factory, the largest of the European Union’s 19 AI factories. 

(93)  Foregone  revenues  of  R&D  tax  incentives  as  %  of  GDP  in 
Finland is 0.01 in 2023, while the EU-27 stands at 0.10 

43 

 
 
 
small 

companies’  ambition 

programme  (94).  Additionally,  in  order  to  enlarge 
the pool of firms involved in R&I and to strengthen 
entry  pathways,  the  government  has  proposed  to 
allocate  EUR 8  million  in  the  2026  budget  to  the 
Economic Development Centres to launch a three-
year pilot aiming to increase the volume of R&I in 
SMEs  (95).  Whether  this  initiative,  together  with 
other new projects such as the sprint funding call 
to  boost 
for 
international  growth  (96),  will  effectively  replace 
former  fundings  that  has  been  closed  due  to 
recent  cuts  to  innovation  and  non-R&D  business 
funding  (97),  remains  to  be  seen.  The  impact  of 
new fiscal incentives, including the additional R&D 
tax  deduction  in  2024  (98)  and  the  one  on  large-
scale  green  tech  projects  (99)  have  been  recently 
evaluated (100), but no data on the increased public 
support  to  business  R&D  has  been  produced.  (101) 
OECD  and  4front  suggest  that  there  is  still  scope 
for  a  more  balanced  policy  mix,  combining  direct 
and indirect public support for business R&D, also 
aimed  at  lowering  administrative  barriers  and 
easing access for SMEs to R&D. A recent study by 
4Front  and  commissioned  by  the  Ministry  of 
Economic Affairs and Employment of Finland calls 
for  targeted  policy  measures,  improved  funding 
structures  and  stronger 
incentives  for  SMEs 
technology adoption and innovation scaling (102).  

(94)  Business  Finland  has  launched  challenge  competitions  in 
which companies with international operations (Veturi, which 
means  locomotive)  agreed  to  resolve  significant  future 
challenges  and  increase  their  RDI  investments  cumulatively 
by  almost  EUR 1.5  billion 
leading 
companies  can  effectively  boost  research  and  innovation 
investments of the partner research organisations and SMEs 
requires further assessment, however. 

in  total.  How  the 

(95)  Orpo Government: Government’s decisions support emerging 
economic growth - Ministry of Social Affairs and Health 

(96)  Business Finland - Upcoming Sprint funding call  

(97)  What do Business Finland’s funding services look like at the 

beginning of 2026? 

(98)  OECD  Economic  Surveys:  Finland  2025,  OECD  Publishing, 

Paris. 

(99)  The  government  has  also  introduced  a  fixed-term  tax  credit 
to encourage the private sector to carry out large-scale green 
tech projects (OECD, 2025, see above) 

(100) Secretariat of the Research and Innovation Council of Finland 
(2026), “Monitoring and Evaluation Report on State funding 
for R&D”. 

(101) See  OECD  Economic  outlook  2025  (above)  and  4FRONT-

Policy-Brief ”Reclaiming-innovation-leadership”.pdf 

(102) From potential to impact: turning SME innovation into growth 

- 4FRONT OY 

Graph A4.1: Total public support for BERD as % of 
GDP 

Source: DG R&I, based on Eurostat, 2019-2023 

of 

(104). 

scientific 

publications 

Additionally, 

Science-business linkages need improvement 
in order to support the commercialisation of 
innovation.    A  downward  trend  in  the  frequency 
of  SME  collaboration  with  universities  and 
research  institutes  has  been  ongoing  since  2010 
(103),  in  parallel  with  a  negative  tendency  in  the 
proportion 
co-
public-private 
publications  as  a  percentage  of  the  total  number 
of 
public 
expenditure  on  R&D  financed  by  businesses  as  a 
percentage  of  GDP  has  more  than  halved  since 
2010  (105).  In  order  to  address  these  issues,  the 
PSF  Final  Report  (106)  has  suggested  a  series  of 
include  clearer  recognition  of 
actions.  These 
universities’ 
performance 
in 
agreements,  mobility  instruments  for  researchers, 
such  as  internships  and  joint  projects  to  support 
knowledge  transfer,  targeted  schemes  to  support 
researchers  and  agile 
SME 
recruitment  of 
instruments  for  scaleups, 
their 
to  maintain 
integration  in  the  national  innovation  ecosystem. 
These  initiatives  are  also  key  to  addressing  the 
2025 CSR on stepping up the cooperation between 
businesses  and  academia  as  well  as 
the 
implementation  of  the  programme  to  fund  the 
expansion  of  PhD  places.  The  policy  pilot  of  this 

third  mission 

(103) Kimmo Halme (2024). ‘Support to Finland on improving R&D 
collaboration between research organisations and the private 
sector: Background report’, European Commission 

(104) 10.82 in 2010, down to 10.28 in 2024, according to Eurostat 

(105) 0.07 in 2010, more than halved in 2023, 0.03 (Eurostat) 

(106)The PSF Country Review process is a key component of the H
orizon Europe Policy Support Facility, which provides practical 
support to design, implement, and evaluate reforms that enh
ance the quality of research and innovation investments, poli
cies, and system.  For example, the  PSF  Country  report  of 
Finland aimed to enhance collaboration between public resea
rch organizations and the private sector.  

44 

0,000,050,100,150,200,2520192020202120222023FIEU 
 
   
 
 
closely  monitoring 

programme will require 80% of the places to be in 
research  fields  covered  by  the  Research  Council’s 
flagship  programme,  which  funds  projects  to 
facilitate  collaboration  (107)  between  HEI  (108)  and 
industry.  However, 
the 
implementation  of  this  measure  will  be  key  to 
ensuring 
the 
government  confirmed  the  inclusion  in  the  2026 
budget  of  the  Rise  to  Challenge  (Näytönpaikka) 
research 
call  for  proposals 
organisations  and  seeking  the  most  impactful 
research 
later  utilisation  by 
for 
companies. These are a step  in the right direction 
to boost business-research collaboration.  

its  effectiveness.  Furthermore, 

(109),  aimed  at 

initiatives 

Entrepreneurial dynamism 

Finland’s  startup  ecosystem  has  grown 
rapidly  thanks  to  a  solid  base.  TESI  (110),  the 
investment  company  of  Finland, 
state-owned 
reports  that 
in  2025  the  Finnish  ecosystem 
encompassed more than 4 000 startup-origin (111) 
companies  (up  from  ~3 821  in  2022),  including 
roughly 2 000 active early-stage startups and tens 
of  scaleups  (112).  The  TESI’s  deep-tech  study 
identifies  285  deep  tech  companies  concentrated 
around  university  hubs  (Helsinki,  Tampere,  Oulu 
and  Turku)  and  reports  a  record-breaking  year  in 
deep  tech  investment  (+170%  year-on-year  in 
2025) (113). 

Finnish  venture  capital  expenditure  is  solid, 
but  startups’  ability  to  scale  up  could  be 
  Venture  capital  as  a 
further  supported. 

(107) Pilot  projects  for  doctoral  programmes  -  OKM  -  Ministry  of 

Education and Culture, Finland 

(108) Higher Education Institutes (HEI) 

(109) Business Finland’s funding services 2026 

(110) Finnish Industry Investment Ltd. (TESI). 

(111) The  term  refers  to  refers  to  firms  that  began  life  as 
innovation-driven  ventures–and 
startups–typically  young, 
have  since  survived  and  grown  beyond  the  initial  startup 
phase. 

(112) Pääomasijoittajat / Finnish Startup Community / Tesi / FVCA. 
(2025).  Startup  Study  2025  (report).  (Startup  study  – 
Finland). 

(113) Tesi  –  Finnish  Industry  Investment  Ltd.  (2025).  Deep-Tech 

percentage of GDP is above EU levels (114), with a 
positive  early-stage  record  but  a  lower  proportion 
of  later-stage  funding  (115),  reflecting  a  shortage 
of  Series-B  rounds  (116)  (See  Annex  6  for  more 
information).  However,  the  IMF  indicates  that 
innovative  startups  are  far  less  leveraged  than  in 
European  peer  countries  (117),  potentially  limiting 
their ability to scale up. According to the IMF, there 
is  room  to  further  increase  access  to  risk  capital, 
including  by  revisiting  tax  policy,  with  the  aim  of 
supporting the growth of young, innovative firms. 

Finland performs well in terms of innovation-
friendly  regulation.  Finland  ranks  first  in  the 
benchmarking  of  national  innovation  procurement 
policy frameworks across Europe (118). The country 
already  runs  targeted  programmes  for  innovative 
public procurement (119), and it is in the process of 
amending  its  public  procurement  legislation,  to 
also  address  some  issues  related  to  in-house 
exemptions  (See  Annex  5).  While  the  national 
competence  network  (KEINO)  (120)  to  promote 
public  procurement  in  innovation  has  finished  its 
mandate  period,  regulatory  sandboxes  (121)  for  AI 
are  being  designed.  All  these  measures  could 
potentially improve market access for high-growth 
firms.  

Although  Finland’s  workforce  has  strong 
education  and  digital  skills,  there  is  still  a 
shortage of highly skilled workers, especially 
in engineering, cleantech and other deep tech 
fields.    Despite  Finland's  tertiary  educational 
attainment  rate  being  below  the  EU  average  in 
2025  (38.2%  of  population  aged  25-34  in  2025, 

(114) Venture  Capital  in  Finland  is  0.1  in  2024,  against  an  EU 

average of 0.06 (Eurostat) 

(115) The  percentage  of  later-stage  funding  (%  of  GDP)  is  0.03, 
equal  to  the  EU  average,  ranking  tenth    within  the  EU-
27(Eurostat) 

(116) Series B round refers to later-stage venture capital financing 
in  which  startups  that  have  validated  their  product  and 
market fit raise capital to scale operations, expand into new 
markets  and  accelerate  revenue  growth,  following  earlier 
seed and Series A rounds. 

(117) International  Monetary  Fund  (2025),  country  report  No. 

25/10, Finland. 

(118) Country report 2024 - Policy benchmark Finland 

(119) Innovative public procurement – Business Finland 

(120) A  network-based  Competence  Centre  for  Sustainable  and 
Innovative  public  procurement  in  Finland  -  Observatory  of 
Public Sector Innovation 

Study Finland 2025 (report). Tesi. Available as PDF. 

(121) Statement - Lausuntopalvelu 

45 

 
 
 
vs  EU  average:  44.8%),  the  number  of  new 
in  science  and  engineering  has 
graduates 
increased in the last year (see Annex 13). In 2023, 
there  were  18.65  graduates  per 
thousand 
population,  as  compared  to  the  EU  average  of 
17.68, while the number of graduates in the field 
of  computing  is  well  above  the  EU  average  (in 
2023, 7.44 per thousand population vs EU average 
of  3.84)  (122).  However,  although  STEM  enrolment 
is  among  the  highest  in  the  EU,  skills  shortages 
and mismatches persist in high-skilled professions 
including  industry  and  ICT,  (See  Annex  11)  (123). 
The  She  Figures  2024  reports  a  clear  gender 
imbalance in the business enterprise sector and in 
self-employed  scientists  and  engineers  and  ICT 
careers,  where  women  remain  underrepresented 
and  contribute  less  to  inventorship  than  their 
qualifications  would  allow  (124).  Additionally,  there 
are  still  barriers  to  hiring  highly  skilled  foreigners 
(125) and there is potential to improve researchers' 
entrepreneurial  skills,  as  indicated  in  the  relevant 
2025 CSR. A strategy to support entrepreneurship 
was  included  in  the  Government  Resolution  on 
Entrepreneurship (126), but without a specific focus 
on  researchers.  Scaling  up  successful  initiatives 
like  the  joint  StartUp  space  in  Vaasa  (127)  or  the 
inventors training for PhDs of the Aalto University 
(128)  to  promote  entrepreneurship  could  be  a  step 
in  the  right  direction.  Implementing  the  EUR-255-
million plan for 1000 new doctoral student places 
over  the  period  2024-2027  (129)  will  be  key  to 
improving  the 
addressing  the  2025  CSR  on 
for 
support 
and 
entrepreneurship 
researchers, 
for 
beneficial 
academia-business cooperation. While the national 

besides 

being 

skills 

(130)  for 

talent  boost  programme 
improving 
retention  of  international  students,  researchers, 
and  young  professionals  in  key  R&I  areas  is 
ongoing,  the  OECD  indicates  that  there  remains 
room for further improvement in attracting foreign 
talent. 

the 

has 

education 

Entrepreneurship 
been 
incorporated  into  all  levels  of  education  in 
Finland.  The  Ministry  of  Education  and  Culture 
published entrepreneurship education guidelines in 
2017,  which  address 
topic  from  early 
childhood education through to tertiary education. 
These  guidelines  are  set  to  be  revised  and 
published  again  in  2026.  Entrepreneurship  is 
embedded in the national core curriculum for both 
basic  and  upper  secondary  education  and  has 
been  further  developed  at  the  higher  education 
level.  There  is  engagement  in  entrepreneurial 
activities  beyond  educational  institutions,  such  as 
learning 
Yrityskylä 
environment designed for sixth and ninth graders, 
as  well  as  upper  secondary  and  higher  education 
students. In Finland, young people display positive 
attitudes  towards  entrepreneurship;  a  survey 
conducted  in  2025  revealed  that  51%  of  lower 
and  upper  secondary  students  expressed  a  desire 
to  try  entrepreneurship,  an 
increase  of  13 
percentage points compared to 2022. 

(Entrepreneur-village), 

a 

(122) Eurostat, 2025 

(123) Education and training monitor 2025 - Publications Office of 

the EU (also see Annex 13) 

(124) The She Figures report provides statistics on gender equality 
in R&I across Europe. Since its first publication in 2003, it 
tracks the representation of women in academia, research 
careers and leadership roles, examining factors such as 
gender pay gaps and access to funding: SheFigures 2024 | 
Research and Innovation 

(125) OECD (2025), OECD Economic Surveys: Finland 2025, OECD 

Publishing, Paris. 

(126) Valtioneuvoston periaatepäätös yrittäjyydestä 

(127) Higher  education  institutions  in  Vaasa  open  a  joint  StartUp 

space - VAMK 

(128) Aalto Inventors | Aalto University 

(129) Universities 

training  a 
receive  additional  funding  for 
thousand  new  doctoral  graduates  -  OKM  -  Ministry  of 
Education and Culture, Finland 

(130) Talent Boost - Ministry of Economic Affairs and Employment 

46 

 
 
 
Table A4.1:  Key innovation indicators 

(1) EU average for the last available year or the year with the largest number of country data. 
* break in series 
Source: Eurostat, OECD, DG JRC, Science Metrix (Scopus), Invest Europe, European Innovation Scoreboard 

47 

R&D intensity (gross domestic expenditure on R&D as % of GDP)3,712,892,932,983,093,22:2,243,44Public expenditure on R&D as % of GDP1,100,940,940,930,981,02:0,720,64Scientific publications of the country within the top 10% most-cited publications worldwide as % of total publications of the country 11,6411,5811,8811,91:::9,4412,31Researchers (FTEs) employed by public sector (Gov+HEI) per thousand active population7,006,106,306,406,707,00:4,3:International co-publications as % of total number of publications47,7957,1564,0864,8464,5165,64:57,24:Business enterprise expenditure on R&D (BERD) as % of GDP2,581,931,962,032,092,19:1,492,69Business enterprise expenditure on R&D (BERD) performed by SMEs as % of GDP0,500,530,720,640,68::0,470,30Researchers employed by business per thousand active population8,808,209,4010,0010,2010,70:5,9:Patent applications filed under the Patent Cooperation Treaty per billion GDP (in PPS €)8,376,176,014,92:::2,812,20Employment share of high-growth enterprises measured in employment (%)::1,241,431,12::0,87:SMEs with at least a basic level of digital intensity% SMEs (EU Digital Decade target by 2030: 90%)::::85,59:94,0471,39:Data analytics adoption% enterprises (EU Digital Decade target by 2030: 75%)::::40,55:45,1439,85:Cloud adoption% enterprises (EU Digital Decade target by 2030: 75%)::::72,99:73,1246,69:Artificial intelligence adoption % enterprises (EU Digital Decade target by 2030: 75%)::::15,1024,3737,8219,95:Public-private scientific co-publications as % of total number of publications10,8210,3410,5410,5810,4410,28:7,62:Public expenditure on R&D financed by business enterprises (national) as % of GDP0,070,050,030,030,03::0,060,02Total public-sector support for BERD as % of GDP0,080,080,090,080,09::0,21:R&D tax incentives: foregone revenues as % of GDP0,000,000,000,000,01::0,100,16BERD financed by the public sector (national and abroad) as % of GDP 0,080,080,090,0800,08::0,11:Venture capital (market statistics) as % of GDP (calculated as a 3-year moving average)0,060,060,130,150,110,10:0,06:Seed stage funding share (% of GDP)0,000,000,010,020,020,02:0,01:Start-up stage funding share (% of GDP)0,030,030,050,060,050,05:0,03:Later stage funding share (as % of GDP)0,030,020,070,080,040,03:0,03:New graduates in science & engineering per thousand population aged 25-3416,9417,8518,4217,6918,6520,79:16,82:Graduates in the field of computing per thousand population aged 25-346,215,446,746,687,448,86:3,84:Science and innovative ecosystemsFinland2010201520202022202320242025EU average(1)USHeadline indicatorInnovative talentR&D investment & researchers employed in businessesInnovation outputsDigitalisation of businessesAcademia-business collaboration Public support for business innovationFinancing innovation 
 
 
   
 
ANNEX 5: SINGLE MARKET AND INDUSTRY 

Low  growth  continues  to  hinder  the  Finnish 
economy,  but  advances  in  innovation  and 
green  technologies  have  potential  to  boost 
Finland’s  growth.  Finland  is  facing  demand 
challenges  both  in  the  domestic  market  and  in 
exports  with  key  trading  partners.  There  is  also  a 
challenge  in  its  otherwise  well  performing  public 
procurement system related to systematic misuse 
in-house  exemptions.  Bankruptcies  have 
of 
increased,  and  late  payments  are  an  issue,  with 
administrative  burden  also  hindering  Finnish 
companies.  Digital  public  services  are,  however, 
excellent,  and  Finland  is  a  digitalisation  and 
innovation  front-runner.  Finland  also  has  a 
significant 
in  green 
competitive  advantage 
technologies  and  is  a  mineral-rich  country.  For 
country-specific 
2025 
the 
Finland, 
recommendations 
(CSRs)  associated  with  the 
Single  Market  and  industry  focused  on  improving 
commercialisation  of  innovation,  and  boosting 
the 
public 
decarbonisation  of  industry  and  transport  as  well 
as  in  the  development  of  green  technologies, 
including circular economy solutions. 

investment 

private 

and 

in 

Business dynamics 

Finland’s  economy  continues  to  struggle  in 
2025.  High  global  uncertainty  and  challenges  of 
key  trading  partners  influence  Finland’s  growth 
(131) and lack of demand for products and services 
hinders  Finnish  businesses  (132).  The  country's 
economic challenges are particularly visible in the 
increased level  of bankruptcies  (133) and in one of 
EU’s  highest  unemployment  rates  (134).  Despite 
this, Finland continues to perform particularly well 
(135),  advancing 
the  green 
in 
transition  (136)  and  also  climbing  to  14th  place  in 
the 2025 IMD world competitiveness ranking (137), 

innovation 

in 

(131) OECD Economic Surveys: Finland 2025 (EN). 

(132) ECFIN BCS and EIB Investment Survey 2025: Finland 

overview. 

(133) Statistics Finland - Bankruptcies. 

(134) Eurostat: [une_rt_m] Unemployment by sex and age - 

monthly data. 

(135) ec_rtd_eis-country-profile-fi.pdf. 

(136) Confederation of Finnish Industries - Green transition 

investments in Finland. Extracted on 5/1/2026 

(137) Finland - IMD business school for management and 

leadership courses. 

thereby 
strengths. 

showcasing 

the 

country's 

relative 

in 

have 

The  Finnish  economy 
is  not  particularly 
dynamic  with  business  churn  at  17.78%,  slightly 
below  the  EU  average  (18.97%).  Both  business 
birth  and  business  death  rates  have  remained 
relatively stable in recent years, with the business 
in  2023. 
death  rate  trending  up  at  8.79% 
Bankruptcies 
increased 
Finland 
significantly  since  2021,  reaching  41%  by  2024 
(138).  A  total  of  3 488  Finnish  companies  went 
bankrupt  in  2024.  A  particularly  high  share  of 
construction  sector  companies  were 
included. 
Bankruptcies in both industry and the construction 
sector in particular have increased in recent years 
(139).  However,  the  number  of  employees 
in 
bankrupt companies decreased in 2024, indicating 
that 
smaller 
companies  than  before  (140).  In  2024,  the  number 
of  small  to  medium-sized  enterprises  (SMEs)  in 
Finland declined, but real added value is expected 
to  grow  in  2025.  SMEs  make  up  57.7%  of  the 
value added in Finland, which is higher than the EU 
average  of  53.6%.  Micro  firms  are  expected  to 
spearhead  this  recovery,  as  their  growth  rate  in 
real  value  added  will  exceed  0.9%;  nevertheless, 
large  enterprises  will  experience  the  strongest 
growth rate in value added terms (141). 

bankruptcies 

concerned 

the 

in  Finland 

is  average 

Investment 
in 
comparison  with  the  EU  level  but  has  been 
trending  down  (142).  Finland  is  also  an  average 
performer  in  gross  fixed  capital  formation  in 
comparison  with  other  OECD  countries  (143).  Low 
investment  drags  down  the  total 
household 
investment,  with  public  investment  in  Finland  still 
above  EU  average  at  4.5%  of  the  GDP  in  2025. 
Finland  requested  an  extension  to  its  medium-
term fiscal and structural plan, with investments in 
R&D,  innovation  and  clean  transition  included  in 
Finland’s  recovery  and  resilience  plan  as  one  part 
investments 
of 

reforms  and 

set  of 

the 

(138) [sts_rb_a] Business registration and bankruptcy index by 

NACE Rev.2 activity - annual data. 

(139) Statistics Finland - Bankruptcies. 

(140) Statistics Finland – Bankruptcies.  

(141) 2025 SME country fact sheet Finland. 

(142) Eurostat. 

(143) OECD Dashboard of Productivity Indicators | OECD. 

48 

 
 
 
 
 
the 

extension 

(144).  Business 
underpinning 
investment  in  Finland  was  at  12.7%  of  GDP  in 
2025,  only  slightly  above  EU  average  12.6%.  The 
share  of  Finnish  firms  investing  remains  high  at 
96%, unchanged from EIBIS 2024 and well above 
the  EU  average  (86%)  (145).  Firms’  investment  is 
also directed to more ambitious goals than the EU 
average.  Capacity  expansion  (26%)  and  investing 
in  new  products  (22%)  are  higher  than  the  EU 
average  and  this  gap  is  expected  to  widen  as 
Finnish  firms  are  planning  to  prioritise  capacity 
expansion  (146).  The  Room  for  Growth  project, 
which  centred  on  promoting  economic  growth  in 
Finland,  concluded  its  report  in  2025.  The  most 
important proposals concern supporting renewal in 
the  business  sector,  and  requiring  competitive 
operating  conditions  for  high-productivity  growth 
companies  on  the  one  hand,  and  investments  in 
the  clean,  green  transition  in  the  industrial  sector 
on the other. In practice, proposals include, among 
other  things,  a  corporate  tax  deduction  based  on 
R&D  investments  and  investments  in  the  clean 
transition,  increasing  state  capital  investment  in 
non-listed companies, raising the higher education 
level  to  50%,  securing  resources  for  the  new 
permit  authority  and  expanding  the  end-markets 
for  products  related  to  the  clean  and  green 
transition (147). 

Business environment 

Finnish  companies  dedicate  an  average  of 
16%  of  their  investment  to  R&D,  more  than 
double  the  EU  average  (7%).  Finland  is  an 
innovation leader, performing at 125.3% of the EU 
average in 2025 (for more information see Annex 
4).  However,  direct  and 
indirect  government 
support  of  business  R&D  in  particular  is  low  in 
Finland  (148).  This  is  despite  front-runner  schemes 
such  as  the  Finnish  Veturi  (Leading  company) 
model, also supported by the Finnish recovery and 
resilience  plan.  Among  firms  that  invested  in  the 

last  financial  year,  11%  received  policy  support, 
which is below the EU average of 16% (149). 

investments 

increased  R&D 

Finland  has  a  2025  CSR  (3)  on  pursuing  the 
ambitious 4% R&D target and improving the 
commercialisation  of  innovation.  Finland  is 
taking action on this through its R&D funding and 
has 
in  higher 
education  institutions,  research  organisations  and 
companies  through  Business  Finland  and  the 
Research  Council  of  Finland.  Business  Finland’s 
funding  provides  grants  and  loans  for  research, 
development  and  co-innovation  projects, including 
innovation  ecosystems.  Business  Finland  has 
several programmes in place to improve industry-
research collaboration and there are also R&D tax 
deductions  for  the  private  sector.  A  dedicated 
cluster  policy  could  yet  further  support innovative 
collaboration between enterprises and R&D actors 
and  facilitate  investments  in  new  technologies. 
The  strong  focus  on  R&D  funding  in  Finland  is 
decreasing  the  share  of  innovation  funding  in 
Finland, 
for 
commercialisation  and  particularly  important  for 
SMEs.  This  decrease  crucially  also  affects  export 
support.  The  scale-up  of  innovative  companies 
also continues to face challenges in particular due 
to  lack  of  available  large-scale  funding  –  a  gap 
that  state-owned  investment  company  Tesi  is 
aiming  to  address  (150)  (for  more  information  see 
Annex  4).  Specifically  on  entrepreneurship  skills, 
strengthened 
Finland 
entrepreneurship  education  at  all 
levels,  e.g. 
through  national  strategies  and  entrepreneurship 
programmes  in  higher  education  (151).  Special 
the 
field-specific  programmes  on 
entrepreneurial  skills  of  researchers  also  exist  at 
Finnish  universities 
the  Aalto 
Inventors programme at Aalto University (152). 

(for  example 

improving 

essential 

it  has 

reports 

which 

also 

that 

is 

Finland  positions  itself  as  a  technological 
leader with digitally agile enterprises, skilled 
people  and  a  strong  semiconductor  industry. 
Finland  also  provides  cross-sectoral  support  for 
artificial  intelligence  (AI)  and  other  disruptive 
technologies,  and  uptake  of  AI  in  businesses  is 

(144) Council Recommendation of 21 January 2025 endorsing the 
national medium-term fiscal-structural plan of Finland. 

(145) EIB Investment Survey 2025: Finland overview. 

(146) EIB Investment Survey 2025: Finland overview. 

(149) EIB Investment Survey 2025: Finland overview. 

(150) Tesi to become an even stronger promoter of growth, 
renewal and investment - Finnish Government. 

(147) Final Report of the Room for Growth Project – Summary. 

(151) Government information. 

(148) ec_rtd_eis-country-profile-fi.pdf. 

(152) Aalto Inventors | Aalto University. 

49 

 
 
 
(153).  66%  of  Finnish  firms  use 
quite  high 
generative  AI  according  to  the  EIB  Investment 
Survey  2025,  significantly  higher  than  the  EU 
average  of  57%.  While  Finland’s  gigabit 
infrastructure requires further development, digital 
public services are widely available  to people and 
businesses in Finland (154). 

of 

the 

very 

Although 
for connectivity 
trends 
infrastructure  are  promising,  there  is  still 
room  for  improvement,  especially  for  the 
development 
high-capacity 
networks. On  the  positive  side, Finland  boasts 
excellent  5G 
infrastructure. Very-high-capacity-
network (VHCN) coverage increased from 77.7% in 
2023  to 81.7%  in 2024,  but was  still  slightly 
below the EU average. However, VHCN coverage in 
rural areas stood at 50%, much lower than the EU 
average  of 61.9%.  Similar 
trends  concerned 
Finland’s  fibre-to-the-premises  (FTTP)  coverage. 
As  regards  mobile  coverage,  overall  5G  coverage 
increased  to  99.5%  (above  the  EU  average  of 
94.4%),  close  to  saturation  levels. Beyond  market 
trends,  broadband  development  is  supported  by 
Facility 
the 
and the European  Agricultural  Fund  for  Rural 
Development. 

Resilience 

Recovery 

and 

Uncertainty  about  the  future,  the  lack  of 
demand  for  products  and  services  and 
availability  of  skilled  staff  are  Finland’s 
three biggest investment obstacles. In general, 
Finnish  firms  report  fewer  investment  obstacles 
than  the  EU  average.  Compared  with  the  EU 
average,  a  significantly  higher  share  of  Finnish 
companies  report  low  demand  for  products  or 
services as being a major obstacle. Meanwhile only 
15%  of  Finnish  firms  report  the  availability  of 
skilled  staff  as  being  a major  obstacle,  compared 
(155)  However, 
with  52%  across 
unemployment  is  a  major  issue  in  Finland  and 
return  to  economic  growth  is  likely  to  worsen  the 
availability  of  skilled  staff  (see  Annex  11  and 
Annex 13). 

the  EU. 

Access  to  finance  is  not  a  key  issue  for 
Finnish  companies  but  there  is  room  for 
improvement.  Availability  of  finance  is  reported 
as  being  an  obstacle  to  investment  by  42%  of 

Finnish  companies,  slightly  lower  than  the  EU 
average  of  45%  but  higher  than  in  the  previous 
year.  The  share  of  finance-constrained  firms  in 
Finland  is  9.6%,  above  the  EU  average  of  6.1%. 
This 
significantly  higher  among 
micro/small companies. (See Annex 6.) 

share 

is 

leverage 

in  business-to-business 

to  force  smaller  players 

Late  payments  remain  a  concern  in  Finland. 
In  2024,  a  total  of  51%  of  companies  in  Finland 
indicated difficulties caused by late payments. The 
payment  gap 
(B2B) 
payments was 16.95 days in 2024, lower than the 
previous  year  and  lower  than  the  EU  average 
(17.44  days).  Beyond  paying 
late,  extending 
payment  terms  is  also  relatively  common  and 
58% of Finnish companies report having accepted 
longer  payment  terms  than  they  are  comfortable 
with,  in  order  not  to  damage  relationships  with 
their  clients.  Some  larger companies  seem to  use 
their 
to 
accommodate  their  terms  (156).  For  SMEs,  the 
proportion of businesses that had experienced late 
B2B payments in the previous and current quarter 
was still 44% in 2025, lower than the EU average 
of  47.1%,  while  11.8%  had  experienced  late 
government-to-business (G2B) payments, which is 
also  lower  than  EU  average  of  15.9%.  In  G2B 
payments,  the  payment  gap  was  13.44  days  in 
2024,  slightly  worse  than  the  previous  year  but 
still  around  the  EU  average  (13.63  days) (157).  It 
takes  the  Finnish  government  seven  days  longer 
than  businesses  to  pay  their  suppliers.  The 
average  payment  period  of  public  authorities  has 
remained  stable  since  2022,  standing  at  68  days 
in  2024.  This  places  G2B  payments  in  Finland 
below  the  EU  average  of  70  days (158),  leaving 
room for improvement. 

Single Market and barriers 

EU 

trade 

integration. 

Finland  has  a  particularly  low  level  of  EU 
integration 
trade 
(measured as the average of intra-EU imports and 
exports  against  GDP)  continues  to  be  only  24%. 
For  a  small  economy,  this  is  very  low,  as  mostly 
large countries, such as France and Germany, have 
lower  values  than  Finland.  An  increasing  share  of 

(153) Finland 2025 Digital Decade Country Report. 

(156) EU Payment Observatory Annual Report 2025. 

(154) Finland 2025 Digital Decade Country Report. 

(157) Intrum. 

(155) EIB Investment Survey 2025: Finland overview. 

(158) EU Payment Observatory Annual Report 2025. 

50 

 
 
 
exporters in Finland which is above the EU average 
(Finland 79% vs EU 60%) report that they have to 
comply with differing requirements and standards 
across  EU  countries (159).  This  suggests  that 
regulatory  complexity  across  the  EU  might  hinder 
Finnish companies in particular. 

Lack of demand is a critical issue for Finnish 
businesses. 75% of Finnish companies consider it 
an investment obstacle, which is both higher than 
the  previous  year  and  the  EU  average  of  55%. 
33%  of  companies  even  consider  this  to  be  a 
major  obstacle  to  investment.  While  this  issue 
seems  to  plague  all  sectors,  it  affects  both 
services  and  infrastructure  even  more  (over  80% 
of  companies). 
limiting 
production,  lack  of  demand  is  the  most  critical 
factor  for  the  three  sectors  of  industry,  services 
and  construction  (160).  Making  it  easier  for  Finnish 
companies  to  reach  the  wider  EU  market  could 
help  to  boost  demand.  Finland  also  performs 
particularly weakly in terms of exports of medium 
and  high-tech  products  (161).  Export  support  in 
these areas  in particular  would  be  useful in order 
to increase high value-added exports. 

In  terms  of  factors 

55%  of  Finnish  companies  cite  business 
regulations  and  44%  of  Finnish  companies 
cite  labour  regulations  as  an  obstacle  to 
investment,  both  lower  than  the  EU  average 
(69% and 64%). The overall share of companies 
citing  business  regulations  as  an  obstacle  to 
investment  slightly  increased  but  only  9%  of 
Finnish companies perceive business regulations to 
be  a  major  obstacle  to  investment (162)  –  the 
lowest  share  within  the  EU.  However,  a  recent 
study  by  the  Confederation  of  Finnish  Industries 
indicates  a  significant  regulatory  cost  in  Finland, 
more specifically that regulations imposed annual 
costs  of  EUR 5.6-7.0  billion  on  Finnish  companies 
in  2024.  These  costs  derived  from  a  variety  of 
different  types  of  legislation,  with  sector-specific 
legislation, environmental legislation and financial 
reporting  being  major  sources  of  the  regulatory 
burden (163). 

Further  work 
is  needed  to  reduce  the 
administrative  burden  on  businesses.  In  this 
area,  Finland  performs  at  around  the  OECD 
average (164).  Finland  has  in  place  a  ‘one-in  one-
out principle’, which has been applied by all Finnish 
ministries  since  2024.  The  progress  towards  the 
target is monitored on an annual basis through the 
government’s  administrative  burden  reports,  the 
latest  indicating  a  reduction  in  administrative 
burden of EUR 0.4 million per year in 2025, adding 
to  the  EUR  119.5  million  from  the  previous  year 
(165).  Regarding licensing  and  permitting,  Finland 
the Finnish 
set  up  a national one-stop  shop, 
Supervisory  Agency, to  deal  with  environmental 
licences  and  permits in  2026. 
(For  more 
information,  see  Annex  7.)  Beyond  assessing  and 
the  Finnish 
removing  administrative  burden, 
government  also  aims  to  promote  digitalisation 
and  streamlining  permit  processes  (166).  Finland 
has  a 
regulatory 
framework  for  professional  services  and  most  of 
the  professions  in  Finland  are  more  competition-
friendly  than  the  OECD  median  (167).  However, 
some  professions  such  as  providers  of  transport 
by  rail  and  providers  of  natural  gas  face  quite 
stringent  regulations.  In  addition,  the  Services 
Trade Restrictiveness Index increased in Finland in 
2025  and  is  above  the  OECD  median,  partially 
driven by the changes in the new Construction Act 
regulating some tasks undertaken by construction 
engineers  and  architects.  The  regulatory  barriers 
within the  European  Economic  Area  (EEA)  are  still 
significantly 
in  comparison  to  barriers 
outside EEA (168).  

fairly  competition-friendly 

lower 

legislation.  Both 

Finland demonstrates sound compliance with 
EU  Single  Market 
the 
transposition and conformity deficits in Finland are 
better 
the 
percentage  of  incorrectly  transposed  directives 
(conformity deficit) increased to 0.9% in 2025 (EU 
average:  1.1%)  and  the  transposition  deficit 
increased  to  0.6%  in  2025  (EU  average:  1.1%). 

the  EU  average.  However, 

than 

(164) Finland_PMR country note.pdf. 

(165) Yksi sisään, yksi ulos – Vuosittainen taakkaraportti 2025 : 

Sääntelytaakan ja norminpurun tilannekatsaus 

(159) EIB Investment Survey 2025: Finland overview. 

(166) Government information. 

(160) ECFIN BCS. 

(161) ec_rtd_eis-country-profile-fi.pdf. 

(162) EIB Investment Survey 2025: Finland overview. 

(163) Study-on-Regulatory-Costs__EK_6.11.pdf. 

(167) OECD PMR country note Finland Part of the barriers 

highlighted in the 2025 Single Market Strategy (‘Terrible 
Ten’). 

(168) OECD, 2026, Services Trade Restrictiveness Index (STRI), 
OECD Services Trade Restrictiveness Index Finland. 

51 

 
 
 
Despite  this,  Finland  remains  among  the  best 
performers  when  it  comes  to  the  transposition 
deficit and still meets the 1% target set by the EU 
Council.  Finland  also  has  the  second 
lowest 
number  of  Single  Market  infringement  cases  of 
any  Member  State,  only  9  compared  with  EU 
average  25.  In  2025,  Finland  resolved  84.2%  of 
the SOLVIT cases it handled as lead centre (the EU 
average was 84.6%) (169).  

surveillance 

investigations 

Compliance  of  products circulating  in  the 
Single Market (170) is key to ensuring a level-
playing  field  for  law-abiding  companies  and 
the safety of consumers. In Finland, the number 
of  market 
has 
increased  compared  with  2019.  In  2025,  national 
authorities  reported  in  the  EU  system  for  market 
surveillance  (ICSMS)  a  total  of 72.2 investigations 
per one million inhabitants, which is lower than the 
EU median 
of 
number 
The 
in  absolute  terms, 
notifications remains limited 
which  may  also  be  the  result  of  insufficient  IT 
national interoperability to the ICSMS system. The 
upcoming  revision  of  the  Market  Surveillance 
fully 
Regulation  will  upgrade 
interoperable EU digital platform.  

136.2. 

ICSMS 

to  a 

of 

this  context,  strengthening 

A  well-functioning  European  Standardisation 
System  depends  heavily  on  the  contribution 
of National Standardisation Bodies, which are 
instrumental  in  overcoming  persistent  obstacles, 
such as the so-called “Terrible Ten”, that continue 
to constrain the full potential of the Single Market 
and  the  global  competitiveness  of  EU  businesses. 
In 
the  national 
standardisation  capacity  in  Finland  is  increasingly 
important,  particularly  as  technological  change 
accelerates  with  advances  in  fields  like  artificial 
intelligence  and  quantum  technologies.  Ensuring 
adequate resources will be critical to securing the 
expertise  needed  for  high-quality  and  timely 
standardisation  processes,  while  also  reinforcing 
Finland’s  position  in  global  markets.  Failure  to 
risks  weakening  Europe’s 
invest  sufficiently 
influence  in  setting  international  standards,  with 
potential  consequences  for  both  the  cohesion  of 
the Single Market and the EU’s long-term strategic 

(169) Part of the barriers highlighted in the 2025 Single Market 

Strategy (‘Terrible Ten’) Source: European Commission, Single 
Market and Competitiveness Scoreboard, Ec.europa.eu 

(170) Part of the barriers highlighted in the Single market 

strategy (‘Terrible Ten’) and the 2026 Annual Single Market 
and Competitiveness Report. 

autonomy.  For  this  reason,  enhanced  national 
support  from  Finland  is  essential  to  ensure  its 
standardisation 
responsive, 
system 
forward-looking, and globally competitive. 

remains 

Finland performs well on public procurement 
competition  and  transparency 
indicators. 
Finland  continues  to  be  among  the  top  EU 
performers  in  the  share  of  single  bid  awards, 
which  has  been  fluctuating  around  15%  for  the 
past  five  years.  The  percentage  of  direct  awards 
was  4%  in  2025,  below  the  EU  median  (171). 
Finland  is  also  one  of  the  frontrunners  in  Europe 
and  the  world  in  applying  strategic  dimensions  of 
public  procurement  and  in  setting  up  innovation 
goals for public procurement. 

However, Finland is facing serious challenges 
in  its  public  procurement  system  due  to 
systemic  risks  and  misapplication  of  the  in-
house  exemption,  as  confirmed  by  data 
provided by the Ministry of Economic Affairs 
and Employment and the Finnish Competition 
and Consumer Authority,  and  the findings of 
the National Audit Office of Finland. In-house 
entities  are  not  systematically  monitored,  and  in 
many cases, companies treated as being in-house 
in  nature  are  only  marginally  owned  by  public 
authorities.  Notably, 
the  Finnish  Competition 
Authority estimates that approximately 56% of all 
public  ownership  stakes  in  in-house  entities  are 
below 1%, which makes it difficult to demonstrate 
the  core  requirement  of  the  in-house  exemption, 
namely  genuine  control  comparable 
that 
exercised  over  an  authority’s  own  departments. 
is 
Transparency  concerning 
severely  and  structurally  limited.  Finland  lacks  a 
comprehensive  national 
in-house 
companies, micro-ownership data are not collected 
(according to the Ministry of Economic Affairs and 
Employment,  the  State  Treasury  records  only 
ownership  shares  exceeding  10%),  and  in-house 
entities are not subject to the Act on the Openness 
of  Government  Activities  (Act  No  621/1999), 
meaning  that  key  information  on  their  ownership, 
governance and activities is not publicly accessible. 
found 
Moreover, 
deficiencies  in  the  completeness  and  accuracy  of 
reporting  on 
in-house  entities  by  wellbeing 
services counties (172). As a result, oversight bodies 

the  National  Audit  Office 

in-house  entities 

register  of 

to 

(171) Single Market scoreboard. 

(172) https://vtv.fi/en/report/procurements-from-in-house-entities-

in-wellbeing-services-counties/  

52 

 
 
 
cannot 
reliably  verify  compliance  with 
conditions laid down in EU procurement law.    

the 

The  National  Audit  Office  of  Finland,  in  its 
2025  audit  on  central  government  in-house 
procurement  (173),  highlighted  issues  related 
to the 80% activity requirement, under which 
an  in-house  entity  must  carry  out  at  least 
80% of its activities for its controlling public 
authorities,  where  in-house  entities  operate 
through  group  structures.  As  confirmed  by  the 
Court  of  Justice 
(AVR-
Afvalverwerking),  where  an  in-house  entity  is  the 
parent  of  a  group  and  subsidiaries  carry  out 
market activities, compliance with this requirement 
must  be  assessed  by  reference  to  the  group's 
turnover. 

in  Case  C-692/23 

Finland  is  in  the  process  of  amending  its 
legislation,  with  a 
public  procurement 
proposal presented to the Parliament in early 
February.  Based  on  the  information  currently 
available,  this legislative amendment is limited to 
introduction  of  a  minimum  ownership 
the 
threshold  (10%)  for  the  use  of  the  in-house 
exemption.  On  its  own,  this  measure  is  not 
sufficient  to  address  the  structural  governance, 
shortcomings 
transparency 
identified. 

supervision 

and 

Taken together, the issues identified point to 
structural  weaknesses  in  Finland’s  approach 
to  in-house  procurement  that  go  beyond 
isolated  cases  or  technical  shortcomings. 
Without  complementary  measures  addressing 
effective 
transparency, 
supervision, there is a risk that legislative changes 
alone will not ensure compliance with Article 12 of 
continued 
Directive  2014/24/EU  or  prevent 
reliance  on  in-house  arrangements  that  distort 
competition. 

governance 

and 

(EU  average:  25%) 

that have experience of and have participated in a 
public  procurement  procedure,  21%  think  that 
corruption  has  prevented  them  from  winning  a 
public  tender  or  a  public  procurement  contract  in 
(174). 85%  of 
practice 
businesses  perceive  the  level  of  independence  of 
the  public  procurement  review  body  (the  Market 
Court)  to  be  ‘very’  or ‘fairly  good’ when  it  is 
reviewing  public  procurement  cases  (175). Public 
rigging) is 
procurement 
considered the main high-risk sector for corruption 
(176). Legislative 
the 
Finnish  Competition  and  Consumer  Authority 
(FCCA)’s  competencies,  but business  stakeholders 
decisive 
highlight 
enforcement 
the 
credibility of the institution and increasing risks of 
corruption (177). 

amendments enhanced 

of timely and 

of its rulings, 

undermining 

(including 

lack 

the 

bid 

and 

stronger 

fragmented 

Finland’s 
e-procurement 
landscape  and  data  quality  issues  highlight 
the need for interoperable systems, common 
standards 
data 
governance. Given  Finland’s  decentralised  e-
procurement  service,  which  has  between  two  and 
five  separate  procurement  services  in  operation 
(178),  economic  operators  must  use  several 
to  access  all  public  procurement 
systems 
procedures,  which  creates complexity  and barriers 
to  participation.  This  fragmentation  underscores 
the  need 
for introducing interoperability  and 
common standards. The once-only principle is only 
partially implemented at national level (see Annex 
7),  and  buyers  across  the  EU  still  lack  digital 
access to relevant evidence. Authorities also report 
issues  with  unreported  contract  award  notices 
(CANs)  and  unstructured  data  from  tender  bids 
across  services,  underscoring  the  need  to  ensure 
structured  data  management  (179).  Therefore,  the 
Finnish  system  would benefit from a  dedicated 
public  procurement  data  collection  and  analysis 

Businesses’  views  on  corruption  risks  in 
public  procurement  are  below  the  EU 
average.  In  Finland,  53%  of  companies  (EU 
average: 58%)  consider tailor-made specifications 
for  particular  companies  in  public  procurement 
procedures,  and  33%  (EU average:  53%)  conflicts 
of interest in the evaluation of bids, to be a ‘very’ 
or  ‘fairly  widespread’  practice.  Among  companies 

(174) Flash Eurobarometer 557, p. 133. 

(175) Justice Scoreboard (2025), p. 53; Flash Eurobarometer 555, 

p. 39. 

(176) Rule of Law Report- Country Chapter Finland (2025), p. 11. 

(177) Rule of Law Report- Country Chapter Finland (2025), p. 11. 

(173) https://vtv.fi/en/report/central-government-in-house-

procurement/  

(178) As reported in the e-procurement matrix. 

(179) As reported in the e-procurement matrix. 

53 

 
 
 
service within  the  government to  support  data-
driven oversight of the procurement life cycle (180). 

Industry and economic security 

of 

sectors 

terms 
important 

industry.  The  GVA  of  both 

Industry gross value added (GVA) constituted 
17.8%  of  Finland’s  total  GDP  in  2024  (181). 
Manufacturing  is  an  important  component  within 
industry, alone making up almost 80% of the GVA 
industry  and 
of 
since 
manufacturing  has  been  decreasing 
2022(182),  with  manufacturing  also 
clearly 
output.  Within 
decreasing 
in 
manufacturing, 
include 
machinery,  computer  and  electronic  products, 
fabricated metals and chemicals. Paper products is 
also  a  sizeable  sector  in  terms  of  value  added. 
Many of these sectors are included in the energy-
intensive  industries  (EIIs),  which  in  Finland,  as  in 
many other countries within the EU, were hard hit 
by  the  shock  in  2022  (see  Graph  A5.1).  However, 
energy prices in Finland are not as serious an issue 
as  in  other  EU  Member  States,  with  only  7%  of 
firms  reporting  it  as  being  a  major  obstacle  to 
investment,  which  is  significantly  lower  than  the 
EU  average  of  41%  (183).  In  fact,  Finland  has  the 
lowest  electricity  prices 
for  non-household 
consumers within the EU (0 061 vs EU 0.155). (See 
also Annex 9.) 

Machinery  and  motor  vehicle  products  were 
the biggest export group in 2024, accounting 
for  20.6%  of  all  Finnish  exports.  The 
is  significantly 
machinery 
bigger than the motor vehicle industry in terms of 
value  added  (184),  but  the  automotive  industry  is 
quite  an  important  employer  in  southern  Finland. 
According  to  a  recent  economic  brief,  this  region 

in  Finland 

industry 

has  been  particularly  affected  by  the  automotive 
sector’s  industrial  decline  and  would  struggle  to 
cope  with  the  decline  of  the  automotive  industry 
(185). The Finnish state recently became a majority 
owner of a car manufacturer, Valmet Automotive, 
which  is  now  planning  to  expand  to  the  defence 
industry,  which  is  another  important  industry  in 
Finland  (186).  There  are  also  growth  companies, 
such  as  the  satellite  company  Iceye,  which  are 
operating in the defence industry. 

Graph A5.1: Manufacturing industry production: 
total and selected sector, index (2021=100), 
2015-2024 

Source: Eurostat 

Beyond  machinery,  the  chemical  industry  in 
Finland  is  traditionally  one  of  the  biggest 
exporters and in 2024 made up 18.9% of all 
Finnish exports (187). However, exports from the 
chemical  sector  decreased  by  12%  in  2024, 
reflecting the challenging business situation in the 
chemical  industry.  Despite  this,  the  industry's 
expectations tend to be slightly positive (188). 

(180) European Court of Auditors, Special Report 28/2023: Public 
Procurement in the EU. Less competition for contracts 
awarded for works, goods and services in the 10 years up to 
2021, 2023, Special report 28/2023: Public procurement in 
the EU. 

(181) Eurostat: [nama_10_a10] Gross value added and income by 

main industry (NACE Rev.2 ). 

(182) Eurostat: [nama_10_a64] Gross value added and income by 

detailed industry (NACE Rev.2 ). 

(183) EIB Investment Survey 2025: Finland overview. 

(184) [nama_10_a64] Gross value added and income by detailed 

industry (NACE Rev.2 ). 

(185) Mapping the impact of industrial decline, European 

Commission 2025. 

(186) Valtiosta tulee Uudenkaupungin autotehtaan 

enemmistöomistaja – autoteollisuuden alavire ajoi tehtaan 
valtion syliin | Uutisia lyhyesti | Yle; Patria has agreed to 
collaborate with Valmet Automotive on the technology 
transfer and production of first armoured vehicles | Patria 

(187) Kuvioita Suomen ulkomaankaupasta 2024. 

(188) Facts and figures - Kemianteollisuus. 

54 

808590951001051101152015201620172018201920202021202220232024ManufacturingManufacture of wood and of products of wood and cork, except furniture; manufacture of articles ofstraw and plaiting materialsManufacture of paper and paper productsManufacture of chemicals and chemical productsManufacture of rubber and plastic productsManufacture of other non-metallic mineral productsManufacture of basic metals 
 
      
 
as 

energy 

as  well 

investment 

industry  and 

Work  on  decarbonising  traditional  industries 
is  ongoing.  Since  2020,  Finland  has  put  in  place 
sectoral  low-carbon  road  maps.  These  road  maps 
were  updated  in  2024  and  highlight  access  to 
clean 
international 
competitiveness  as  preconditions  for  the  clean 
transition.  Electrification  of  production  processes 
and  hydrogen  are  important  topics  for  multiple 
industries  (189).  Finland  has  a  2025  CSR  (4)  on 
boosting  public  and  private 
in 
decarbonisation  of 
transport, 
including  through  electrification.  In  2025,  Finland 
had a clean transition aid scheme worth EUR 400 
million  (190)  which gathered wide interest (191)  and 
resulted  in  EUR  312  million  in  funding  in  2025 
(192).  Finland  also  has  a  tax  credit  in  place  for 
climate-neutral 
in 
certain 
economy, 
industrial  decarbonisation, 
which  resulted  in  a  total  EUR  2  billion  of  granted 
tax  credit  in  2025.  The  continuation  of  this  tax 
credit scheme for investments in clean transition is 
now  being  discussed  (193).  There  are  numerous 
planned  investments  in  the  clean  transition  and 
Finland’s transmission system operator Fingrid has 
connections 
about 
received 
accounting  to  70  GW  of  electricity  consumption. 
The Ministry of Employment and Economic Affairs 
is  also  fostering  the  development  of  industrial 
parks,  which  can  help  in  the  electrification  and 
exploitation of side streams from other production 
plants (194). (For more, see Annex 8.) 

investments 
including 

inquiries 

grid 

the 

in 

Beyond  decarbonisation,  the  low  level  of 
resource  productivity 
Finland  also 
warrants  attention.  Resource  productivity, 
measured  as  gross  domestic  product  (GDP)  over 
domestic  material  consumption  (DMC),  has  been 
undergoing  a  slight  improvement  in  Finland  but 
the  country  still  has  the  second  lowest  level  of 
resource productivity  within the EU. Moreover, the 
circular material use rate in Finland is significantly 

lower  than  the  EU  average,  only  2%  compared 
with 12.2% in 2024. (For more, see Annex 8.)  

has 

important 

Finland 
comparative 
advantages  in  clean  technologies  due  to  its 
abundant  clean  energy,  technical  expertise 
and  wide  support  for  the  transition  to  net 
zero. 46% of Finnish firms consider the transition 
to stricter climate standards to be an opportunity, 
compared  with  the  EU  average  of  27%  (195).  A 
recent  OECD  analysis  also  highlights  Finland’s 
potential in terms of the green industrial transition 
(196).  Finland’s  manufacturing  capacity  across  all 
net-zero  technologies  remains  modest  but  has 
significant  development  potential,  particularly  in 
the  battery  sector  (197).  Finland  has  production 
capacity  in  wind  turbine  generators,  lithium-ion 
batteries and heat pumps. Numerous investments 
are  planned  throughout  Finland,  for  example  in 
wind 
battery 
hydrogen 
technologies (198).  According  to  the  Confederation 
of  Finnish  Industries,  around  EUR 303  billion  of 
green  transition  investment  is  planned  in  Finland 
by 2035 as of March 2026. In the hydrogen sector, 
Finland  is  aiming  to  account  for  10%  of  the  EU’s 
green  hydrogen  production  and  processing 
capability  by  2030  (199).  Hydrogen  pipelines  are 
being constructed to connect production in western 
Finland  with  uptake  in  southern  Finland  (200).  The 
hydrogen ecosystem in Finland is undergoing rapid 
development, but Finnish clean industry is plagued 
by  economic  and  regulatory  uncertainty  and  low 
global demand  for  clean products.  The industry is 
calling  for  clarity,  commitment  to  the  green 
transition  and  further  action  on  ensuring  demand 
(201). 

power, 

and 

in 
Finland  has  progressed  effectively 
implementing  the  Net-Zero 
Industry  Act 
(NZIA).  It  has  successfully  designated  a  single 

(195) EIB Investment Survey 2025: Finland overview. 

(189) Yhteenveto toimialojen vähähiilitiekartoista 2024. 

(196) OECD Economic Surveys: Finland 2025 (EN). 

(190) Hallitus hyväksyi puhtaan siirtymän teollisten investointien 
tukiohjelman: tukea varattu 400 miljoonaa euroa vuodelle 
2025 - Valtioneuvosto. 

(197) European Commission: Directorate-General for Energy, The 
net-zero manufacturing industry landscape across the 
Member 2025, https://data.europa.eu/doi/10.2833/2181110. 

(191) Teollisuuden investointituet viidelle suurelle puhtaan 

siirtymän investointihankkeelle 

(198) Confederation of Finnish Industries - Green transition 
investments in Finland. Extracted on 30/3/2026. 

(192) Business Finland myönsi viime vuonna rahoitusta yli miljardi 

(199) Hallitus hyväksyi periaatepäätöksen vedystä - Suomella 

euroa 

(193) Puhtaan siirtymän investointien verotuen jatkon valmistelu 

etenee - Valtioneuvosto 

(194) Government information. 

edellytykset valmistaa 10 prosenttia EU:n vihreästä vedystä 
2030 - Valtioneuvosto. 

(200) Government information. 

(201) Stakeholder feedback. 

55 

 
 
 
concentration  level  (205).  However,  when  it  comes 
to  materials  more  generally,  Finland  has  quite  a 
low level  of import dependency (17.5 vs EU 22.4) 
and  has  relatively  low  dependencies  on  biomass, 
metal ores and non-metallic minerals. It is heavily 
dependent only on fossil energy carriers (206). 

and 

coordination 

point  of  contact,  which  is  crucial  for  streamlining 
among 
communication 
stakeholders.  It  has  also  established  a  dedicated 
website.  Furthermore,  Finland  has  put  in  place  a 
national  contact  point  to  process  applications, 
facilitating  the  advancement  of  net-zero  strategic 
projects.  However,  Finland  has  not  yet  launched 
any net-zero strategic projects. Finland has a 2025 
CSR (4) on boosting public and private investment 
technologies, 
in 
including  circular  economy  solutions.  The  country 
has  strengthened  support for  the  green  transition 
and  Business  Finland  will  increase  investments  in 
green  technologies.  Business  Finland  also  has 
existing  schemes,  e.g.  on  circular  economy 
research (202). 

the  development  of  green 

Finland  is  a  mineral-rich  country  and,  at  EU 
level,  Finland  leads  in  the  production  of 
several  critical  raw  materials  (CRMs)  (203). 
Furthermore, rare earth elements are also present 
in  the  Finnish  bedrock,  and  extraction projects  for 
these are planned (204). A total of six projects from 
Finland, an amount surpassed only by France and 
Spain,  were  also  selected  as  strategic  projects  in 
2025  in  the  context  of  the  Critical  Raw  Materials 
Act  (CRMA).  Finland’s  mining  industry  plays  an 
important part in  Finland’s  and  the  EU’s  domestic 
sourcing.  The  mining  tax  increase  from  0.6%  to 
2.5%  and  the  use  of  the  standard  rate  for 
operational 
electricity 
the 
increased 
in  Finland, 
expenditure  of  mining  operations 
including  for  EU  CRM  Act  strategic  projects.  This 
could  reduce  incentives  to  invest  in  Finland  and 
increase  incentives  for  processing  companies  to 
source raw materials from other sources, including 
from  outside  the  EU.    At  the  same  time,  while 
taxes  increase,  the  European  Commission  has 
been asked to provide new funding instruments to 
support  the  capital  and  operational  expenditure 
incurred by EU raw materials producers. 

have 

While Finland has significant own extraction, 
it  remains  dependent  on  imports  for  some 
materials.  With  regard  to  CRMs,  Finland  has  a 
level of strategic dependencies which is above the 
import 
EU 

relatively  high 

level  due 

to  a 

(202) Government information. 

(203) RMIS - Country Profiles. 

(204) The Sokli studies are progressing – promising findings 

regarding rare earth elements and critical minerals - Finnish 
Minerals Group. 

(205) COMEXT. 

(206) Eurostat. 

56 

 
 
 
 
Table A5.1:  Single Market and Industry 

Source: (1) Eurostat, (2) EIB Investment Survey, (3) EIF SME Access to Finance Index, (4) Intrum Payment Report, (5) SAFE survey, 
(6) OECD, (7) data up to 2024: Single Market and Competitiveness Scoreboard, 2025: Commission calculation based on TED data, 
accessible at the Public Procurement Data Space (PPDS) (*) the value represented here under EU average is the median, (8) Single 
Market and Competitiveness Scoreboard, (9) European Commission calculations. 

57 

POLICY AREA20212022202320242025EU-27 average109,0106,4104,7105,9106,3100,013,413,713,612,812,712,64,24,14,14,44,53,9Business environment and simplification9,99,55,48,19,034,00,400,400,390,27-0,430,490,340,280,27-0,1912,89,914,417,817,017,48,211,516,013,213,413,6from private entities in the previous or current quarter---47,444,047,1from public entities in the previous or current quarter---12,111,815,922,526,524,924,324,440,70,0500,0500,0500,0500,0520,0501414161516273335460,80,90,40,40,611,11,310,60,91,190,9183,38091,784,284,611131189250,06660,09040,07460,06770,06120,146230,430,730,6--32,742,847,750,852,1-25,219,118,416,817,5-22,45,55,82,62,0-12,2FinlandINDICATOR NAMEBusiness environment and investmentProductivity and investmentLabour productivity (GDP per hour worked in PPP terms), % of EU271Business investment (share of GDP)1Public investment (share of GDP)1Impact of regulation on long-term investment, % of firms reporting business regulation as a major obstacle2SME liquidityEIF Access to Finance for SMEs index - loans3EIF Access to Finance for SMEs index - equity3Late paymentsPayment gap - corporates B2B, difference in days between offered and actual payment4Payment gap - public sector, difference in days between offered and actual payment4Share of SMEs experiencing late payments, %5Industry and economic securitySingle Market IntegrationEU trade integration, average(intra-EU imports + intra EU exports)/GDP, %1EEA Services Trade Restrictiveness index6Public procurementSingle bids, % of total contractors7*Direct awards, % of negotiated procedures7*ComplianceTransposition deficit, % of all directives not transposed8Conformity deficit, % of all directives transposed incorrectly8SOLVIT, resolution rate per country, %8Number of pending infringement proceedings8Energy-intensive industriesElectricity prices for non-household consumers1Electrification (electricity as a share of total energy consumption in industry)1Share of energy from renewable sources (renewable energy generation as a share of overall energy consumption)1Critical raw materialsMaterial import dependency, %1Circular material use rate1Operational cleantech manufacturing capacity in 20259 - Solar PV (c: cell, w: wafer, M:module), GW0.1 (m) - Electrolyzer, GW- - Heat pump assembly - - Battery, GW- 
 
 
     
 
ANNEX 6: SAVINGS, INVESTMENT AND ACCESS TO FINANCE 

Table A6.1:  Savings and Investment Union summary diagnostic 

Source: OECD (pensions), Eurostat (households' financial wealth), FISMA CMU dashboard (VC and PE), national sources (capital 
taxation). 

the  policy  goals  of 

Finland  stands  out  as  one  of  the  most  advanced 
countries  along  the  main  indicators  of  progress 
with 
the  Savings  and 
Investment  Union  (see  Table  A6.1).  The  Finnish 
economy relies heavily on medium-sized and large 
corporates, which account for most jobs and added 
value. Local companies have a clear preference for 
equity  funding  in  their  funding  mix  (on  top  of 
credit), which is also reflected in the relatively high 
level of development of the Finnish capital market. 
The  banking  sector  is  well  capitalised,  profitable 
and  easily  meets  the  credit  demand  of  local 
businesses.  Funding  overall  is  not  considered  a 
major  issue  by  local  firms  (207).  Households’ 
financial wealth is tied to the equity markets to a 
much  larger  extent  than  the  European  average. 
This is due to the large assets-backed pillar 1 (208) 
funds but also supported through the popular local 
savings  and 
investment  account,  and  more 
generally  due  to a  rather high  degree  of  financial 
literacy 
Insurance 
companies  are  dominated  by  several  players 
managing the asset-backed part of  the local pay-
as-you-go  (PAYG)  pension  and  have  an  equity-
focused  investment  portfolio,  similarly  to  local 
investment  funds,  which  have  been  growing 
rapidly  over  the  past  decade.  The  active  venture 
capital ecosystem allows companies to easily find 
initial  start-up  financing,  but  the  system  fails  to 
follow through at later stages of financing. 

population. 

among 

the 

Business landscape and company 
funding 

that 

in  2025 

corporate 

Finland’s 
landscape  mirrors 
broader  European  patterns.  However,  it  also 
exhibits  Nordic  characteristics  of  efficiency  and 
specialisation,  with  a  heavy  reliance  on  large 
export-oriented  firms  in  tech  and  manufacturing 
alongside  a  vibrant  SME  sector  in  services  (see 
Annex  5  for  more  details  on  the  Finnish  business 
landscape).  This  structure  also  underscores  the 
imperative  for  tailored  financing  mechanisms  to 
bolster  firms’  scalability.  Generally,  local  firms  do 
not  perceive  financing  as  a  major  obstacle  to 
making 
investment  decisions.  Just  9.6%  of 
domestic  firms  reported  to  the  EIB  Investment 
finance 
Survey 
constrained, slightly above the EU average (6.1%). 
This suggests that there is no major financing gap 
relative  to  investment  demand  and  perceived 
investment  needs.  Finnish  corporates  rely  on  a 
sound  mix  of  internal  financing  (covering  up  to 
69%  of  all  investment  needs,  against  an  EU 
average  of  66%),  bank  loans  and  capital  market 
instruments  for  business  funding  needs.  The 
average  Finnish  firm  relies  on  bank  loans  and 
overdrafts to a slightly higher extent (31% of total 
funding)  than  its  average  EU  peer  (about  27%) 
(209).  In  total,  corporate  funding  in  Finland  is 
equivalent to 210% of GDP, about  20 percentage 
points (pps) lower than the EU average of 230% of 
GDP.  Capital  market  instruments,  including  listed 
shares  and  bonds,  contribute  74.6%  to  the  total 

they  were 

(207) EIB Investment Survey 2024: Finland Country Overview. 

(208) The first pillar of the state pension provision. 

(209) ECB. 

58 

Main featuresRelative EU positioningAssets at 100.6% of GDP (32.3% in the EU)10-year real return of 3.5 (1.4% in the EU)Very high pension assets yielding a high real return.EUR 75 869 per capita (EUR 85 090 in the EU)o/w 13.9% in listed shares and bonds (7.6% in the EU)o/w 15.1% in investment funds (11.0% in the EU)o/w 12.8% in life insurance (13.4% in the EU)o/w 1.9% in  pension claims (13.6% in the EU)A very high share of households' financial assets is invested in equity and in capital markets.VC at 0.096% of GDP (0.064% in the EU)PE at 0.755% of GDP (0.487% in the EU)Very high venture capital and high private equity investments.30% on the first EUR 30 000, 34% above. Dividends from listed companies are effectively taxed at a tax rate of approximately 28.9%.No preferential tax treatment for equity investments, very high rates of capital taxation.1-34-1011-1718-2425-27Colours indicate the country's relative ranking based on five groups, ranging from the three best to the three worst performers. The relative ranking as regards an SIU diagnostic topic derives from a consistent cross-country comparison, the starting point of which is the average of the underlying main features.TopicAsset-backed pension schemesHouseholds' financial assetsVenture capital (VC)Private equity (PE)Capital taxation 
 
 
 
 
 
 
   
 
 
financing of Finnish firms, much more than the EU 
average  of  53.2%.  Listed  and  unlisted  shares  are 
equivalent to 118.6% of GDP in Finland, while the 
EU average stands at 97.9% of GDP. This reliance 
on  equity-based  instruments  and,  in  particular 
listed equities, highlights the level of development 
of  Finland’s  capital  markets  and  the  fact  that 
Finnish  investors  are  more  likely  to  invest  in 
equity-based instruments than their EU peers. 

Graph A6.1: Composition of non-financial 
companies' funding 

Source: Eurostat. End-2024. 

Size and structure of the financial 
sector 

Finland’s  financial  sector  is  dominated  by 
credit  institutions.  By  mid-2025,  the  banking 
sector’s  total  assets  stood  at  254.8%  of  GDP,  a 
few  percentage  points  above  the  EU  average  of 
245.3%  (210).  Foreign  presence  remains  limited, 
below  10%  of  total  assets,  but  all  lenders  have 
strong  ties  to  other  Nordic  markets.  Non-bank 
financial  intermediaries,  particularly  investment 
funds  and  insurance  corporations,  are  significant, 
with  assets  worth  76.9%  and  32.6%  of  GDP 
respectively  in  2024,  driven  by  a  strong  cultural 
emphasis  on  long-term  savings.  Local  private 
voluntary  pension  funds  (functioning  outside  of 
the pensions’ pillar 1 funds) manage assets worth 
1.2%  of  GDP.  The  small  size  of  these  voluntary 
pension  funds 
the 
comprehensive  and  sizeable  first-pillar-related 
pension  funds,  which  by  end-2024  managed 
assets  worth  EUR  277 billion  (roughly  equivalent 

is  mostly  explained  by 

to the country’s economic output), and also by the 
low  household  awareness  of  voluntary  pension 
funds.  

a 

(see 

Table 

exhibits 

stands  as 

The  capital  market  is  a  vital  component  of 
the  country’s  financial  system.  It  is  deeply 
embedded  within  the  broader  Nordic  ecosystem 
but 
footprint  when 
compact 
benchmarked  against  some  bigger  European 
markets.  Nasdaq  Helsinki 
the 
cornerstone equity trading platform in Finland with 
a  market  capitalisation  equivalent  to  97.1%  of 
GDP  in  2024,  about  30  pps  higher  than  the  EU 
average 
A6.2).  Non-financial 
corporations (NFCs) lead with over 66.2% of total 
market capitalisation, affirming the stock market’s 
crucial  intermediary  role  in  channelling  savings 
into the equity of Finland's corporates. Initial public 
offerings  (IPOs)  have  lost  momentum  in  recent 
years,  registering  just  13  new  listings  across  the 
main market over the past five years. The CCP and 
CSD 
is 
provided  by  Nasdaq  Clearing  AB  (Sweden  based) 
for the CCP and Euroclear Finland Oy for the CSD. 
Finnish  authorities,  in  collaboration  with  market 
participants,  have  been  actively  pursuing  a 
multifaceted plan to revitalise the domestic capital 
market  (211).  It  emphasises  further  diversifying 
NFCs  away  from  loan  financing  toward  equity 
markets,  lowering  barriers  to  IPOs  for  SMEs,  and 
investor 
boosting 
participation 
and 
attractiveness.  This  effort  also  builds  on  the  EU's 
Savings and Investments Union (SIU) initiative. 

infrastructure  of  the  capital  market 

institutional 
to 

strengthen 

liquidity 

retail 

and 

still 

While  NFCs  have  increasingly  turned  toward 
equity markets for funding, their embrace of 
fixed-income 
remains 
instruments 
sizeable.  Finnish  large  and  medium-sized  firms 
make  ample  use  of  fixed-income  financing, 
although  the  outstanding volume  of  non-financial 
corporate bonds is worth about 12.8% of GDP (vs 
an EU average of 10.7%), substantially lower than 
the  listed  equity  financing  part  of  corporate 
funding.  As  in  most  EU  Member  States,  the  local 
bond  market  remains  dominated  by  monetary 
financial institutions’ issuances (70% of GDP) and 
domestic  sovereign  bonds  (close to  60%  of  GDP). 
Private  sector  debt  securities  are  overwhelmingly 
denominated  in  euro,  reflecting  a  minimal  FX  risk 
for local issuers. 

(210) ECB. 

(211) Finanssialan kasvustrategia [Finance sector growth strategy]. 

59 

050100150200250FIEU% of GDPLoansTrade credit and advancesBondsListed sharesUnlisted sharesOther equity 
   
 
 
Graph A6.2: Capital markets and financial 
intermediaries 

its  close  to  EUR 300 billion  (end-2024)  of  funded 
assets allocated to global equities and alternative 
investments  –  acts  as  a  powerful  retirement 
vehicle that further boosts indirect equity exposure 
of local households. 

Graph A6.3: Composition of households' financial 
assets 

Source: ECB, EIOPA, AMECO. End-2024. 

Households’ participation in capital 
markets 

Source: Eurostat. End-2024. 

in  2024 

Rising  level  of  financial  confidence  across 
the  population.  Finnish  retail  investors  show  in 
on  average  confidence  when  managing  their 
financial  wealth.  Households’  financial  assets 
reached 155.5% of GDP at the end of 2024. This 
is  below  the  EU’s  average  of  212.2%  of  GDP  but 
significantly higher than most Member States. The 
average  monthly  disposable  income  per  capita 
stood  at  EUR 2 180 
(EU  average 
EUR 1 770)  (212),  while  the  saving  rate  stood  at  a 
relatively  low  12.42%  (EU  average  stood  at 
14.54%).  Finnish  households  stand  out  for  their 
high  direct  and  indirect  participation  in  capital 
markets  and  remain  among  the  most  equity-
oriented households in the EU. While about 30% of 
Finnish  households’  financial  assets  are  held  on 
current  accounts  and  sight  deposits  (the  EU 
average being 32%), 46% of households’ financial 
wealth is channelled to listed and unlisted shares, 
investment  funds  and  bonds,  against  an  EU 
average  of  29%.  Finns’  appetite  for  direct 
involvement  with  the  capital  market  is  driven  by, 
among  other  factors,  the  increasing  popularity  of 
the  share  savings  accounts.  Overall,  direct 
ownership  of  listed  equities  is  quite  widespread 
the  adult 
with  approximately  a  quarter  of 
population 
the 
mandatory earnings-related pension system – with 

shareholders,  while 

being 

(212) Eurostat. 

60 

laid  foundational 

There is further potential for retail investors 
to  engage  with  the  capital  market.  Finnish 
households’  shareholdings  have  been  on  the  rise, 
surging 9% year-on-year by Q3-2025, as noted by 
the central bank of Finland. Despite showing above 
the EU average engagement with capital markets, 
local  retail  investors  still  have  more  untapped 
potential.  This  hinges  partly  on  further  tax 
incentives and deepening financial literacy. Finnish 
authorities  have 
incentives, 
notably  the  osakesäästötili  (OST)  equity  savings 
account. This savings and investment account (SIA) 
was  launched  in  2020  with  tax-deferred  gains  on 
up  to  EUR 50 000  in  holdings  initially  and  further 
raised to EUR 100 000 more recently. The OST is a 
relatively  popular  product  (close  to  10%  of  adult 
Finns  opened  an  OST)  though  it  lacks  a  tax-free 
component and its penetration is penalised by the 
narrow  array  of  investable  financial  instruments. 
The 2025 blueprint for SIAs could  spark a further 
revision  of  the  OST  account  terms  possibly 
expanding  eligible  assets  to  bonds,  UCITS,  and 
ETFs,  which  would 
their 
attractiveness.  Current  tax  parity  on  capital  gains 
(in  the  brackets  30%  and  34%)  neither  penalises 
nor privileges bonds over equities and local savers 
are  generally more inclined  to  invest  into  equities 
the  average  European  saver.  Financial 
than 
education  is  important  in  Finland  and  is  already 
embedded  in  school  curricula  and  regular  public 
campaigns.  While  it  is  difficult  to  objectively 

further 

raise 

Non-financial corporationsFinancial corporationsNon-financial corporationsMFIsInsurance  and pension fundsOther financialsGovernmentMFIsPension fundsInsurance corporationsInvestment funds050100150200250300   Listed equity               Bonds                        Assets by sector% of GDP050100150200250020406080100FIEUFIEUper capita (000 EUR) (lhs)% of GDP (rhs)Currency and depositsInsurance and pension fundsInvestment fundsBondsListed sharesUnlisted sharesOther equityHH Debt (liability) 
   
 
   
quantify  the  impact  of  financial  education,  it  is 
noteworthy  that  these  efforts  correlate  with 
positive  household  behaviour  in  capital  market 
participation, further fostering the capital market-
oriented savings culture. 

The banking sector: resilience and 
financing of the economy 

Local 

stress 

exceeds 

comfortably 

lenders  maintain 

Finland’s banking sector shows resilience and 
meets  the  financing  needs  of  the  domestic 
economy. 
robust 
capitalisation  levels  reflected  in  the  Common 
Equity  Tier  1  (CET1)  ratio  of  17.8%  at  Q2-2025, 
surpassing  the  EU  average  of  16.8%.  MREL 
compliance 
regulatory 
mandates, and all major financial institutions have 
tests  with 
successfully  passed  EU 
acceptable  levels  of  CET1  erosion  under  adverse 
scenarios.  Liquidity  metrics  such  as  the  liquidity 
coverage  ratio  (LCR)  and  net  stable  funding  ratio 
(NSFR)  reflect  the  strong  liquidity  base  of  local 
banks.  Asset  quality  remains  exemplary,  with  a 
non-performing  loans  (NPL)  ratio  of  1.4%  versus 
the  EU's  1.9%,  however,  the  coverage  ratios  of 
NPL at 23.6% (mid-2025) trails the EU average of 
over 41.6%, signalling scope for enhancement. The 
banks’ asset quality outlook is subject to increased 
uncertainty due to the geopolitical uncertainty and 
its impact on energy prices and economic growth. 
Profitability has thrived over recent years, yielding 
a return on equity (ROE) of over 13% both in 2024 
interest  margin 
and  2025,  propelled  by  net 
expansion. The local banking sector has also made 
efforts  to  cut  costs,  which  results  in  a  cost-to-
income  ratio  of  43.5%  (lower  than  the  EU's 
few 
52.6%).  Yet, 
vulnerabilities  that  warrant  ongoing  scrutiny.  The 
loan-to-deposit ratio (L/D), at 128.4% by Q2-2025, 
continues to reflect a relatively strong reliance on 
wholesale  funding,  which  may  flag  a  potential 
vulnerability  in  crisis  times.  The  sector's  hyper-
concentration  –  the  top  five  lenders  command 
82%  of  assets  against  an  EU  average  of  51%  - 
poses some systemic risks, which are compounded 
by high household indebtedness.  

the  sector  has  also  a 

Credit extension to households and corporate 
clients is heavily driven by current economic 
uncertainty  and  follows  a  highly  interest 
rate-sensitive  path.  Lending  to  households 
declined  throughout  2024,  with  the  overall  loan 

61 

to 

corporate 

stock  contracting  by  close  to  1%  year-on-year 
(end-2024). 2025 remained marked by uncertainty 
coupled  with 
relatively  high  unemployment. 
Household  credit  stayed  virtually  flat  with  Finnish 
consumers  prioritising  debt 
repayments  and 
clients  has 
savings.  Credit 
transitioned  from  subdued  growth  to  a  slight 
contraction  in  the  loan  stock  in  the  first  half  of 
2025,  though  new  lending  activity  has  been 
picking  up  in  Q3-2025.  The  rise  in  new  lending 
confirms that firms with a solid business case are 
successfully accessing the funding they need from 
the  domestic  banking  sector.  However,  access  to 
financing  remains  uneven  across  regions  and 
company  types,  creating  structural  challenges  for 
balanced growth.  

Role of non-bank financial 
intermediaries 

the 

Finland’s insurance sector encompasses both 
traditional  life  and  non-life  insurers  and 
institutions  managing  statutory  earnings-
related  pension  providers.  The  latter  manage 
part of pillar 1 PAYG pension assets, a cornerstone 
local  capital  market  depth.  These 
of 
specialised  pension  insurance  companies  (distinct 
from  life  and  non-life  business)  are  regulated  as 
insurers  and  supervised  by  the  local  Financial 
Supervisory Authority (FIN-FSA). This integration is 
a  specific  Finnish  feature,  where  mandatory 
is  decentralised  to  private 
pension  provision 
insurance 
local 
insurance-like  providers.  The 
market, like the domestic banking sector, is highly 
concentrated,  with  the  four  largest  insurance 
groups  accounting  for  about  90%  of  premiums 
written in 2024. Non-life segments enjoy a quasi-
universal  uptake  bolstered  by  a  strong  risk 
management  culture.  Life  insurance,  on  the  other 
hand, 
consists  mostly  of  unit-linked  and 
investment-oriented products covering below 10% 
of the population and growing modestly. Voluntary 
life insurance in Finland is a niche segment due to 
strong statutory survivors' pensions and group life 
coverage  often  provided  by  employers.  Total 
insurance sector assets under management (AUM) 
reached  EUR 194 billion  at  end-2024  (including 
PAYG  assets),  while  gross  written  premiums  grew 
5.2% to EUR 29.8 billion. The solvency positions of 
local insurers are robust with life insurers at 222% 
and  non-life  at  251%  in  mid-2025,  comfortably 
above EU averages.  

 
Finnish  insurers  pursue  a  distinctly  growth-
oriented  asset  allocation  that  is  heavily 
skewed  toward  equities.  This  sets  the  local 
insurance  sector  apart  from  more  fixed-income 
oriented European peers. Equities and equity funds 
comprise 74% (213) of their portfolios, fixed income 
around  17%  (including  government  and  corporate 
bonds), and real estate 7%, whereas about 2% of 
the  aggregate  portfolio  was  invested  into  loans 
and  alternative  investments.  This  risk  appetite 
stems  predominantly  from  the  long  duration  of 
pension 
liabilities  with  minimal  guarantees, 
enabling  higher  equity  caps  under  bespoke 
solvency rules that are less punitive than standard 
Solvency  II  charges.  Insurers  managing  pension 
funds also benefit from reforms launched in 2025 
raising  equity  limits  to  75-85%  and  refining 
volatility adjustments. Traditional life and non-life 
undertakings  face  much 
II 
constraints,  in  line  with  the  pan-European  rules 
capping  the  equity  allocation.  Life  and  non-life 
players  invest  about  57%  of  AUM  into  debt 
securities, 33% into equity instruments and about 
7%  into  real  estate.  Bottlenecks  for  voluntary 
insurers  include  capital  charges,  concentration 
rules, and liquidity requirements. There are no hard 
bans  for  venture  capital  (VC)  allocation,  but 
practical  constraints  and  supervisory  oversight 
limit  more  aggressive  VC  uptake  compared  with 
listed equity or bonds allocation.  

tighter  Solvency 

and 

have 

been 

UCITS 

funds) 

steadily, 

investment 

Finland’s  asset  management  industry  has 
exhibited  robust  expansion  over  the  past 
decade.  The  retail  investors’  base  has  been 
growing 
funds 
and 
AIF-compliant 
(encompassing 
investment 
efficiently 
channelling new inflows of household savings into 
the  capital  market.  At  end-2024,  total  AUM  by 
domestic  funds  reached  EUR 184 billion (214)  – 
equivalent  to  some  67%  of  GDP,  trailing  the  EU 
average  of  approximately  100%  of  GDP  but 
reflecting steady progress up from EUR 149 billion 
a  year  prior.  Equity  funds  dominate  the  assets’ 
management  landscape,  capturing  over  50%  of 
total AUM, while the bond segment and the mixed 
funds segment each represent about a fifth of the 
total  AUM.  In  response  to  growing  retail  investor 
the  offerings  of  sustainable  and 
demand, 
investments  have  been  growing 
technology 

(213) Finnish Insurance in 2024, Finance Finland. 

(214) Finance Finland. 

rapidly.  The  Finnish  funds  sector  is  expected  to 
grow further as retail investors are becoming more 
financially  aware.  VC  and  PE  (private  equity) 
allocations  remain  marginal  as  retail  investors 
favour liquid and less risky investments. 

in  Finland 

The  segment  of  voluntary  supplementary 
pensions 
remains  a  niche 
component of the pension savings landscape 
given  the  size  of  the  statutory  earnings-
related  system.  Individual  pension  insurance 
policies  and 
long-term  savings  contracts  are 
managing assets of circa EUR 3 billion in 2024 i.e. 
less  than  1%  of  GDP  and  remain  stagnant. 
Participation is limited, covering less than 10% of 
working-age  adults.  Asset  growth  has  been  slow 
over recent years, hampered by the relatively low 
tax  deduction  ceilings  (EUR 5 000  annual  limit, 
until they are abolished in 2027), lack of an auto-
enrolment  mechanism  and  cultural  reliance  on 
mandatory  schemes.  Local  voluntary  pension 
funds  are  often  perceived  as  a  redundant  option 
when  viewed  against  the  statutory  earnings-
related  system  and  do  not  offer  any  major 
differentiation  such  as  access  to  different  asset 
classes  compared  with  the  statutory  product. 
Furthermore, taxation on gains within the policy is 
deferred until withdrawal, at which point gains are 
taxed  as  capital  income  (30-34%  rate,  depending 
on  total  capital  income).  Specific  investor  profiles 
invest 
supplementary  pension 
products  in  Finland,  but  the  product  as  such 
remains  a  niche  product  with  its  appeal  declining 
since  the  discontinuation  of  the  tax  deduction 
in  2027.  Nevertheless,  the  European 
system 
2025/2384 
recommendation 
Commission’s 
encourages Member States to introduce automatic 
enrolment  mechanisms  and  to  set  up  more 
integrated  national  pension  tracking  systems  that 
enable  the  public  to  view  and  monitor  their 
accrued pension rights across all pillars in a single, 
accessible place. 

in  voluntary 

Venture capital ecosystem 

Finland’s  VC  and  PE  ecosystem  continues  to 
thrive.  It  is  bolstered  by  decades  of  innovation 
policy  cultivating  a  high-tech  start-up  culture  and 
positioning Finland among EU leaders in deeptech 
and cleantech (215). It is a mature market that has 

(215) See Annex 4 for more information. 

62 

 
 
 
been  successfully  attracting  substantial  cross-
border capital inflows with on average about 65% 
of  VC  volume  being  international  capital.  Finnish 
start-ups raised in 2024 the EUR 445 million of VC 
and  growth  funding.  Start-up  and  seed  capital 
were marking a close to 50% year-on-year surge. 
despite  a  broader  European  downturn.  When 
looking at the total amount of investments raised, 
the  market  reached  EUR 1.4 billion  according  to 
the Finnish Venture Capital Association (FVCA). The 
positive momentum was carried into 2025 as the 
sector  showed  further  growth  in  the  first  half  of 
the year. PE activity was worth 0.755% of GDP (vs 
the  0.487%  EU  average) 
sustaining 
momentum  into  2025  amid  resilient  buyout  and 
growth segments dynamics. 

(216), 

(Finnish 

innovation  investments,  (ii)  setting  up  the  Finnish 
Angel  Co-investment  Fund  (EUR  30  mn  for  early-
stage  matching), 
Industry 
(iii)  TESI 
Investment  vehicle)  2024  commitments  to  VC/PE 
funds  to  the  tune  of  EUR  337 million,  (iv)  eased 
solvency  buffers  under  the  2025  pension  reform 
allowing  up  to  85%  equity  exposures,  including 
into  VC/PE  operations,  (v)  simplified  access  to 
Business  Finland  grants,  (vi)  enhancing  regulatory 
support by the FIN-FSA  for  FinTech developments 
under  DORA/MiCAR,  and 
(vii)  public-private 
collaborations  to  expand  fund-of-funds  vehicles 
for pension limited partners. 

often 

resulting 

investors, 

There  are  still  bottlenecks  hampering  more 
dynamic  development  of  the  VC  market. 
Foremost there is the scaling-up bottleneck. Local 
VCs excel in seed and Series A rounds but falter at 
growth stages due to a scarcity of large domestic 
institutional  funds  capable  of  leading  EUR  50-
100 million  plus  rounds.  This  forces  reliance  on 
in 
international 
ownership  dilution  and  relocation  risks  for  local 
unicorns or quasi-unicorns. The FVCA estimates an 
annual  EUR 200-300 million funding gap  for mid-
listing  difficulties  further 
stage  firms.  Public 
exacerbate  the  exit  strategy  conundrum  with 
Nasdaq Helsinki's slow IPO activity stemming from 
the  relatively  small  bourse  size  and  investor 
preference  for  acquisitions  over  IPOs.  Additional 
headwinds  for 
include  talent 
local  start-ups 
retention amid high living costs and brain drain to 
the  neighbouring  Stockholm  or  to  Silicon  Valley. 
The 2025 Slush Survey (217) reveals that hiring is a 
major  hurdle  for  40%  of  founders.  The  Finnish 
authorities  have  pursued  a  multifaceted  strategy 
to continue to invigorate the VC/PE landscape. The 
2024-2027  government  strategy 
to  bolster 
entrepreneurship, embedded in the broader plan to 
push  R&D  expenditure  to  4%  of  GDP  by  2030, 
encompasses several points (218), among which the 
most  important  are:  (i)  granting  tax  credits  for 

(216) Differences in VC/PE indicators across annexes reflect the 

use of distinct data sources. This Annex uses CMU Dashboard 
data for consistency across CMU indicators, while Annex 4 
uses InvestEurope data, which is disaggregated by 
investment stage. Variations in reported figures are therefore 
due to underlying source definitions. 

(217) https://slush.org/. 

(218) Some of the milestones have been already implemented; 

See also Annex 4 on Innovation. 

63 

 
 
 
 
Table A6.2:  Financial sector indicators 

(1) Annualised data. EU data for credit growth and pension funds refer to the EA average. 
Source: ECB, Eurostat, European Insurance and Occupational Pensions Authority, DG FISMA CMU dashboard, AMECO. 

64 

20182019202020212022202320242025-Q3EUTotal assets of MFIs, % of GDP271.0273.5295.6287.9291.5263.9240.7238.3246.1Common equity Tier 1 ratio17.217.618.117.817.218.318.218.216.8Total capital adequacy ratio20.921.321.221.420.622.122.121.920.2Overall NPL ratio, % of all loans1.51.41.51.21.01.11.41.41.9NPL ratio, loans to NFCs2.82.52.52.11.31.51.7-3.5NPL ratio, loans to HHs1.31.31.61.41.41.61.81.72.1Return on equity ratio18.14.95.89.29.613.513.212.79.6Loans to NFCs, % of GDP36.838.141.039.939.438.838.638.729.3Loans to HHs, % of GDP56.356.358.557.754.652.551.851.343.6NFC credit growth rate, %7.96.96.83.25.71.2-0.30.32.5HH credit growth rate, %2.12.93.34.01.5-1.2-0.50.22.6Stock market capitalisation, % of GDP101.5109.9123.3138.9107.297.089.9102.069.9Initial public offerings, % of GDP0.270.120.281.370.140.000.00-0.06Market funding ratio63.762.762.461.761.161.361.3-49.7Private equity, % of GDP0.5080.5080.6940.6380.7140.7070.755-0.487Venture capital, % of GDP0.0730.0910.1300.1490.1540.1150.096-0.064Financial literacy, composite index-----38.0--45.5Bonds, % of HHs' financial assets1.10.90.70.50.50.80.7-2.8Listed shares, % of HHs' financial assets13.114.515.316.314.413.813.1-4.8Investment funds, % of HHs' financial assets9.911.111.613.312.213.615.1-11.0Insurance/pension funds, % of HHs' financial assets17.216.916.117.115.816.315.8-27.8Total assets of insurers, % of GDP31.132.834.336.029.830.732.6-53.9Pension assets, bn EUR---263.9241.5254.7277.5-5813.8Pension assets, % of GDP---106.190.893.3100.6-32.310y real return average of pension assets, %-----3.33.5-1.4Pension funds assets, ECB (% of GDP)-1.81.81.71.41.41.41.323.01-34-1011-1718-2425-27Colours indicate performance ranking among the 27 EU Member States.Banking sectorNon-banking sector 
 
 
 
      
 
ANNEX 7: EFFECTIVE INSTITUTIONAL FRAMEWORK 

institutional  framework 

An  effective 
is 
essential  for  competitiveness.  This  requires 
public  trust  built  on  integrity,  quality  legislation, 
regulatory  simplification  and  efficient  services  for 
people and businesses. 

Public trust 

Graph A7.1: Trust in justice, regional / local 
authorities and in government 

(1) EU-27 since 2019; EU-28 before 
Source: European Commission, Standard Eurobarometer 
surveys. 

Trust  in  institutions  remains  well  above  the 
EU average. Trust in the justice and legal system 
is the highest in the EU and has increased slightly. 
Trust  in  regional  or  local  authorities  also  exceeds 
the EU average and has risen slightly from 62% to 
66%  since  2024,  although  it  has  fallen  8%  since 
2017 (Graph A7.1). Both businesses and the public 
retain  confidence  in  the  public  administration’s 
ability 
their  data  securely  and 
responsibly  (219).  These  metrics  reflect  Finland's 
sustained trust in public institutions. 

to  handle 

Quality of lawmaking 

Finland’s  rules  for  lawmaking  show  broad 
alignment  with  best  practice  to  reduce  the 
regulatory  burden  and  ensure  effective 
implementation,  although  there  is  room  for 

improvement.  Performance  continues 
to  be 
generally stronger in stakeholder engagement and 
ex  ante  impact  assessments  than  in  ex  post 
evaluation of legislation. However, some practices 
weaken  the  ability  to  monitor  implementation  of 
legislation,  such  as  the  absence  of  a  formal 
requirement for the legislature to assess the level 
of compliance when developing new primary laws 
(Table A7.1.). 

to 

for 

RIAs 

significance 

assessment 

Regulatory  impact  assessments  (RIAs)  are 
required  and  conducted  for  all  primary  laws 
and  some  subordinate  regulations.  The  RIA 
Guidelines  were  renewed  in  2022  and  extend 
requirements 
of 
include 
macroeconomic,  financial  and  indirect  costs  (220). 
The Finnish Council of Regulatory Impact Analysis, 
reviews 
Finland's 
regulatory  oversight  body, 
selected 
and 
representativeness  before  approval  but  cannot 
return  an  impact  assessment  for  revision  if  it  is 
deemed inadequate, which limits its effectiveness. 
Furthermore, oversight of better regulation tools is 
weakened  by  the  absence  of  an  external  body 
responsible  for  reviewing  the  quality  of  ex  post 
evaluation.  There  are  no  publicly  available 
assessments  of  the  effectiveness  of  RIAs  in 
amending  regulatory  proposals,  nor  are  there 
the  percentage  of  ex  post 
indicators  on 
evaluations  that  comply  with  guidelines  (Table 
A7.1.). 

remains 

evaluation 

Recent  reforms  indicate  a  commitment  to 
strengthening ex post evaluation: principles of 
conduct were established in 2023(221). However, ex 
non-mandatory. 
post 
Moreover, there are currently no indicators to track 
the percentage of ex post evaluations that comply 
with  guidelines,  and  the  effectiveness  of  such 
evaluations  in  improving  regulatory  stock  has  not 
yet been systematically assessed (Table A7.1). The 
Impact  Assessment  Competence 
government's 
Network,  which  was 
support 
implementation  of  the  new  principles,  is  currently 
on  its  second  term  (2023-2027).  It  aims  to 
cooperation  and 
strengthen 

inter-ministerial 

set  up 

to 

(219) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

(221) Valtioneuvoston yhteiset periaatteet lainsäädännön 

seurannasta ja jälkiarvioinnista. 

(220) Guidelines for Impact Assessment in Law Drafting. 

65 

00,10,20,30,40,50,60,70,80,9AutumnSpringAutumnSpringAutumnSpringWinterSummerWinterSpringWinterSummerAutumnSpringAutumnSpringAutumnSpring202520242023202220212020201920182017Justice,  legal system EU-27Justice,  legal system FIRegional or local public authorities EU-27Regional or local public authorities FIGovernment  EU-27Government  FI 
 
      
 
 
 
Table A7.1:  Finland. Selected indicators on better regulation practices for primary legislation 

Source: OECD, 2025, Regulatory Policy Outlook 2025 [https://doi.org/10.1787/56b60e39-en] and Better Regulation across the 
European Union 2025  

support  both  impact  assessment  in  legislative 
drafting and ex post evaluation of legislation(222). 

in 

These 

guidelines 

Finland  performs  well 
stakeholder 
engagement for legislation (223). The legislative 
drafting consultation guidelines, finalised in 2025, 
offer  practical  guidance  across  all  stages  of 
lawmaking. 
underscore 
Lausuntopalvelu.fi  as  the  primary  platform  for 
organising consultations and recommend that it is 
used  more  consistently  across  government. 
Lausuntopalvelu.fi complements the government's 
Registry for Projects and Initiatives, which publicly 
provides  information  on  ministries'  development 
legislative  preparation.  However, 
projects  and 
a 
have 
stakeholders 
minimum length for the consultation period as an 
area for improvement (224). Fully implementing the 
new  guidelines  has  the  potential  to  further 
strengthen stakeholder engagement (225). 

highlighted 

ensuring 

Finland  is  taking  steps  toward  simplifying 
regulation. In 2024–2025, Finland monitored the 
impact  of  primary  and  secondary  legislation  on 
businesses (particularly SMEs) and people through 
initiatives such as administrative burden reduction, 

(222) Valtioneuvoston vaikutusarvioinnin osaamisverkosto 2023-

2027 - Ministry of Justice. 

(223) OECD, 2025, Better Regulation Practices across the European 

Union 2025, https://doi.org/10.1787/6f007516-en.  

(224) European Commission, 2025, Rule of Law Report Finland 

Country Chapter p. 14-15. 

(225) Lainvalmistelun kuulemisopas - Valtioneuvosto. 

66 

(kuntien 

normien 

norm  simplification,  and  the  'one  in,  one  out' 
principle.  A  dedicated  programme  on 
the 
simplification  of  municipal  regulations  was  also 
launched 
keventäminen). 
Legislative  changes  are  estimated  to  reduce 
companies’  administrative 
costs  by  around 
EUR 120 million per year and remove at least 133 
burdensome  norms,  demonstrating  attention  to 
competitiveness,  specific  social  groups  and 
regional impacts. (226) 

Public service delivery and 
digitalisation 

Finland  maintains  high  satisfaction  with 
public services, with 66% of people satisfied 
or very satisfied with public administration – 
among  the  EU’s  top  performers.  Business 
satisfaction  stands  at  48%,  also  above  the  EU 
average of 42% (227). 

However,  processing  times  are  the  main 
challenge for both groups in interaction with 
public  administration  (Table  A7.2  and  Graph 
A7.2).  Some  39%  of  people  identify  waiting  for 

(226) Hallituksen toimet sääntelyn keventämiseksi tuovat 

merkittäviä säästöjä yrityksille ja sujuvoittavat arkea - Työ- 
ja elinkeinoministeriö. 

(227) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

Tools for smart legislation: Share of possible impacts assessed for all primary laws when developing legislation 1Regulators are required to identify and quantify the benefits of a new primary law1Regulators are required to identify and assess the impacts of alternative non-regulatory options1Tools for effective implementation: when developing laws, regulators are required to:Assess the level of compliance0Identify and assess potential enforcement mechanisms1Specify the methodology of measuring progress in achieving the law's goals1Oversight of better regulation: There is an external  body responsible for reviewing the quality of RIAs and of ex post evacuations 1There are publicly available assessments of the effectiveness of RIA in modifying regulatory proposals 0There are reports on the level of compliance by government department with the requirements of RIA1There are indicators on the percentage of ex post evaluations that comply with guidelines0The effectiveness of ex post evaluations in improving the regulatory stock has been assessed in the last five years1 
 
 
 
   
 
Table A7.2:  Digital Decade key performance indicators: availability of digital public services 

(1) Digital Decade target by 2030: 100. (2) Publishing year, data were collected in the previous year 
Source: European Commission, 2025, State of the Digital Decade report. 

responses  as  the  most  time-consuming  aspect  of 
interactions  (Graph  A7.2),  while  42%  associate 
public  administration  with  slow  service  provision 
(down  5%  from  2023,  a  slight  improvement). 
Similarly, 27% of businesses cite processing times 
as  the  most  time-consuming  part  of  interacting 
with  public  administration.  Despite  this,  60%  of 
businesses report experiencing no negative impact 
on 
result  of  public 
administration services, placing Finland among the 
EU’s best performers (average: 45%). (228) 

their  business  as  a 

Graph A7.2: Most time-consuming aspects of 
service delivery 

of 

transformation 

Finland  continues  to  be  a  frontrunner  in  the 
public 
digital 
administration across the EU. Finland’s current 
availability  of  digital  public  services  for  people 
(Finland:  96;  EU:  82)  and  businesses  (Finland:  99; 
EU: 86) place it high above the EU average. Online 
access to electronic health records remains above 
the  EU  average  (Table  A7.1.)  The  proportion  of 
people  using  their  electronic  identification  (eID)  is 
also high (Finland: 96; EU; 52) (230). 

is 

currently 

reviewing 

Finland 
its 
digitalisation  strategy,  the  Digital  Compass, 
which  was  published  in  2022.  The  review  is 
being 
interministerial 
cooperation.  The  updated  strategy  is  expected  to 
be published in June 2026. 

conducted 

through 

the  Social 

While  most  people  in  Finland  use  digital 
public  administration  services  (97%)  (231), 
Finland introduced Suomi-piste service points 
in  2025  to  improve  accessibility  for  people 
who  cannot  or  do  not  wish  to  use  digital 
services.  Suomi-piste  brings  together  services 
Insurance 
from  state  authorities, 
Institute (Kela)municipalities and wellbeing regions 
under  one  roof,  offering  in-person  and  remote 
assistance,  with  a  nationwide  network  being 
gradually expanded towards full coverage by 2030 
(232).  Suomi-piste  service  points  might  improve 
interactions with public authorities given that 38% 
of  people  would  prefer  a  single  point  of  contact 
and  38%  would  like  the  digital  services  provided 
by  the  administration  to  be  more  user-friendly 
(233). In addition, people would appreciate receiving 

(230) European Commission, 2025, Digital Decade 2025: Country 

reports. 

(231) European Commission, 2025, DESI indicators. 

(232) Suomi-pisteet kokoavat viranomaisten palveluja saman 

katon alle | Suomi-piste. 

(233) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

Source: European Commission, 2026, Flash Eurobarometer 
surveys 567 and 568 on satisfaction with administrative 
services.  

People  also  indicated  that  interaction  with 
public administration was relatively efficient 
overall,  with  40%  reporting  they  needed  no 
more  contact  than  initially  expected  (EU: 
interoperability  gaps 
29%).  However,  certain 
might persist, since 59% claim they are repeatedly 
asked for the same personal data, and 57% would 
appreciate  being  proactively  offered  prefilled 
forms. (229) 

(228) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

(229) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

67 

0%10%20%30%40%50%Time forresponsesApplicationformsDocumentspreparationTime forresponsesApplicationformsDocumentspreparationPeopleBusinessesEUEU-27202320242025202592919682100100998690838583Digital public services for citizens (0 to 100)Digital public services for businesses (0 to 100)Access to electronic health records (0 to 100)Finland 
 
   
 
 
 
   
 
help  quickly  through  interactive  chat  (68%),  as 
well as improved mobile access (61%) (234). 

permit  efficiency  and  investment  conditions  will 
require monitoring as implementation matures. 

is 

its 

renewing 

Finland 
institutional 
permitting  structures.  In  January  2026,  a  new 
ja 
permits  and  supervisory  agency,  Lupa- 
valvontavirasto,  was  established,  centralising 
functions previously managed by six regional state 
administrative  agencies,  15  ELY  centres  (Centre 
for  Economic  Development,  Transport  and  the 
Environment)  and  Valvira  (National  Supervisory 
Authority  for  Welfare  and  Health)  into  a  single 
authority with approximately 2 000 staff (235), and 
replacing  21  regional  authorities  with  a  single-
window approach ( see also Annex 5). Finland has 
also  introduced  temporary  priority  processing  for 
green  transition  permit  applications  in  regional 
state  administrative  agencies  (2023–2026)  and 
administrative  courts  (2023–2028),  in  line  with 
the goal of a carbon-neutral Finland by 2035 (236). 
The new Building Act further mandates BIM-based 
digital permits with statutory processing deadlines, 
and  by  2029,  the  Ryhti  national  information 
system  (237)  will  standardise  built  environment 
data nationwide. 

to 

to 

still 

needs 

across 

through 

identify the 

Finland has 
cross-border 
enabled the 
exchange  of data  and documents  between 
the  EU  once-only 
authorities 
technical  system(241). When services(242) become 
accessible,  people  and businesses  will  no  longer 
their data, download 
for 
search 
have 
and upload documents  manually 
e-
government  portals  in different  Member  States. 
Finland 
types 
of documents they needs to exchange through the 
system  and explore  ways  to  shift  from  the 
submitting  unstructured document  formats 
to 
structured ones.  Finland  has  one  procedure  (243) 
covering  the  education  domain/studying  abroad 
life  event  and  authority 
the 
population,  education  and  business  domain 
connected.  From  the  beginning  of  2026,  a  citizen 
certificate  linked  to  a  Finnish  ID  card  will  allow 
people  to  make  cross-border  transactions  using 
electronic  services,  in  compliance  with  the  eIDAS 
Regulation (244). 

registries 

in 

In spite of the recent reforms, issues remain 
in  permitting  environment  remain,  including 
fragmented  digital  tools  and  overly  detailed 
environmental  impact  assessments  (238).  A 
recent  Technical  Support 
Instrument  project 
provided  recommendations  to  improve  legislative 
and environmental  procedures and IT systems for 
permits (239). Although the recent changes address 
many of the structural shortcomings and speed up 
in  renewable  energy  and 
major 
decarbonisation  (see  2025  country  report  for 
Finland,  p.  8,  No  27  (240)),  their  full  impact  on 

investments 

(234) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

(235) Lupa- ja valvontavirasto tukee kasvua ja varmistaa 

oikeusturvaa koko Suomessa - Valtiovarainministeriö. 

(236) Ohjeistus etusijamenettelystä. 

(237) Ryhti - Rakennetun ympäristön tietojärjestelmä. 

(238) European Commission, 2025, Accelerating permitting for 
renewable energy and green investments - Reforms and 
Investments. 

(239) European Commission, 2025, Accelerating permitting for 
renewable energy and green investments - Reforms and 
Investments. 

Civil service 

Finland's  civil  service  continues  to  have  a 
high  level  of  education  and  commitment  to 
professional  development,  though  financial 
pressures  may  challenge  workforce  capacity 
in  the  coming  years.  Educational  capacity 
remains  exceptionally  strong,  with  71%  of  civil 
servants  having  a  post-secondary  education  (EU 
average  55%)  (245).  39%  of  public  administration 
employees  participate  in  education  and  training, 
which  is  among  the  highest  rates  in  the  EU  (EU 

(241) European Commission, Once-Only Technical System 

Acceleratormeter, Ec.europa.eu. 

(242) Procedure types under Annex II of the SDGR (2018/1724/EU) 
and directives 2005/36/EC, 2006/123/EC, 2014/24/EU and 
2014/25/EU.  

(243) European Commission, 2025, Once-Only Services going-live! 
Applying for a tertiary education study financing in Finland, 
Ec.europa.eu. 

(244) Identification in official services in the EU area using a citizen 
certificate to be enabled in 2026 - Finnish Government. 

(240) European Commission, 2025, https://economy-

(245) European Commission, Eurostat, 2026, European Union 

finance.ec.europa.eu/publications/2025-european-semester-
country-reports_en 

Labour Force Survey, Employees by educational attainment 
level and NACE Rev. 2 activity (2008-2026). 

68 

 
 
 
average 19%) (246). To further support professional 
development,  a  peer  mentoring  programme  for 
state  administration  managers  and  experts  was 
launched in 2025, facilitating knowledge exchange 
and  cross-organisational  cooperation  as  part  of 
the personnel strategy implementation (247). 

The  age  profile  of  Finland's  civil  service 
remains  balanced  although  slightly  higher 
than  the  EU  average,  with  a  ratio  of  1.64 
younger  (25-49)  to  older  (50-64)  civil  servants. 
This  figure  indicates  a  relatively  balanced  age 
structure despite the long-term trend of an ageing 
workforce in Finland (248). The proportion of women 
in senior management has remained above the EU 
average  (Finland:  52;  EU:  48),  although  this  is 
slightly down in 2024 (Finland: 54) (249). 

Recent  initiatives  demonstrate  a  sustained 
commitment  to  integrity  in  Finland’s  public 
In  2025,  the  Public  Service 
administration. 
Leadership  Group published  a  proposal  for values 
and  principles  for  public  service 
leadership, 
emphasising  democracy,  public  interest,  rule  of 
law,  justice,  equality,  transparency,  trust,  human-
centredness, independence and impartiality (250). In 
addition,  a  2024  survey  on  civil  service  ethics 
found  that  most  staff  perceive  administrative 
in  daily  work. 
values  as  clearly 
Leadership  example  was  identified  as  the  most 
influential  factor  in  implementing  civil  service 
ethics,  followed  by  whistleblower  protection.  Key 
challenges 
included  excessive  workload  and 
insufficient  resources  (251).  Findings  suggest  that 
while  Finland’s  public  service  values  are  well 
internalised,  their  realisation  in  practice  relies  on 
leadership  example  amid  growing 
resource 
constraints. 

reflected 

(246) European Commission, Eurostat, 2026, European Union 
Labour Force Survey, Participation rate of employees in 
education and training (last 4 weeks) by NACE Rev. 2 activity 
(2008-2026). 

(247) Valtion vertaismentorointiverkosto - Valtiolla.fi. 

In  April  2025,  the  government  adopted  a 
fiscal plan for 2026-2029 including EUR 130 
in  annual  public  administration 
million 
savings 
Productivity 
in  2026. 
starting 
leverage  digitalisation,  AI, 
improvements  will 
streamlined processes and enhanced procurement 
(252). Union negotiations in 2025 reflected the tight 
fiscal situation and may contribute to instability in 
public  administration  as  savings  measures  are 
implemented. 

Integrity 

(EU: 

fewer 

firms perceive corruption  as 
Far 
widespread (Finland: 28%; EU: 63%) and only 
18% see it as a problem when doing business 
(EU: 35%)(253). Nevertheless, 59% cite that overly 
links between business and politics lead  to 
close 
corruption 
76%), suggesting perceived 
vulnerability even  amid  lower  overall  corruption 
perceptions.  Sectors  particularly  vulnerable  to 
corruption  in Finland are  public  procurement  and 
land use planning (254) (see also Annex 5). Only 2% 
of  companies  report  being  asked  or  expected  to 
offer gifts or extra payments for permits, services, 
or  procurement  (EU:  10%),  while  62%  believe 
bribery  of  senior  officials 
is  appropriately 
punished–nearly  double  the  EU  average of 33% 
(255), pointing to both low corruption exposure and 
strong deterrence. 

Finland has updated its strategic  framework 
for  preventing  and  tackling  corruption. 
Limited  steps  were  taken  to  update  the 
integrity  framework  for  Ministers  and  top 
executive  functions,  with  Ministers  not  covered 
by  the  code  of  conduct.  The  lobbying  framework 
updated  by 
the  Transparency  Register  Act, 
establishing an electronic transparency register for 
lobbying  activities  targeted  at  Parliament  and 
function  well.  A 
ministries, 

reported 

to 

is 

(248) European Commission, Eurostat, 2026, European Union 

(252) Valtiovarainministeriö selvittää valtionhallinnon toimintojen 

Labour Force Survey, Employed persons by economic activity 
(NACE Rev. 2) (2008-2026). 

(249) European Institute for Gender Equality, 2025, Gender 

Statistics Database. 

keskittämistä osana toimintamenosäästöjä. 

(253) European Commission, 2025, Flash Eurobarometer survey 
557 on businesses’ attitudes towards corruption in the EU 
and selected enlargement countries. 

(250) For democracy and national prosperity. Values and principles 

(254) European Commission, 2025, Rule of Law Report., p. 10. 

for public service leadership. 

(251) Virkamiesetiikan tila 2024: Valtionhallinnon virkamiehet ovat 

sitoutuneita eettisiin periaatteisiin. 

(255) European Commission, 2025, Flash Eurobarometer survey 
557 on businesses’ attitudes towards corruption in the EU 
and selected enlargement countries. 

69 

 
 
 
legislative  proposal  on 

governmental 
limiting 
‘revolving  doors’  for  Ministers  was  submitted  to 
Parliament  in  September  2024(256).  As  for  the 
detection of corruption, 45% of Finnish businesses 
find  protection  of  whistleblowers  to  be  effective 
(EU:  29%).  Awareness-raising  activities,  including 
training courses, have helped bring attention to the 
Whistleblower  Act.  People  can  report  misconduct 
through  different  channels  to  authorities  or 
electronically to the police (257). 

Prosecution  of  corruption  continues  to  be 
efficient. The cooperation between the police, the 
National  Bureau  of  Investigation,  the  Financial 
Intelligence  Unit  and  prosecution  is  smooth,  with 
adequate  resources  allowing  them  to  perform 
the 
efficiently 
European  Public  Prosecutor’s  Office 
is  also 
reported to be efficient (258). 

tasks.  Cooperation  with 

their 

Justice 

for 

room 

The 
justice  system  performs  efficiently 
overall. The time taken to reach a decision in civil 
and commercial cases at first instance courts rose 
from  349  in  2023  to  464  days  in  2024.  The 
estimated time  to  resolve  administrative  cases  at 
first  instance  courts  increased  from  263  days  in 
2023  to  268  days  in  2024.  The  quality  of  the 
justice  system  is  good  overall.  While  Finland  has 
made progress in digitising its justice system there 
is 
improvement.  Finland 
significantly  lags  behind  in  digital  solutions  to 
initiate  and  follow proceedings in  civil/commercial 
and  administrative  cases.  The  country  also  lags 
behind  in  the  general  public’s  online  access  to 
published 
regarding 
judgments,  as  well  as 
arrangements  for  producing  machine-readable 
judicial  decisions.  Further  improvements  could  be 
made by allowing all steps in judicial proceedings 
to be carried out online, such as paying court fees 
and  tracking  ongoing  cases.  This  would  improve 
access for both people and businesses (259). 

further 

(256) European Commission, 2025, Rule of Law Report, p. 9.  

(257) European Commission, 2025, Rule of Law Report, p. 10. 

(258) European Commission, 2025, Rule of Law Report, p. 7. 

(259) For  a  more  detailed  analysis  of  the  performance  of  the 
justice system in Finland, see the upcoming 2026 EU Justice 
Scoreboard and the 2025 Rule of Law Report. 

70 

 
 
SUSTAINABILITY 
ANNEX 8: INDUSTRY DECARBONISATION, CIRCULARITY AND CLIMATE MITIGATION 

in 

(GHG)  emissions 

faces  challenges 

is  making  progress 

in  reducing 
Finland 
from 
greenhouse  gas 
industry  but 
the 
decarbonisation  of  road  transport  and  the 
shift  to  a  circular  economy.  In  2025,  Finland 
received  a  country-specific  recommendation  on 
boosting  public  and  private  investment  in  the 
decarbonisation  of  industry  and  transport  as  well 
as  in  the  development  of  green  technologies 
including  circular  economy  practices.  Finland 
in 
continues  to  make  meaningful  reductions 
industrial 
industrial  emissions,  particularly 
in 
processes 
use 
and 
manufacturing.  Bioenergy 
to 
remains  central 
industry decarbonisation, especially in the pulp and 
paper sector. Road transport has seen an increase 
in  emissions  in  recent  years  and  remains  the 
largest  contributor  to  effort  sharing  emissions, 
highlighting the need to step up decarbonisation. 

in 
energy 

combined 

166 g CO2eq  per  euro  of  gross  value  added, 
Finland’s 
gas 
emissions  intensity  of  manufacturing  production 
was similar to that of the EU overall.  

energy-related 

greenhouse 

Finland’s  pulp  and  paper  industry  has  made 
substantial  progress  in  reducing  its  GHG 
footprint. According to EU inventory data for IPCC 
category  1.A.2.d  (Pulp,  Paper  and  Print),  Finland’s 
emissions  in  this  category  fell  by  approximately 
60%  between  1990  and  2023.  This  decrease 
reflects  the  sector’s  shift  from  fossil  fuels  to 
biomass and other low-carbon energy sources and 
its investment in energy efficiency. It is in line with 
broader  decarbonisation  trends  seen  across  the 
EU’s pulp and paper industry. 

Reduction of effort sharing emissions 

Industry decarbonisation 

Compliance  with  effort  sharing  limits  with 
domestic measures 

Greenhouse gas emissions from industry 

emissions 

GHG 
from  manufacturing 
industries  continue  to  fall  in  Finland,  with  a 
24%  decline  between  2019  and  2024 (260)(261). 
This  is  more  than  the  EU  overall,  16%.  In  2023, 
the share of energy-related emissions in Finland’s 
industrial  GHG  emissions  was  at  52%,  somewhat 
below  the  value  for  the  EU  overall,  58%,  with  a 
bigger  role  for  process-related  emissions.  With 

(260) This Annex discusses the transition of Finland's 

manufacturing industry, specifically its energy-intensive 
industries, to low-carbon and net-zero modes of production, 
which is key to preserving competitiveness on the path 
towards climate neutrality as mandated by the European 
Climate Law. A broader perspective on the current 
competitiveness challenges facing Finland's manufacturing 
industry is provided in Annex 5. For a more detailed 
description of greenhouse gas emissions from industry, see 
European Commission (2025), 2025 Country Report - 
Finland, Commission staff working document, SWD (2025) 
205 final, Brussels, 4.6.2025, Annex A7. Clean industry and 
climate mitigation. 

(261) In the following, data on the manufacturing sector exclude 
the NACE division C19 – manufacture of coke and refined 
petroleum products, for better match of the sectoral data 
from Eurostat (gross value added) with those from the 
UNFCCC under the Common Reporting Format; also see the 
annotation to table A8.1 at the end of this Annex.  

For  2030,  Finland’s  effort  sharing  emissions 
are  projected  to  be  above  its  target,  but  it 
could  cover  the  gap  with  unused  emission 
allocations from previous years (262). In 2024, 
GHG  emissions  from  Finland’s  effort  sharing 
sectors  are  expected  to  have  been  26.2%  below 
those  of  2005.  By  2030,  current  and  planned 
policies  and  measures  are  expected  to  lead  to  a 
decrease  of  45.2%, 
leaving  a  gap  of  4.8 
percentage  points  to  the  2030  target  of  −50%. 
Finland  could  bridge  this  gap  with  unused  annual 
emission  allocations 
years. 
Nevertheless,  swift  and  steady  implementation  of 

previous 

from 

(262) The  national  GHG  emission  reduction  target  is  set  out  in 
Regulation (EU) 2018/842 (the Effort Sharing Regulation). It 
applies  jointly  to  buildings  (heating  and  cooling),  road 
transport,  agriculture,  waste  and  small  industry  (known  as 
the effort sharing sectors). The emissions from effort sharing 
sectors for 2024 are based on approximated inventory data. 
The  final  data  will  be  established 
in  2027  after  a 
comprehensive  review.  Projections  about  the  impact  of 
current  policies 
(‘with  existing  measures’,  WEM)  and 
additional  policies (‘with  additional  measures’,  WAM)  as  per 
Finland’s 2025 reporting under Article 17 of Regulation (EU) 
2018/1999 (the Governance Regulation). Also see European 
Commission  (2025),  Climate  Action  Progress  Report  2025 – 
Technical  Information,  Commission  staff  working  document, 
Brussels,  Chapter  9  (pp. 111ff.),  and  in  particular  Tables  25 
and 26. 

71 

 
 
 
 
 
 
 
additional measures will remain crucial to progress 
towards climate neutrality. 

Sustainable transport 

Graph A8.1: Greenhouse gas emissions in the 
effort sharing sectors, 2005, 2023, and 2024 

Source: European Environment Agency. 

highlighted 

investment 

Road transport accounts for a major share of 
effort  sharing  emissions  in  Finland.  In  2024, 
38%  of  Finland’s  effort  sharing  emissions  came 
from  road  transport,  even  though  road  transport 
emissions  have  decreased  by  23%  from  2005 
levels (263).  For  Finland,  the  2025  country-specific 
recommendations 
challenges 
concerning  its  reliance  on  fossil  fuels.  Notably, 
they  underlined  the  need  to  boost  public  and 
private 
in  the  decarbonisation  of 
transport, including through electrification. Finland 
has  taken  steps  in  recent  years  to  curb  transport 
emissions.  These 
include  support  for  vehicle 
electrification,  biofuel  blending  obligations  and 
investment  in  charging  infrastructure  and  rail. 
However,  current  policy  efforts  may  not  yet  be 
sufficient  to  achieve  national  climate  objectives. 
Continued  fossil  fuel  dependence,  slow  fleet 
renewal  –  particularly 
for  heavy-duty  and 
commercial vehicles – and limited modal shift risk 
slowing  the  pace  of  emission  reductions.  This  is 
evident  from  the  rise  in  transport  emissions  over 
the  last  few  years  (+3.8%  from  2023-2024, 
compared to a decline of -1.7% from 2005-2024), 
a worrying trend that calls into question whether it 
will  be  possible  to  achieve  Finland’s  goal  of 
halving GHG emissions from domestic transport by 
2030 (compared with 2005 levels) and achieving a 
zero-emissions transport sector by 2045. 

The  main  driver  of  the  persistently  high 
its 
road 
emissions 

transport 

from 

is 

(263) See Graph A8.1, and Table A8.1 at the end of this Annex. 

72 

and  2022. 

between  2018 

dominant share in land transport. In 2023, the 
modal split of freight transport by land showed a 
preference for road over rail, with road accounting 
for  77.4%  of  all  tonne-kilometres  (above  the  EU 
average  of  75%).  Moreover,  instead  of  a  modal 
shift  taking  place  from  road  to  rail,  the  share  of 
rail freight in inland freight transport decreased by 
6.5 pps 
This 
development  is  not  dissimilar  to  the  overall  EU 
trend,  but  it  is  more  pronounced.  In  passenger 
transport, road is even more dominant. The modal 
share  of  passenger  cars,  buses  and  coaches 
together  stood  at  92.2%  of  all  passenger-
kilometres  (above  the  EU  average  of  90.2%). 
Despite  an  increase  in  rail  passenger  volume  to 
5.2 billion  passenger-kilometres 
in  2023,  the 
modal  share  of  rail  stood  at  only  7%,  which  is 
below the EU average of 8.4%. Only 57.9% of the 
Finnish railway lines were reported as electrified in 
2023 (264).  The  European  rail  traffic  management 
system,  which  improves  the  efficiency  and  safety 
of  rail  operations,  was  deployed  on  0 km  of  the 
TEN-T  network.  For  more  information,  see  Annex 
19.  

Reliance on private cars results in one of the 
highest  rates of motorisation  in  the  EU,  with 
666 passenger cars per 1 000 inhabitants in 2024. 
The market penetration of electric cars is growing 
–  29.5%  of  new  registrations  in  2024  were  zero 
emission  vehicles (265)  –  but  is  increasing  at  a 
slower  rate  than  in  2023.  Fully  electric  vehicles 
still  account  for  only  10.3%  of  the  overall 
fleet (266).  For  light  goods  vehicles,  the  share  of 
zero  emission  vehicle  registrations  among  new 
registrations  stood  at  12.7%,  which  is  above  the 
EU average of 6.1% in 2024. In terms of charging 
infrastructure,  Finland  has  significantly  exceeded 
the  fleet-based  target  set  in  the  Alternative  Fuel 
Infrastructure Regulation (267). However, significant 

(264) Eighth monitoring report on the development of the rail 

market, 2025, available at: 
https://transport.ec.europa.eu/transport-
modes/rail/market/rail-market-monitoring-rmms_en. 

(265) EU Transport in Figures – Statistical pocketbook 2025, 
available at: https://op.europa.eu/en/publication-detail/-
/publication/52c07e98-a3f4-11f0-97c8-01aa75ed71a1. 

(266) Sähköinen liikenne ry, Sähköisen liikenteen tilannekatsaus 

Q4/2025, 24 January 2025, 
https://teknologiateollisuus.fi/emobility/wp-
content/uploads/sites/9/2025/01/2024-Q4-
SahkoinenLiikenne-tilannekatsaus-2025-01-24-jaettava.pdf. 

(267) Alternative Fuels Observatory, https://alternative-fuels-

observatory.ec.europa.eu/transport-mode/road/european-
union-eu27/target-tracker. 

0510152025303540200520232024MtCO2eDomestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
   
 
 
investment  in  charging  infrastructure  for  heavy-
duty  vehicles  (EUR 140 million  in  total)  is  still 
needed  to  achieve  the  targets  set 
in  that 
Regulation by 2030. 

Sustainable industry 

Circular economy industry 

Finland’s  2021  strategic  programme  to 
promote  a  circular  economy  sets  out  a  vision 
for the country’s economic success to be founded 
on  a  carbon-neutral  circular  economy  society  by 
2035. However, the results are sluggish. The vision 
the  objectives  of  decreasing 
is  guided  by 
consumption  of  non-renewable  natural  resources 
and  increasing  the  sustainable  use  of  renewable 
natural resources so that the total consumption of 
primary raw materials in Finland in 2035 does not 
exceed  that  in  2015.  Finland  aims  to  double  its 
resource  productivity  by  2035  as  compared  with 
2015  and  to  double  its  circular  material  use  rate 
by 2035 (268). 

Finland  is  on  track  to  meet  the  2025 
recycling target for all packaging waste and 
the  2035  landfill  target.  However,  with  a 
municipal  waste  recycling rate  of  47.9%  in  2024, 
Finland is at risk of missing the target for recycling 
55%  of  municipal  waste  by  2025.  The  63%  of 
construction 
being 
recovered (269)  is  below  the  EU  average  of  89%. 
The recycling of plastic packaging (29.3% in 2023) 
is  well  below  the  EU  average  (42%) (270).  The 
number  of  patents  related  to  recycling  and 
secondary  raw  materials  in  Finland  is  average, 
with  15 in 2020 (271).  Following  a  9% decrease  in 

demolition  waste 

and 

(268) 2025 Environmental Implementation Review Country Report 

– FINLAND – Environment. 

(269)Techno-economic and environmental assessment of 

construction and demolition waste management, Joint 
Research Centre, 2024, https://build-
up.ec.europa.eu/system/files/2024-04/JRC2024-Techno-
economic_and_environmental_assessment_of_CDW_manag
ement_in_the_EU_Final_with_identifiers_2.pdf. 

(270)Eurostat, Plastic packaging recycling rate, 

https://ec.europa.eu/eurostat/databrowser/view/env_waspac_
_custom_14718907/default/table?lang=en. 

(271)Eurostat, Patents related to recycling and secondary raw 

materials. 
https://ec.europa.eu/eurostat/databrowser/view/cei_cie020/d
efault/table?lang=en&category=cei.cei_cie. 

73 

the  number  of  people  now  employed  in  the 
sector (272),  the  circular  economy  accounted  for 
only 1.5% of total employment in 2023, compared 
with  1.8%  in  2014.  This  is  below  the  EU  average 
of  2%.  Furthermore,  although  per  capita  material 
consumption  has  increased  by  1.5% (273)  over  the 
past five years and resource productivity increased 
by  16%  between  2019  and  2024 (274),  waste 
generation  is  still  high (275).  Secondary  materials 
use halved from 4% to 2% (276). 

Finland  has  made  considerable  progress  in 
diverting waste from landfilling (less than 1% 
of  waste  treatment),  but  this  has  resulted  in  a 
significant increase in the incineration rate (52% in 
2024), while there has been a smaller increase in 
the  recycling  rates.  Economic  instruments  could 
help  direct 
from  waste 
recyclables  away 
incineration  and  towards  the  higher  levels  of  the 
waste  hierarchy.  In  line  with  the  waste  hierarchy, 
Finland could benefit from introducing new policies 
to  promote  waste  prevention  and  make  product 
reuse  and  waste  recycling  more  economically 
attractive. 

Finland’s  fiscal  tools  for  circular  practices 
are  on  track,  but  taxes  on  pollution  and 
resources  represent  less  than  1%  of  the 
total. 
taxes 
represented 2.3 % of its GDP (EU average: 2.0 %) 

total  environmental 

In  2023, 

(272)Eurostat, Persons employed in circular economy sectors, 
https://ec.europa.eu/eurostat/databrowser/view/cei_cie011/d
efault/table?lang=en. 

(273)Eurostat, Material footprint, 

https://ec.europa.eu/eurostat/databrowser/view/cei_pc020/de
fault/table?lang=en. 

(274)Municipal waste generation per capita (Eurostat, 

Generation of municipal waste per capita, 
https://ec.europa.eu/eurostat/databrowser/view/cei_pc031/de
fault/table?lang=en) and construction and demolition 
waste (Joint Research Centre, A report on sustainable 
management of construction and demolition waste, 2024, 
https://build-up.ec.europa.eu/en/resources-and-
tools/publications/report-sustainable-management-
construction-and-demolition-waste). 

(275) The share of municipal waste incineration remains stable 

at EUR 6.2 billion annually, reflecting a reliance on 
consumption-driven materials (Eurostat, Municipal waste 
by waste management operations, 
https://ec.europa.eu/eurostat/databrowser/view/env_wasmun/
default/table?lang=en). 

(276) Eurostat, circular material use rate, 

https://ec.europa.eu/eurostat/databrowser/view/env_ac_cur/d
efault/table?lang=en&category=env.env_mrp. 

 
 
 
tax 

revenue 

the  economy  has 

(277).  While  revenues  have  increased  in  absolute 
terms over the past 15 years, their relative weight 
fallen  slightly.  Total 
in 
environmental 
reached 
EUR 5.73 billion  in  2023,  representing  a  28% 
increase in real terms since 2009. Over the same 
period,  however,  the  environmental  tax-to-GDP 
ratio fell from 2.5% to 2.3%. In 2023, energy and 
transport  taxes  dominated  the  revenue  structure 
respectively),  while 
(around  75%  and  24% 
pollution  and  resource  taxes  together  accounted 
for less than 1%. 

To  meet  its  environmental  objectives  concerning 
the circular economy  and waste,  Finland needs to 
increase  circular  economy  investments  by  an 
estimated  EUR  397  million  per  year,  with  an 
additional  EUR  56  million  concerning  waste 
management action (278). 

Bioeconomy industry 

While  Finland’s  bioeconomy  value  added, 
employment  and  labour  productivity  have 
fallen,  R&D  investment  from  bioeconomy-
relevant  subsectors  has  grown.  Finland’s 
overall  bioeconomy  value  added  has  been 
declining  over  the  2018-2023  period,  even  as 
domestic  GDP  has  grown.  Employment  trends 
reflect  a  similar  pattern,  with  overall  bioeconomy 
employment  edging  downwards.  Only  the  wood 
recorded 
products  and 
marginally  positive 
job  growth,  at  0.1%  on 
average (279)(280).  Against  this  backdrop,  bio-based 
textiles  and  food  and  beverages  stand  out  as 
relative  bright  spots,  registering  modest  but 
positive  value-added  growth  of  1.4%  and  1.7%, 
respectively.  Labour  productivity,  measured  as 
value added per person employed, stood at 93.8% 

subsector 

furniture 

(277) European Commission: Directorate-General for Environment, 

RPA Europe, Conduct in-depth assessments on 
environmental priorities to support the greening of the 
European Semester and integration of environmental 
priorities into the EU's economic governance framework, 
2025. 

(278) Environmental Implementation Review – Environment – 

European Commission. 

(279) Bioeconomy  subsectors:  food  and  beverages;  bio-based 
textiles;  wood  products  and  furniture;  bio-based  chemicals 
and plastics. 

(280) Joint Research Centre, Developments of Economic Growth 
and Employment in Bioeconomy Sectors across the EU, 
https://datam.jrc.ec.europa.eu/datam/mashup/BIOECONOMIC
S/. 

in 

of  the  national  average  –  a  notable  drop  from 
100.5%  in  2018 (281).  R&D  business  expenditure 
from  bioeconomy-relevant  subsectors  has  grown 
broadly 
line  with  overall  national  R&D 
investment  (5.2%  compared  with  an  average  of 
5.1%  between  2018  and  2023),  suggesting  that 
innovation  efforts  are  being  maintained  but  have 
not  yet  translated  into  a  decisive  productivity  or 
(282).  Structurally,  bio-based 
growth  premium 
chemicals  and  plastics  constitute  a  primary 
innovation  frontier,  with  a  strong  focus  on  lignin-
based materials and wood-derived biopolymers as 
substitutes  for  fossil  plastics.  At  the  same  time, 
the  textiles  sector is  pioneering  high-performance 
cellulose  fibres  from  wood  pulp.  The  food  and 
beverage  sector,  meanwhile, 
increasingly 
transforming  oat  and  berry  side  streams  into 
diversifying 
functional 
Finland’s 
These 
developments  are  framed  within  the  Finnish 
bioeconomy  strategy,  which  sets  an  ambitious 
target of doubling the sector’s value by 2035 and 
positioning  Finland  as  a  global 
in 
sustainable, 
bioeconomy 
innovation (283). 

forest-based 

ingredients, 

bio-based 

further 

chains. 

leader 

value 

is 

Zero-pollution industry 

Air  quality  in  Finland is  generally  good,  with 
some  exceptions.  Emissions  of  several  air 
pollutants  have  decreased  significantly  in  Finland 
since  2005,  while  GDP  growth  has  continued.  In 
According  to  the  inventories  submitted  under 
Article 10(2)  of  the  National  Emission  Reduction 
Commitments  Directive  (NECD)  in  2024,  Finland 
its  emission  reduction  commitments  for 
met 
2020-2029  for  nitrogen  oxides 
(NOx,  non-
methane  volatile  organic  compounds  (NMVOC), 
sulphur  dioxide  (SO2),  ammonia  (NH3)  and  PM2.5. 
According  to  the  latest  projections  submitted 
under  Article 10(2)  of  the  NECD,  Finland 
is 
reduction 
projected 

its  emission 

to  meet 

(281) Joint Research Centre, Developments of Economic Growth 
and Employment in Bioeconomy Sectors across the EU, 
https://datam.jrc.ec.europa.eu/datam/mashup/BIOECONOMIC
S/. 

(282) Joint Research Centre, Business expenditure in Research and 

Development (R&D) in the EU bioeconomy, 
https://datam.jrc.ec.europa.eu/datam/mashup/BERD_BIOECO
NOMY/. 

(283) Ministry of Agriculture and Forestry of Finland (2022). Finnish 

Bioeconomy Strategy — Sustainable Growth from 
Bioeconomy. Available at: The Finnish Bioeconomy Strategy - 
Bioeconomy.fi. 

74 

 
 
 
and  EU  targets  for  pollution  prevention  and 
to  spend  an 
control,  Finland  would  need 
additional EUR 871 millions every year (about 
0.33% of GDP), largely focused on improving air 
quality  –  particularly  in  industrial  regions  and 
urban transport corridors (289). 

commitments for 2030 onwards for NOx, NMVOC, 
SO2, NH3 and PM2.5. Finland submitted its updated 
national  air  pollution  control  programme  to  the 
Commission  on  1 June  2023.  The  European 
Environment  Agency  estimates  12  years  of  life 
lost  per  100 000  inhabitants  as  a  result  of  air 
pollution due to PM2.5 concentrations that exceed 
the World Health Organization air quality guideline 
levels (284). 

Since pollution and resource taxes account for only 
0.8%  of  environmental  taxes,  the  polluter  pays 
principle  could  be  applied  on  a  larger  scale.    e.g. 
for NOx and arsenic (285). 

in 

the 

Water  pollution  from  industry  remains  a 
challenge.  Regarding  water  quality,  decisive 
measures are needed to address diffuse pollution 
from  agriculture,  mainly 
form  of 
phosphates, mercury and polybrominated diphenyl 
ethers.  Moreover,  in  Finland,  the  periodic  reviews 
of  controls  on  water  uses  do  not  meet  the 
requirements  of  the  Water  Framework  Directive. 
As  reported  in  2025 (286),  100%  of  Finland’s 
surface  water  bodies  is  failing  to  achieve  good 
chemical  status  due  to  diffuse  pollution  from 
agriculture and forestry, which has remained high. 
Water  pollution  by  industry  imposes  direct  and 
indirect  costs  of  EUR 88 million  annually (287),  not 
yet sufficiently borne by the polluters. 

The  total  economic  cost  of 
industrial 
pollution  in  Finland  was  EUR 5.9 billion  in 
2021. This encompasses healthcare expenses, lost 
productivity,  and  environmental  degradation (288). 
Yet,  investment  still  falls  short.  To  meet  national 

(284) EEA, ‘Harm to human health from air pollution in Europe: 

burden of disease status’, 2025, 
https://www.eea.europa.eu/en/analysis/publications/harm-to-
human-health-from-air-pollution-burden-of-disease-status-
2025. 

(285) Greening the European Semester - Publications Office of the 

EU. 

(286) ENV - Library. 

(287) European Commission: Directorate-General for Environment, 
IEEP, Green taxation and other economic instruments – 
Internalising environmental costs to make the polluter pay 
(p. 48, Table 5), 2021. 
https://environment.ec.europa.eu/publications/green-taxation-
and-other-economic-instruments-internalising-
environmental-costs-make-polluter-pay_en. 

(288) EEA, ‘The costs to health and the environment from industrial 
air pollution in Europe – 2024 update, 2024, Link. The costs 
reported are calculated in terms of value of a statistical life 
(VSL). 

(289) European Commission: Directorate-General for Environment, 
EMRC, Logika Group and RPA Europe, Update of the costs of 
not implementing EU environmental law, 2025, 
https://op.europa.eu/en/publication-detail/-
/publication/4dead000-263d-11f0-8a44-
01aa75ed71a1/language-
en?mc_cid=d30edf72a9&mc_eid=3bdab86db2. 

75 

 
 
 
Table A8.1:  Key clean industry and climate mitigation indicators: Finland 

Source:  Industry decarbonisation: All data are from Eurostat; data following the UNFCCC Common Reporting Format (CRF) are 
from the European Environment Agency (EEA), republished by Eurostat. (1) Sectors covered: all divisions of section C - 
Manufacturing - of the NACE Rev. 2 statistical classification of economic activities, except C19 (manufacture of coke and refined 
petroleum products). (2) GHG emissions as per UNFCCC Common Reporting Framework (CRF) categories 1.A.2 - fuel combustion in 
manufacturing in industries and construction (that broadly correspond to the broadly correspond to the NACE sections C - 
Manufacturing and E - Construction, excluding C-19),  and CRF2 - industrial processes and product use. The figures shows the 
emissions in the 1.A.2 category as a share of the sum of CRF1.A.2. and CRF2 emissions. (3) Sectors covered: CRF 1.A.2 as 
described above. Gross value added (GVA) data in the denominator aligned in sectoral coverage, in 2020 prices. (4) Sectors 
covered: NACE section C excluding C19. (5) Nominator: NACE divisions C17, 20, 23, 24; denominator: NACE section C excluding 
C19 (see above). (6) GVA (denominator) in 2020 prices. Reduction of effort sharing emissions: Data source: European 
Environment Agency, greenhouse gas data viewer; European Commission, Climate Action Progress Report, 2025. For details, see 
the footnote in the "Reduction of effort sharing emissions" section. Sustainable road transport: (7) Source: Eurostat; (8) Source: 
European Alternative Fuels Observatory; (9) Source: Eurostat. For all climate mitigation indicators, the trend arrows compare the 
latest available data (year t) with the data four years earlier (t-4). Sustainable industry: Bioeconomy value added, employment 
and productivity: JRC, Developments of Economic Growth and Employment in Bioeconomy Sectors across the EU. Bioeconomy 
R&D business expenditure: JRC, Business expenditure in Research and Development (R&D) in the EU bioeconomy. Damage cost for 
industrial pollution: EEA, The costs to health and the environment from industrial air pollution in Europe, 2024. Water industrial 
pollutants releases: EEA, Industrial releases of pollutants to water and economic activity in the EU-27, 2024. Water chemical 
status: WISE, Surface water bodies: Chemical status, 2024 and WISE Groundwater bodies: chemical status, 2024. Other indicators: 
Eurostat. For circular economy indicators, the trend arrows compare the latest available data (year t) with the data two years 
earlier (t-2). 

76 

Climate mitigationTrendIndustry decarbonisation201820192020202120222023202420182023GHG emissions intensity of manufacturing production, g/€ (1)323304252268258236217330-Share of energy-related emissions in industrial GHG emissions (2)54,555,255,554,654,151,7-55,557,9Energy-related GHG emissions intensity of manufacturing and construction, g/€ (3)227,8222,3185,7189,7185,5165,6-203,9163,0Share of electricity and renewables in final energy consumption in manufacturing, % (4)68,168,768,568,566,968,868,842,843,9Energy intensity of manufacturing, GWh/€ (4)3,593,433,283,473,343,313,261,271,05Share of energy-intensive industries in manufacturing production, % in GVA (5)26,8625,9023,2923,8228,2924,0720,38--GHG emissions intensity of production in sector [...], g/€ (6)- paper and paper products (NACE C17) 1.047        1.015       931                 824            1.095                823           750             722             619            - chemicals and chemical products (NACE C20) 648          476          497                 647            787                  599           540             --- other non-metallic mineral products (NACE C23) 1.166        1.148       1.167              1.185         1.126                935           902             2.495           2.352          - basic metals (NACE C24) 2.786        2.418       2.325              6.680         5.855                4.516         4.402          2.842           3.099          Reduction of effort sharing emissions201820192020202120222023202420182023GHG emission reductions relative to base year, % -20,3-22,9-25,6-26,2- domestic road transport-8,9-12,1-17,5-21,1-22,9-25,9-23,2-1,4-5,6- buildings-34,2-33,5-37,8-40,3-42,1-47,6-53,2-20,3-33,520052021202220232024TargetWEMWAMEffort sharing: GHG emissions, Mt; target, gap, %34,427,426,625,625,4-50,0%-45,2%-45,2%Sustainable road transport2018201920202021202220232024202520182021New zero-emission vehicles, electricity motor, % (7)0,641,664,4010,3117,7933,7529,521,038,96Number of publicly accessible AC/DC charging points (8)--364245975525112471672619806446956n/aShare of electrified railways, % of total (9)56,1956,2456,5956,7657,9257,8961,4555,4756,49Sustainable industryTrendEU-27Circular economy transition20182019202020212022202320242018latest dataMaterial footprint, tonnes per person43,839,844,543,445,438,337,014,813,7Circular material use rate, %4,7            5,1           4,8                  5,5             5,8                    2,6             2,011,612,2Resource productivity, €/kg1,0            1,1           1,0                  1,1             1,1                    1,2             1,32,13,0Employees in circular economy1,1            1,71,7                  1,7             1,6                    1,5             -2,12,0Patents in circular economy23,7317,9         33,4                32,4           12,312,0Recycling rate           42,3           43,5                  42,1             39,0                   43,7            44,8 47,9            46,4048,1Plastic recyling -------41%42%Construction and demolition waste (CDW) recovery 74-638889Bioeconomy industry 2018201920202021202220232024CAGR 2018-202320182023Value added, million EUR14.13113.86413.35814.91316.17013.695--0,5%642.438863.436Employment, total number of people employed183.965184.567180.682174.907175.163169.135--1,4%17.649.04017.085.642ProductivityValued added per worker, thousand EUR76,875,173,985,392,381,0-0,9%36,450,5Valued added per worker, % of national average100,596,793,6104,9109,593,8--62,270,7R&D business expenditureTotal bioeconomy (biomass producing and converting sectors)2783023143483443775,2%15.67223.335Total R&D business expenditure4.2274.4084.6445.1535.3975.703-5,1%196.587259.525Zero pollution industry201820192020202120222023202420182021Damage cost for industrial pollution7,16,85,75,9---414,9352,7Water industrial pollutants releases 2021change (2010)2021change (2010)2021change (2010)2021change (2010)6.060        -44%6.499.400        -20%6.008.200         -44%58.580        -70% Water chemical statusGood0Good (%)0Poor-Poor (%)-EUTOCPhosporusFinlandFinlandCd, Hg, Ni, Pbnitrogen 
 
  
 
ANNEX 9: AFFORDABLE ENERGY TRANSITION 

During  2025  Finland  acquired  a  leadership 
position in clean energy, with an increase of 
investments  in  the  green  transition  and  a 
clear  strategy  of  electrification  of  the 
energy  system  and  industry,  with  a  focus 
also  on  hydrogen.  The  government  measure 
introducing  reforms  in  the  electricity  market, 
permitting  for  wind  and  solar  power  through  the 
Land Use Act, allowed Finland to make progress in 
implementing 
country-specific 
recommendation to reduce reliance on fossil fuels 
by  boosting  public  and  private  investment  in  the 
transport, 
decarbonisation  of 
including  through  electrification,  as  well  as  in  the 
development of green technologies. 

industry  and 

2025 

the 

The decarbonisation of the Finnish system is 
progressing  at  good  pace,  but  there are still 
some  challenges.  The  share  of  energy-related 
emissions in total emissions has steadily declined 
over  the  past  20  years,  but  in  2024  it  still 
accounted for 69% of Finland’s total emissions. 

In  2024,  emissions  from the  energy industry 
(8.6 Mt  CO₂-eq.) 
below  domestic 
fell 
transport  emissions  (9.8 Mt  CO₂-eq.)  for  the 
first  time.  Combustion-related  emissions  from 
industry  and  construction  were  4.8 Mt  CO₂-eq.  As 
much as 95% of domestic electricity production is 
based  on  emission-free  energy  sources.  District 
heating  emissions  are  also  declining  rapidly  as 
combustion-based production is increasingly being 
replaced  by  other 
technologies  and  energy 
sources.  The  share  of  emission-free  production  in 
district heating is already over 70%. 

Finland  has  significant  potential  to  build 
electricity 
affordable 
zero-emission 
the  ongoing 
production,  also 
initiatives 
power 
support 
construction and hydrogen market legislation 
under preparation. 

through 

nuclear 

to 

Energy prices and costs 

In  Finland,  household  and  non-household 
electricity  prices  have  continued  to  decline 
since 2024, remaining below the EU average. 
However,  industrial  gas  prices  have  stayed  above 
the EU average. 

In  the  first  half  of  2025,  household 
electricity  prices  in  Finland  remained  below 
the EU average, at EUR 0.2246/kWh. Although 
industrial  gas  prices  have  decreased  in  recent 
years,  they  have  remained  above  the  EU  average 
and  above  pre-crisis  levels.  Electricity  prices  for 
non-household consumers have followed a similar 
trend  but  have  stayed  significantly  below  the  EU 
average.  For  large  businesses,  electricity  prices 
were  nearly  as  high  as  average  gas  prices  in  the 
first  half  of  2025.  Taxes  and  levies  account,  on 
average,  for  1%  of  electricity  bills  but  represent 
nearly 27% of gas bills. Excluding taxes and levies, 
the  electricity-to-gas  price  ratio  would  have 
increased  from  0.9  to  1.2,  signalling  a  balancing 
effect  of  Finland’s  fiscal  measures,  particularly 
concerning gas bill and the influence of carbon tax 
on fossil fuels used for heating. 

Graph A9.1: Electricity and gas prices for 
household and non-household consumers, first 
half of 2025 

(i) For household consumers, the consumption band is DC for 
electricity and D2 for gas. 
(ii) For non-household consumers, the consumption band is ID 
for electricity and I4 for gas. VAT and recoverable charges are 
not displayed for non-household consumers as these are 
typically recovered by businesses. This also applies to the ‘% 
of taxes and levies’, which is shown excluding VAT and 
recoverable charges for non-household consumers. 
(iii) ‘Without taxes and levies’ indicates the retail price 
excluding all taxes and levies. It always includes the 
energy/supply and network cost components, which are not 
disaggregated in Eurostat’s six-monthly price dataset. 
Source: Eurostat 

Because it had a large share of clean energy 
(96.1%)  in  its  electricity  mix  (natural  gas 
accounts for a small share of Finland’s total 
energy 
representing 
approximately  2.6%  to  4.4%  of  total  supply 
as  of  2023-2024),  Finland  had  the  EU’s 

consumption, 

77 

 
 
 
 
 
lowest wholesale electricity prices, averaging 
EUR 41/MWh  in  2025  (45)  (EU  average  of 
EUR 85/MWh).  Average  day-ahead  electricity 
prices in Finland decreased by 12% in 2025 amid 
rising  natural  gas  costs  (46).  The  effect  of  the 
latter  on  electricity  prices  was  mitigated  by 
Finland’s  growing  penetration  of  renewables. 
Finland  remains,  however,  vulnerable  to  price 
spikes during peak-demand hours. This is because 
falling  solar  output  in  the  evening  and  early 
morning, 
limited  non-fossil 
flexibility,  leads  to  costly  ramp-ups  of  thermal 
plants to cover supply–demand gaps. Price spreads 
(47)  in  Finland  averaged  EUR 81/MWh  in  2025, 
matching the 2024 figure. 

combined  with 

Graph A9.2: Low-carbon electricity generation vs 
electricity wholesale prices, 2025 

Data not available for Cyprus or Malta. The wholesale price is 
given as the average of day-ahead electricity prices over 
2025. The EU-27 average is calculated as consumption-
weighted. The EU low-carbon share is calculated from total 
EU electricity generation. The low-carbon share by country is 
calculated from total public electricity generation. ‘Low-
carbon’ includes renewables and nuclear. 
Source: European Commission calculation based on ENTSO-E, 
S&P Global Platts 

Flexibility and electricity grids 

available  for  trade.  On  the  border  of  the  eastern 
region,  the  grid  capacity  constraints  limit  the 
large-scale  deployment  of  wind  and  bioenergy 
projects  in  certain  areas.  The  lack  of  a  robust 
national  main  grid  in  some  parts  of  the  eastern 
regions  further  hampers  energy  security  and 
industrial development. 

In  the  western  regions,  the  new  Aurora  Line 
in  2025  and 
interconnector,  completed 
formally  inaugurated  on  29 January  2026, 
connects  Messaure  in  Sweden  to  Pyhänselkä 
in Finland with a 400 kV transmission line. 

functions  efficiently 

It  increases  cross-border  electricity  capacity 
significantly,  by  up  to  1 900 MW,  in  both 
directions.  It  increases  security  of  supply  in 
Finland and further integrates the country into the 
Nordic electricity system. It also enables Finland to 
make better use of balancing power and reserves 
in  both  Finland  and  Sweden.  Several  projects  are 
planned  or  under  construction  to  ensure  that  the 
energy  market 
through 
strengthened interconnections, including electricity 
interconnections between Finland and Sweden and 
the subsea cable with Estonia (EstLink 3). Drawing 
on  its  renewable  energy  potential,  Finland  is  also 
planning  a  series  of  cross-border  hydrogen 
transport 
infrastructure  projects  as  well  as 
projects  for  electrolyser  facilities  with  a  cross-
border impact. The Finnish recovery and resilience 
plan  provides  support  for  the  production  and 
storage of clean hydrogen. The plan also includes 
major 
the  production  and 
in 
distribution  of  renewable energy.  The  objective  of 
these  investments  is  to  enhance  the  framework 
conditions  for  attracting 
in  clean 
energy.  The  three  investment  measures  will  be 
completed  by  the  second  quarter  of  2026, 
corresponding  to  a  combined  increase  in  new 
renewable  energy  capacity,  storage  capacity 
and/or  grid  connection  capacity  of  at 
least 
288 MW. 

investments 

investment 

Finland  is  part  of  the  Nordic  and  Baltic 
capacity  calculation  regions  (CCRs).  Cross-
border  trade  capacities  in  these  regions  are 
consistently  high.  Member  States  are  to  ensure 
that  at 
least  70%  of  technical  cross-border 
capacity is available for trading. The borders in the 
Nordic  region  are  highly  interdependent  and,  to 
support  system  operation,  flow-based  market 
coupling was successfully implemented in October 
2024, thereby increasing the volume of capacities 

Finland  is  taking  steps  to  further  develop 
non-fossil  flexibility.  Although  there 
is 
limited  flexibility  on  the  generation  side, 
there  is  nonetheless  widespread  deployment 
of  smart  meters  among  end  users.  Finland’s 
current  operational  electricity  storage  capacity  is 
Its  final 
around  250 MW 
updated  national  energy  and  climate  plan  (NECP) 
notes  that  there  are  several  electricity  storage 
projects  under  development 
(batteries  and 
pumped  hydro),  but  there  are  no  specific  targets 

(mostly  batteries). 

78 

 
 
 
in 

for  electricity  storage  capacity.  Demand  response 
is  well  developed  in  Finland,  with  around  1 GW 
participating 
the  day-ahead  market.  This 
capacity is expected to increase and to expand into 
other  markets 
intraday  and  balancing 
markets).  Finland’s  regulatory  framework  allows 
demand  response  and  electricity  storage  to 
participate 
(day-ahead, 
in  electricity  markets 
intraday  and  balancing).  However,  independent 
aggregators cannot participate in these markets. 

(the 

Renewables and long-term contracts 

In  2025,  Finland’s  renewable  energy  share 
in  2024), 
(up  from  55.9% 
hit  56.5% 
surpassing  the  EU  average  (47%),  with 
1.39 GW  of  new  wind  and  solar  capacity 
added in 2025. This constitutes a rise of almost 
8,5%  compared  to  2024  but  falls  short  of  the 
total expected additional installed wind capacity in 
2025, which was 1 500 MW (onshore) according to 
the  document  ‘Wind  Pledges  –  European  Wind 
Power 
2023).  One 
(19 December 
noteworthy development is that installed capacity 
of industrial-scale solar power more than doubled 
total 
in  2025, 
renewable  energy  capacity  in  electricity  was  17 
943 MW  in  2025,  representing  69%  of  total 
installed capacity. Finland has pursued reforms to 
renewables, 
the  deployment  of 
accelerate 
including  reinforcing  the  authorities  dealing  with 
environmental  permits  and  fine-tuning  these 
processes. 

reaching  352 MW.  Finland’s 

Action’ 

Graph A9.3: Finland’s installed renewable capacity 
vs electricity generation mix 

Electricity mix is given as net electricity generation (gross 
electricity production minus consumption of power stations’ 
auxiliary services). Electricity produced in pumped hydro 
plants is excluded from total net electricity production, as it 
was previously counted as electricity produced from another 
source. 
“Other” includes renewable municipal waste, solid biofuels, 
liquid biofuels, and biogas. 
Source: IRENA, Eurostat 

is 

by 

facing 

potential 

In  terms  of  public  acceptance  of  renewable 
energy  sources  (RESs),  public  hearings  are 
organised  regularly  and  early  on  in  the 
process.  An  important  challenge  that  Finland  is 
currently 
limited  grid  connection 
capacities  until  network  upgrades  are  concluded, 
geographical 
exacerbated 
misalignments  between  supply  and  demand 
centres. Finland has continued making progress in 
reforming the permitting process. Finland adopted 
the  Act  amending  the  Act  on  permit-granting 
procedures  and  certain  other  administrative 
procedures for renewable energy plants in August 
2025,  which  aims  to  further  streamline  these 
procedures  in  line  with  the  revised  Renewable 
Energy  Directive.  Its  completeness  vis-à-vis  the 
revised RED obligations will be assessed during the 
corresponding infringement procedure. 

In  accordance  with  its  national  climate  and 
energy  plan,  Finland  has  been  pursuing  RES 
deployment  mainly  on  a  merchant  basis, 
without any State aid schemes, primarily due 
to  observed  and  forecast  cost-competitive 
deployment of onshore wind. 

The  sole  exception  is  offshore  wind,  where 
Finland  has  introduced  a  tendering  process, 
with results originally expected in 2026. 

The  Finnish  approach  has  helped  create  one 
of  the  strongest  power  purchase  agreement 
(PPA)  markets  in  Europe.  It  is  one  of  the  few 

79 

 
 
Member  States  projected  to  have  a  negative  PPA 
market gap in both 2030 and 2035, meaning that 
forecast  PPA  demand  outweighs  the  projected 
supply.  However,  there  was  a  substantial  drop  in 
the number of PPAs and their capacity contracted 
from  2023,  when  there  were  10  deals  for 
742 GWh and four deals for 127 GWh. 

In  2023  Finland  curtailed  20.178 GW  of  RES 
generation. 

In  2024,  electricity  accounted  for  29.1%  of 
Finland's  final  energy  consumption,  above 
the EU average of 23.4%, and this share has 
increased  slightly  in  the  past  decade (290) 
When it comes to households, electricity  accounts 
for  35.3%  of  final  energy  consumption,  while  in 
industry  it  represents  30.7%  (see  also  Annex  8). 
For  the  transport  sector,  this  share  remains 
negligible, 
in 
electrification across sectors is required in order to 
cost-effectively  decarbonise  the  economy  and 
bring 
renewable 
generation to consumers. 

the  benefits  of  affordable 

at  3.3%. 

progress 

Further 

Energy efficiency 

In October 2025 the state and sectors signed 
new energy efficiency agreements for 2026–
2035.  When  the  agreements  were  signed,  169 
organisations  committed  themselves  to  efficient 
energy use. The objective is to have 60 per cent of 
Finland’s  total  energy  use  under  the  voluntary 
agreements. 

The  fourth  energy  efficiency  agreement 
period  begins  in  2026,  covering  various 
sectors of business, the housing industry and 
the public sector. Among those who immediately 
joined  the  agreements  are  111  companies  from 
various  sectors  of  business,  35  facility  and  rental 
housing 
communities  and  23  public-sector 
organisations. 

these  agreements,  Finland 

is 
Through 
implementing  the  EU’s  Fit  for  55  package 
(designed to cut the bloc’s emissions by 55% 

(290) CAGR (compound annual growth rate) of −0.06% between 
2015 and 2024 and minimum/maximum share of 28.2% and 
29.3% respectively (source: Eurostat). 

by 2030) and the Energy Efficiency Directive, 
which  requires  Member  States  to  reduce 
their  final  energy  consumption  and  achieve 
ambitious savings by the end of 2030. Finland 
FEC in 2024 is nearly line with the trajectory to its 
expected contribution in 2030. 

variation 

savings 
changes. 

(renovations) 
This 

Between  2019  and  2024,  residential  FEC 
decreased  by  8.9%,  mostly  as  a  result  of 
and 
technical 
structural 
in 
residential  FEC is  more  than in  line  with  the 
objectives  set  in  Finland’s  2020  long-term 
renovation  strategy,  which  forecast  a  22% 
reduction  in  energy  consumption  between 
its  draft 
2020  and  2030.Finland  submitted 
national building renovation plan (NBRP), indicating 
a  clear  commitment  to  setting  up  a  predictable 
pathway 
energy-efficient  and 
decarbonised  building  stock,  currently  responsible 
for  34%  of  total  final  energy  consumption,  and 
therefore  acknowledging  the  importance  of  the 
sector in increasing the country’s energy security. 

towards  an 

final 

residential 

Heating  and  cooling  account  for  82%  of  the 
country’s 
energy 
consumption, with renewables supplying 61% 
of  the  total  energy  used  for  heating  and 
cooling  in  all  sectors.  The  deployment  of  heat 
pumps  is  very  advanced,  as  their  sales  in  2024 
represented  94%  of  total  combined  heat  pump 
and  boiler  sales.  In  spring  2024,  the  government 
fossil  heating  oil, 
decided 
complementing  an  action  plan 
to  eliminate 
emissions  from  the  separate  heating  of  buildings 
by  2030  that  is  part  of  Finland’s  recovery  and 
resilience  plan  (RRP).  Support  for  the  phaseout  of 
oil and gas heating has been available since 2020 
for owners of small houses and municipalities and 
congregations (sources: NBRP, NECP). 

to  phase  out 

Security of supply and diversification 

In  2025  the  Finnish  government  actively 
reformed  the  energy  sector  to  increase 
preparedness and security. Key reforms include 
the  New  Electricity  Market  Act,  which  entered 
into  force  in  autumn  2025,  with  the  aim  of 
increasing  market  flexibility,  clarifying  pricing 
models  and improving  utilisation  of  the  electricity 
grid.  The  Act  will  allow  distribution  network 

80 

 
 
companies  to  build  and  own  local  networks  of 
above  110 kV.  It  will  also  introduce  more  flexible 
connection  line  arrangements  for  networks  of  at 
least 110 kV. 

is  based  on 
Finland’s  energy  security 
decentralised,  diversified  and  efficient 
energy  production.  The  National  Emergency 
Supply  Agency  is  responsible  for  maintaining  and 
developing 
the  country’s  security  of  supply 
preparedness  and  securing  access  to  critical 
resources. 

These  reforms  are  part  of  Finland’s  broader 
strategy to modernise its energy system and 
ensure  a  secure  and  sustainable  energy 
supply for the public and its economy. 

Preparedness Act reform: on 9 October 2025, 
the  government  submitted  a  proposal  to 
parliament  for  an  Act  on  the  measures 
necessary  to  ensure  security  of  supply  and 
on  the  National  Emergency  Supply  Agency. 
The aim of the reform is to modernise the Security 
of Supply Act in order to meet the requirements of 
the  amended  Constitution  and 
the  current 
operating  and  security  environment.  Under  the 
proposal,  the  Security  of  Supply  Act,  enacted  in 
1992,  would  be  repealed.  The  Act  on  security 
stockpiling  (Turvavarastolaki),  adopted  in  1982, 
would also be amended. 

Finland  has  implemented  the  EU’s  Critical 
Entities  Resilience  (CER)  Directive,  through 
the  national  Act  on  the  protection  of 
infrastructure  critical  to  society  and  on  the 
improvement  of  resilience,  which  entered 
into force on 1 July 2025. This legislation aims 
to  increase  national  security  and  bolster  the 
resilience  of  critical  entities  across  11  sectors. 
Energy  resilience  in  the  face  of  the  difficult 
geopolitical  context  has  recently  improved.  The 
state  is  increasing  its  share  in  the  ownership  of 
Fingrid, 
transmission 
system  operator  responsible  for  the  transmission 
grid and the operational  security  of the electricity 
system.  As  a  result  of  the  transaction,  the  state's 
ownership  control  in  a  strategically  significant 
company will be strengthened. Upon completion of 
the  transaction,  the  state's  shareholding  in  the 
company  will  increase  from  53.1%  to  59.5%  and 
its voting rights from 70.9% to 81.5%. 

the  national  electricity 

Finland  has  already  made  progress 
in 
diversifying  its  energy  sources  by  relying 
heavily  on  renewable  energy  and  nuclear 
power  and  continuing  to  reduce  its  use  of 
fossil  fuels.  It  aims  to  achieve  a  carbon-neutral 
economy by 2035. 

to  achieve 

Nuclear  energy  plays  a  role  in  Finland’s 
energy  sector  and  is  a  central  part  of  the 
government’s  plan 
carbon 
neutrality by 2035. The Finnish government has 
been  drafting  a  total  overhaul  of  the  Nuclear 
Energy  Act,  with  a  draft  sent  out  for  public 
comment in June 2025. The new law, expected to 
enter  into  force  on  1 January  2027,  aims  to 
streamline 
licensing  processes  and  better 
accommodate  new  technologies  such  as  small 
modular  reactors 
In  2025,  Finland’s 
(SMRs). 
newest 
reactor  unit,  Olkiluoto  3,  operated 
throughout  the  year  without  any  unplanned 
outages.  Traditionally  dependent  on  Russian  fuel, 
the  Loviisa  nuclear  power  plant  (NPP)  (VVER-440 
reactor units) has been operating since 2024 with 
its  first  batch  of  alternative  Westinghouse  fuel.  It 
is important for Finland to develop a national plan 
to  fully  phase  out  its  dependency  on  Russian 
nuclear  fuel,  as  set  out  in  the  REPowerEU  road 
map adopted on 6 May 2025. In 2026, Finland is a 
global  front  runner  in  the  deployment  of  SMRs, 
specifically for district heating in order to achieve 
its carbon neutrality goals. Unlike traditional large 
reactors  focused  on  electricity  generation,  the 
Finnish  SMR  strategy  prioritises  replacing  fossil 
fuel-based heating in urban areas. 

Finland  is  pioneering  innovative  SMR  dual-
uses,  such  as  district  heating,  beyond 
traditional  electricity  production.  However, 
ensuring  commercial  viability  requires  targeted 
support  for  market  creation  and  deployment 
projects. 
regulatory 
frameworks  must  be  adapted  to  accommodate 
these novel use cases. 

Furthermore, 

existing 

On 12 May 2025, Finland signed the EU Baltic 
Sea memorandum of understanding to renew 
the  Baltic  energy  market  interconnection 
plan (BEMIP) adopted in 2015 in line with the 
current  priorities  of  the  EU’s  energy  policy. 
During  the  negotiations,  Finland  emphasised  the 
importance of technology neutrality. 

The  RePowerEU  road  map  acknowledges  the 
substantial  progress  that  Finland  has  made 

81 

 
in  reducing 
its  dependence  on  Russia’s 
imports  during  the  past  few  years  but 
emphasises  that  it  must  continue  to  make 
efforts 
remaining 
dependencies, including in the nuclear sector. 
Finland  is  at  the  forefront  of  this  work  and  last 
year  started  loading  test  batches  of  alternative 
Westinghouse fuel in Unit 2 of the Loviisa NPP. 

reduce 

the 

to 

Fossil fuel subsidies 

In  2024,  environmentally  harmful  (291) fossil 
fuel  subsidies  without  a  planned  phaseout 
before  2030  represented  0.30% (292)  of 
Finland’s  GDP (293).  Additionally,  Finland’s  2023 
effective carbon rate (294) averaged EUR 94.37 per 
tonne  of  CO₂  –  above  the  EU  weighted  mean  of 
EUR 84.80 (295). 

(291) Explicit fossil fuel subsidies (e.g. direct transfers) and implicit 
fossil fuel subsidies (i.e. tax expenditures linked to forgone 
tax revenues that have an identifiable fiscal impact for the 
central budget) that support fossil fuel energy production, 
transmission and/or consumption. 

(292) European Commission calculation based on underlying data 
from the Study on energy subsidies and other government 
interventions in the EU – 2025 edition, Enerdata. 

(293) 2024 gross domestic product at market prices, Eurostat. 

(294) The effective carbon rate is the sum of carbon taxes, ETS 
permit prices and fuel excise taxes, representing the 
aggregate effective carbon rate paid on emissions. 

(295) OECD (2024), Pricing Greenhouse Gas Emissions 2024. 

82 

 
 
 
ANNEX 10: CLIMATE ADAPTATION, PREPAREDNESS AND ENVIRONMENT 

in  EU 

livelihoods  are 

including  more 

Climate  adaptation  efforts  are  advancing, 
but exposure to intensifying climate hazards 
continues  to  shape  Finland’s  risk  and 
investment  profile.  Finland’s  LULUCF  sector 
has  shifted  from  a  carbon  sink  to  a  net 
source,  with  a  widening  gap  to  its  2030 
targets  driven  by  high  harvesting,  reduced 
forest  growth  and  emissions  from  drained 
peatlands,  exposing  gaps  in  current  policies 
to  restore  net  removals.  The  country 
is 
experiencing  accelerating  climate  risks  linked  to 
rapid  warming, 
frequent 
heatwaves,  floods  and  extreme  precipitation,  with 
northern regions warming significantly faster than 
the  EU  average.  While  economic  losses  from 
climate-related  events  have  been  comparatively 
low 
impacts  on 
terms,  projected 
infrastructure,  ecosystems,  health  and  climate-
sensitive 
increasing.  Estimated 
adaptation  investment  needs  are  above  the  EU 
average,  placing  Finland  among  the  top  five  EU 
Member States. Finland has an established climate 
adaptation  governance  framework  and  municipal 
yet 
engagement  above 
implementation challenges persist, notably uneven 
local capacity, developing monitoring systems, low 
insurance  coverage  and  the  need  to  scale  up 
is 
nature-based  solutions.  Finland’s  economy 
structurally  exposed  to  nature  loss  given  its  high 
dependency  on  ecosystem  services.  Habitat 
degradation is increasingly widespread, mainly due 
resulting 
to  agriculture 
eutrophication  that  continue  to  increase.  Peatland 
degradation  in  Finland  contributes  to  unhealthy 
soils,  including  agricultural  land.  The  country  also 
struggles  with  diffuse  pollution  from  agriculture 
affecting 
surface 
waterbodies,  and  unsustainable  forestry  practices 
jeopardising  the  conservation  status  of  habitats 
and species. 

intensification  and 

the  EU  average, 

status  of 

chemical 

the 

Climate adaptation and preparedness  

Finland  faces  increasing  climate  risks  linked 
to  significant  warming  and  more  frequent 
extreme  weather,  with  economic 
losses 
projected to rise. Its high latitude, boreal forests 
and  cold-climate  conditions  shape  a  distinct  risk 
profile.  While  historically  less  exposed  to  extreme 
heat  than  southern  Member  States,  Finland  is 
experiencing  rising  heatwaves,  floods,  and  heavy 
infrastructure, 
precipitation,  with 

impacts  on 

83 

in  2025,  even 

identified  nationally 

health, and ecosystems. Flooding, including coastal 
flooding,  and  drought  are  among  the  most 
(296). 
significant  hazards 
Temperatures  are  well  above  historical  norms, 
with record numbers of hot days in summer 2024 
in 
and  prolonged  heatwaves 
northern  parts (297).  Earlier  snowmelt  and  reduced 
snow cover are affecting winter ecosystems, water 
availability  and  traditional  livelihoods  such  as 
reindeer  herding.  Warming  increases  heat  stress, 
pressures  on  health  services,  wildfire  risk,  as  well 
as agricultural and ecosystem impacts- (e.g. higher 
water temperatures can stress aquaculture species 
(298). Milder winters in Finland are expected to shift 
more precipitation to rain, altering river flows and 
increasing flood risks – especially in southern and 
central  regions  –  while  making  floods  more 
variable and challenging to manage, with potential 
damage to transport and energy infrastructure.(299) 
Climate-related  events  (floods,  storms)  already 
cause economic losses, particularly in forestry and 
agriculture,  and  these  are  projected  to  increase 
with more severe weather.  

Finland’s  drought  impact  on  ecosystems  is 
comparatively  low  in  relation  to  many  other 
Member States (300). In 2023, Finland’s share of 
land  area  where  vegetation  productivity  was 
impacted  by  drought  during  the  growing  season 
was just over 2% compared to 3.5% in the EU.  

Economic  losses  from  climate  extremes  in 
Finland  have  historically  been  much  lower 
compared with more exposed countries in the 
EU,  just  ~0.3%  of  all  EU  climate-related  losses 
from 1980-2023 (301). However, the trend and the 
associated need for adaptation is rising across the 

(296) OECD 

Economic 

Surveys 

Finland 

2025. 

https://www.oecd.org/en/publications/oecd-economic-
surveys-finland-2025_985d0555-en/full-report/stepping-
up-the-transition-to-net-zero_902009f2.html 

(297) FMI:  Year  2025  was  Finland’s  second  warmest  year  on 
https://en.ilmatieteenlaitos.fi/press-

record, 
release/2mV6FGVh8kkpwJG9DfKjTL?utm_=.  

(298) Finland, EU Aquaculture, 

https://aquaculture.ec.europa.eu/country-information/finland. 

(299) CLIMATE-ADAPT, 

Finland 

Profile, 
Finland%20|%20Country%20Profiles%20|%20Discover%20t
he%20key%20services,%20thematic%20features%20and%
20tools%20of%20Climate-ADAPT%20Climate-ADAPT.  

Country 

(300) Drought impact on ecosystems in Europe – Indicators – EEA, 

link. 

(301) EEA Climate-related economic losses/Finland, link. 

 
 
 
 
 
EU.  The  EEA  has  identified  Europe  as  the  fastest 
warming  continent,  with  escalating  extreme 
weather  frequency.  Finland  is  not  an  exception  in 
this  regard,  and  notably  the  northern  parts  of  its 
territory, Lapland, which forms part of the Arctic, is 
warming 3-4 times faster than the EU on average 
(302).  This  requires  adaptation  from  nature  and 
from  the  people  who  live  off  activities  that  are 
strongly  linked  to  predictable  climate  conditions, 
such as reindeer herding and winter tourism.  

(306)  placing  Finland  among  the  top  five  EU  MS. 
Research  shows  that  proactive  adaptation  can 
reduce  climate-induced  economic  losses  far  more 
cost-effectively  than  reactive  responses  later.  A 
report  on  Finland’s  National  Climate  Change 
that 
Adaptation  Plan  until  2030 
anticipatory  adaptation  measures  could  avoid 
cumulative climate-related damages amounting to 
approximately  EUR 5–8 billion  over  the  period 
2040–2070,  compared  with  a  reactive  approach. 
(307).  

indicates 

capita 

Finland’s 

A  recent  study(303)  estimates  that  Finland 
will  need  to  invest  more  than  EUR 2  billion 
per  year  up  to  2050  (0.6%  of  annual  GDP, 
which is above the EU average of 0.5%), first 
and  foremost,  in  ecosystems  (around  61%  of 
the total share), followed by infrastructure (around 
21% of the total)  and health (around 11% of the 
total)(304). 
adaptation 
per 
investment need (~ EUR 355) is more than double 
the  EU  average  per  person  (~  EUR 155),  a 
significantly  higher  adaptation  burden  than  the 
average 
reflects  Finland’s  unique 
geographic and climate risks (rapid Arctic warming, 
infrastructure  exposure  to  freeze-thaw  cycles), 
which  may  drive  higher  per  capita  adaptation 
costs.  Its  small  economy  and  population  and 
relatively  large  land  area  also  mean  that  fixed 
adaptation  costs,  like  upgrading  infrastructure 
across  a  sparsely  populated  territory,  weigh  more 
per GDP unit. The required investments in climate 
adaptation  correspond  to  0.64%  of  Finland’s 
annual GDP, well above the EU average, of 0.46%, 

(305).  This 

(302) Communications Earth & Environment: The Arctic has 

warmed nearly four times faster than the globe since 1979, 
link. 

climate 

transition, 

(303) European  Commission:  Directorate-General  for  Climate 
Action,  Monteleone,  L.,  Roberti,  G.,  Fossati,  F.,  Davies,  W.  et 
al.,  Assessment  of  EU  and  Member  States  adaptation 
investment needs – Study on the macroeconomic impacts of 
the 
25, 
2026, 
https://op.europa.eu/en/publication-detail/-
/publication/d2039eac-f742-11f0-b9bc-
01aa75ed71a1/language-en%20(Table%208).  The  study 
provides detailed estimates of adaptation investment needs 
at the level of the EU and individual Member States per type 
of measure. It relies on a common methodology that makes 
estimates  comparable  across  the  EU.  Four  accompanying 
methodological reports provide a detailed description of how 
the results were estimated to ensure full transparency. 

Table 

(304) Idem as above. 

(305) Finland’s annual adaptation investment need is EUR 2 billion 
up to 2050. For the EU average this figure is EUR 70 billion. 
Given that Finland’s population is 5.64 million and the EU is 
450 million, this results in ~ EUR 355 of per capita 
investment need in Finland compared to EUR 155 in the EU. 

84 

national 
has  well-established 
Finland 
governance  structures  in  place  for  climate 
adaptation,  and  the  country  continues  to  make 
progress  in  integrating  adaptation  into  sectoral 
policies.  Similarly,  monitoring  mechanisms  are 
improving  and  there  are  new  key  efforts  in 
subnational action. Finland has adopted a Climate 
Act  and  a  National  Adaptation  Plan  (NAP2030) 
that sets out strategic priorities to boost resilience 
(infrastructure,  health,  water 
across  sectors 
management, 
NAP2030 
The 
ecosystems). 
framework  is  advanced  institutionally,  but  data 
gaps  remain  on  exact  costs  and  benefits  of 
specific adaptation measures. Tools like the SUOMI 
project 
risk 
assessments  to  tailor  adaptation  but  linking  this 
science  to  planning  and  action  across  governance 
levels needs further strengthening.  As in other EU 
Member  States,  climate  adaptation  governance  in 
Finland involves multiple levels, and the division of 
roles  between  national, 
local 
authorities is not always clearly defined, which can 
slow 
risk 
implementation.  Monitoring  and 
assessment  frameworks  remain  uneven,  limiting 
learning 
Smaller 
municipalities  in  Finland  often  lack  resources  for 
climate  adaptation,  and  fewer  than  half  have  set 
targets or plans, while larger cities such as Espoo, 
Vantaa and Turku are more advanced, resulting in 

regional,  and 

adjustment. 

regional 

produce 

policy 

help 

(308) 

and 

(306) See  footnote  228,  Assessment  of  EU  and  MS  adaptation 

investment needs.  

(307) Government  Report  on  Finland’s  National  Climate  Change 
Adaptation Plan until 2030: Wellbeing, Safety and Security in 
a 
Climate, 
Changing 
https://julkaisut.valtioneuvosto.fi/items/60d4fbe4-b360-
4058-94c2-f667b7c6fcaa.  

(308) Project  of  the  Finnish  Climate  Panel,  coordinated  by  the 
Institute, 
Meteorological 

Finnish 
https://en.ilmatieteenlaitos.fi/suomi-project.  

 
 
 
uneven  adaptation  progress  across  the  country 
(309).  

The share of Finland’s population covered by 
the  EU  Covenant  of  Mayors  signatories  has 
remained  stable  over  the  past  years,  at 
around  41-45%,  which  is  higher  than  the  EU 
average  of  34%  in  2024.  Furthermore,  66%  of 
signatories  have  submitted  a  sustainable  energy 
and  climate  plan  (SECAP)  on  time  and  33%  have 
submitted  at  least  one  monitoring  report  within 
the recommended timeframe – both figures being 
considerably higher than the EU average (310). 

adaptation  will 

Climate  risks  have  a  direct  effect  on 
Finland’s  economy,  while  the 
insurance 
coverage  remains  low.  Between  1980  and 
2024,  Finland  recorded  EUR  603.4  million  in 
economic  losses  (311)  from  weather-  and  climate-
related  extreme  events,  out  of  which  only  3%  - 
EUR  18.2  million  were  insured  (312).  Effective 
climate 
strategic 
investments  across  several  domains  to  build 
infrastructure  resilience,  promote  nature-based 
solutions,  enhance  public  health  systems  for 
heatwave  response,  develop  adaptive  agriculture 
and rural resilience, and to ensure up-to-date data, 
risk  assessments  and  further  development  and 
strengthening  of  climate  services.  There  is  also  a 
need  for  sufficient  financing  and  governance,  not 
least through well-financed municipal plans.  

require 

Climate  risks  have  a  direct  and  significant 
effect  on  Finland’s  economy,  but  total 
economic  losses  caused  by  weather  and 
climate-related  extremes  in  the  country  are 
relatively low compared with other EU countries. 
According  to  estimates  from  the  EEA,  total 
damages  in  Finland  were  around  EUR  2.17  billion 
for  the  period  1980-2021,  mostly  due  to  storms, 

(309) Finnish Environment Institute (2025): Finnish municipalities 
have progressed to varying degrees in climate change 
adaptation, https://www.sttinfo.fi/tiedote/71556505/finnish-
municipalities-have-progressed-to-varying-degrees-in-
climate-change-adaptation-risks-are-not-sufficiently-
assessed?lang=en. 

(310) European 

Commission, 

https://eu-

mayors.ec.europa.eu/en/explorer. 

(311) EEA, 2024, Economic losses from weather- and climate-

related extremes in Europe, 
https://www.eea.europa.eu/en/analysis/indicators/economic-
losses-from-climate-related 

(312) Idem as above. 

85 

floods, and other extreme weather events. Finland 
is  among  the  countries  with  the  lowest  economic 
losses  per  square  kilometre  in  Europe  over  the 
mentioned period (313). 

Though 

particularly 

connectivity 

Finland’s  transport  network  faces  moderate 
but  tangible  climate  risks,  and  this  will 
require  targeted  and  sustained  adaptation 
in  maritime 
investment, 
infrastructure, to ensure long-term resilience 
(314). 
and 
Finland‘s 
exposure to extreme heat is comparatively limited, 
continued  risks  from  heavy  precipitation,  flooding, 
freeze-thaw  cycles  and  winter  storms  are 
prevalent  which  can  affect  road  durability,  rail 
stability and port operations(315). Adaptation needs 
remain  (316),  reflecting  Finland’s  long  coastline, 
reliance  on  maritime  transport  and  exposure  to 
sea-level  rise,  storm  surges  and  changing  ice 
conditions.  Though  Finland’s  vulnerability  is  not 
among  the  highest  in  the  EU,  targeted  and 
sustained 
in  port 
investment  –  particularly 
resilience  and  weatherproofing  of  rail  and  road 
assets  –  will  be  necessary  to  safeguard  network 
reliability, cross-border connectivity, and long-term 
climate resilience. 

Finland  has  strong  policy  recognition  for 
nature-based solutions for climate resilience, 
including  targets  in  the  national  adaptation 
plan  to  2030,  and  several  project  level 
successes  in  forestry,  water  management 
and  urban  planning.  But  the  transition  from 
policy  ambition  to  broad  implementation  is  still 
ongoing,  with 
systematic  deployment  and 
monitoring yet to be fully realised – a pattern that 

(313) Idem as above. 

(314) European Commission (2024): Support study on the climate 
adaptation and cross-border investment needs to realise the 
TEN-T network, Table 4.6, 
https://op.europa.eu/en/publication-detail/-
/publication/26731a63-b904-11ef-91ed-
01aa75ed71a1/language-en. 

(315) 2025 Environmental Implementation Review Country Report 

– Finland, 
https://environment.ec.europa.eu/publications/2025-
environmental-implementation-review-country-report-
finland_en. 

(316) European Commission (2024): Support study on the climate 
adaptation and cross-border investment needs to realise the 
TEN-T network, Table 4.28, 
https://op.europa.eu/en/publication-detail/-
/publication/26731a63-b904-11ef-91ed-
01aa75ed71a1/language-en. 

 
 
 
closely  mirrors  the  situation  in  many  EU  Member 
States.  

Finland  could  benefit  from  boosting  efforts  on 
nature-based solutions to improve  river continuity 
and  ecological  flows  and  to  ensure  that  forestry 
practices fully take into consideration the need to 
protect  and  restore  the  conservation  status  of 
forest habitats and species.  

Finland  received  EUR 8.5  million  EU  funding 
for climate-resilient forestry and biodiversity 
projects (2022-2025), including participation 
in  Horizon  Europe  NBS  projects 
like 
Trees4Adapt  (EUR 4 million).  These  show  that 
EU  and  national 
increasingly 
directed  towards  NBS,  though  many  are  still 
project-based 
widespread 
infrastructure or policy instruments.   

resources  are 

rather 

than 

Water resilience 

for  emissions 

Finland  has  the  fourth  highest  number  of 
emissions of heavy metals to water and is in 
first  position 
intensity. 
Decisive  measures  are  needed  to  address 
diffuse  pollution  from  agriculture,  mainly  in 
the  form  of  phosphates,  mercury  and 
polybrominated diphenyl ethers. Moreover, in 
Finland,  periodic  reviews  of  controls  over 
water uses need to be compliant.  

The  national  water  exploitation  index  plus  (WEI+) 
(317)  in  Finland,  a  measure  of  how  much  water  is 
being  used  compared  with  the  total  renewable 
freshwater resources available for a given territory 
and  period,  indicates  very  low  overall  pressure  at 
0.5% in 2023.   

Water  productivity  in  Finland  (318)  stood  at 
EUR 100 per m³ of abstracted water in 2022, 
well  below  the  EU-27  average  of  EUR  153 
per  m³,  reflecting  efficiency  in  abstraction-
heavy sectors like energy and manufacturing. 

In  2023,  manufacturing  accounted  for  53%  of 
freshwater  abstraction,  public  water  supply  20%, 
and energy production 23%(319).  

75% of surface waterbodies in Finland are in 
good or better ecological status. However, all 
of  them  (100%)  are  failing  to  achieve  good 
chemical  status,  compared  with  about  50  % 
in  the  second  river  basin  management  plan 
(RBMP)(320).  Lack  of  progress  is  mainly  due  to 
diffuse pollution from agriculture and forestry that 
has  remained  high.  Furthermore,  Finland  also 
hydro-
in 
faces 
morphological  alterations.  Overall,  the  treatment 
of  urban  wastewater  in  Finland  is  compliant 
(97%). 

addressing 

challenges 

Looking ahead, the annual cost for installing 
and  renewing  urban  wastewater  collecting 
systems and treatment plants between 2024 
and  2032  is  expected  to  reach  and  average 
of EUR 360 million. Altogether, this represents a 
significant  investment  of  EUR  78  per  inhabitant 
each  year  (321).  Water  investments  in  Finland  are 
estimated to be around EUR 245 million per year. 
Of  this,  EUR  194  million  supports  wastewater 
management,  EUR  4  million  drinking  water  and 
around  EUR  43  million  water  management  and 
protection.  A  further  EUR  198  million  per  year  is 
needed to close the investment gap (322). 

Nature restoration 

Finland’s  economy  is  structurally  exposed  to 
nature  loss  because  it  is  among  the  EU 
Member  States  with  the  highest  dependency 
on ecosystem services (323). Half of gross value 

(319) EEA,  Water  abstraction  by  economic  sector,  2000-2023, 

2025. 
https://www.eea.europa.eu/en/analysis/indicators/water-
abstraction-by-source-and/water-abstraction-by-economic-
sector. 

(320) eur-lex.europa.eu/legal-

content/EN/TXT/PDF/?uri=SWD:2019:46:FIN 

(317) Eurostat, Water Exploitation Index, plus. 

(321) Internal documents, implementation of Directive 91/271/EEC 

https://ec.europa.eu/eurostat/databrowser/view/sdg_06_60/d
efault/table?lang=en. 

(UWWTD), 2022. 

(318) Water  productivity  is  a  metric  that  is  calculated  by  dividing 
GDP  (in  chain-linked  volume)  by  total  water  abstraction.  It 
indicates the average economic value (GDP) a Member State 
creates for each unit of water it takes from nature. 

86 

(322) 2025 Environmental Implementation Review Country Report 

– FINLAND - Environment. 

(323) Hirschbuehl  et  al.  (JRC),  The  EU  economy`s  dependency  on 
European 

VASILAKOPOULOS, 

editor(s), 

nature, 

P. 

 
 
 
 
 
 
added  (GVA)  relies  directly  on  the  ecosystem 
(50%)  –  above  the  EU  average  of  44%.  This 
vulnerability is particularly acute in the agriculture, 
forestry,  construction  and  water  utilities  sectors, 
which  depend  directly  on  healthy  terrestrial 
ecosystems (324).  

Finland’s 

exceptionally 

Despite 
rich 
biodiversity  –  reflected  in  13.4%  (325)  of  its 
territory  designated  as  protected  areas  – 
is 
habitat 
increasingly 
degradation 
intensification  and 
widespread.  Agricultural 
increase. 
resulting  eutrophication  continue  to 
Moreover,  poor  water  quality  affects  fish  health, 
survival,  and  reproductive  success,  threatening 
fisheries  (326).  Forestry  is  the  most  reported 
pressure  on  Natura  2000  sites.  Finland  needs  to 
speed up the necessary conservation measures, as 
they are yet to be defined for some sites, including 
the  Åland  Islands.  To  curb  the  situation,  Finland 
the  Natura  2000  site 
needs 
designation 
effective 
the 
implementation  of  Natura  2000  management 
plans  and  provide  sufficient  administrative 
capacity  and  financing  both  for  Natura  2000  and 
the  implementation  of  the  Nature  Restoration 
Regulation, 
the 
implementation  of  prioritised  actions  frameworks 
2021-2027 (PAFs) (327).   

to  complete 
process, 

ensuring 

ensure 

while 

also 

Nature  degradation  is  further  amplified  by 
invasive  alien  species,  with  18  recorded  in 
Finland 
estimated 
damages  of  EUR 270  million  up  to  2020, 
primarily  affecting  agriculture  and  public 
health  (328).  At  the  same  time,  eutrophication–a 

in  2024, 

inflicting 

Commission, 
(2025) 
https://publications.jrc.ec.europa.eu/repository/handle/JRC140
304?mode=full.   

VASILAKOPOULOS, 

(324) Hirschbuehl  et  al.  (JRC),  The  EU  economy`s  dependency  on 
European 
nature, 
Commission, 
(2025). 
https://publications.jrc.ec.europa.eu/repository/handle/JRC140
304?mode=full. 

editor(s), 

P. 

(325) Eurostat, Protected Areas Indicator, 

https://ec.europa.eu/eurostat/databrowser/view/env_bio4/def
ault/table?lang=en&category=env.env_biodiv. 

(326) See 

HELCOM-Thematic-assessment-of-eutrophication-

2016-2021.pdf 

(327) 2025 Environmental Implementation Review Country Report 

– FINLAND - Environment. 

(328) Neobiota,  Economic  Cost  of  invasive  alien  species  across 
Europe 
(2021).  https://neobiota.pensoft.net/article/58196/.  
European Commission, 2025, Environmental Implementation 

87 

threat to biodiversity and ecosystem integrity–has 
decreased  from  10.4%  in  2005  to  2.1  in  2022. 
(329)  

The  investment  needs  for  biodiversity  and 
ecosystems  are  estimated  to  be  EUR  5.1 
billion per year in Finland in 2021–2027. This 
includes  the  following  financing  needs:  Finland’s 
prioritised action framework concerning the Natura 
2000 areas: EUR 862.4 million per year; additional 
Biodiversity  Strategy  costs:  EUR  2.8  billion;  and 
sustainable  soil  strategy  management  costs:  EUR 
1.4 billion per year. (330)  

Sustainable agriculture and land use 

Finland’s  LULUCF  sector  has  shifted  from  a 
carbon  sink  to  a  net  source  of  emissions, 
with  removals  below  required  levels  and  a 
projected gap to targets, indicating the need 
for additional policy measures to support the 
achievement  of  national  and  EU  climate 
objectives.  In  2024  land  use,  land-use  change 
and  forestry  (LULUCF)  net  emissions  were  9.77 
MtCO2-eq  (331).  The  latest  available  projections 
show a gap to target of almost 15 million tonnes 
CO2-eq for 2030(332), the second largest projected 
shortfall among EU Member States (333). This large 

Review, 
Country 
Finland 
https://ec.europa.eu/transparency/documents-
register/detail?ref=SWD(2025)308&lang=en. 

Report. 

(329) EEA,  Eutrophication  caused  by  atmospheric  nitrogen 
deposition 
2024. 
https://www.eea.europa.eu/en/analysis/indicators/eutrophicati
on-caused-by-atmospheric-nitrogen 

Europe 

in 

(330) Environmental Implementation Review - Environment - 

European Commission 

(331) European  Environment  Agency  (EEA),  Net  greenhouse  gas 
emissions  of  the  Land  Use,  Land  Use  Change  and  Forestry 
(LULUCF) 
dataset, 
https://www.eea.europa.eu/en/datahub/datahubitem-
view/4732d4ec-960d-4e25-aece-8a3ca52ce170?utm_. 

1990–2024 

sector, 

(332) Climate Action Progress Report – Finland Country Profile -

https://climate.ec.europa.eu/document/download/fff9a456-
7d80-4d5b-9ee7-
1aaccc428b68_en?filename=fi_2025_factsheet_en.pdf. 

(333) National  LULUCF  targets  of  the  Member  States  in  line 
https://eur-

with Regulation 
lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:02018R0841-20230511.  

2023/839, 

(EU) 

 
 
 
 
gap  reflects  a  combination  of  reduced  forest 
growth,  methodological  revisions,  high  harvest 
levels, and high emissions from drained peatlands, 
all  of  which  have  weakened  Finland’s  forest 
carbon sink. 

Independent assessments, including from the 
Finnish Climate  Change  Panel  (334)  and  OECD 
analyses, indicate that under current policies 
the  LULUCF  sector  is  far  off  track  to  meet 
both the EU’s 2026–2030 commitment period 
and  its  2030  LULUCF  target  of  additional 
carbon  removals  of  roughly  −2.9  Mt  MtCO2-
eq  (335).  Finland  is  projecting  an  annual  harvest 
volume  of  81-82  million  cubic  metres  over  the 
next 20+ years, a considerable increase compared 
to  the  72  million  cubic  metres  harvested  on 
average  over  the  past  10  years.  According  to  the 
Finnish  Climate  Panel,  these  projected  logging 
levels  are  not  in  line  with  the  country’s  2035 
carbon  neutrality  goal  and  EU  land  use  sector 
obligations. They estimate that the goals could be 
achieved  with  a  logging  level  of  60-60 Mm3, 
though  this  is  also  dependent  on  how  emissions 
are reduced in other areas of the land use sector.  

policy 

recent 

current 

climate 

announcements, 
Despite 
is 
strategy 
Finland’s 
insufficient to deliver on its legally enshrined 
target  of  carbon  neutrality  by  2035.  Under 
existing  policies  and  those  in  the  medium-term 
climate  plan  and  the  updated  energy  and  climate 
strategy  adopted  in  late  2025,  the  government 
has  prioritised  measures  in  transport  and  clean 
energy,  and  some 
forest  actions  such  as 
fertilisation,  afforestation  and  growing  denser 
forests.  These  steps  are projected  to  increase the 
sink  by  only  a  few  million  tonnes  at  most.  This 
leaves  a  far  larger  gap  with  what  is  required  to 
meet  both  the  EU’s  LULUCF  obligations  for  2030 
and the deeper sink needed for 2035. 

Reversing  this  trajectory  would  require 
implementing  structural  changes  that  go 
combining 
beyond 
that 
sustainable 

policies, 
forest  management 

current 

(334) Report  by  the  Finnish  Climate  Change  Panel 
Ilmastopaneelin-raportti-1-2025-Arvio-Suomen-
maankäyttösektorin-tilanteesta-Tarkastelussa-EU:n-LULUCF-
velvoitekaudet-2021–2025-ja-2026–2030.  

(2025), 

(335) National LULUCF targets of the Member States in line with 
Regulation (EU) 2023/839 https://eur-lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:02018R0841-20230511. 

88 

and 

resilience 

technological  sinks 

improves 
long-term 
productivity with stronger protection of high-
carbon  and  high-biodiversity  ecosystems, 
including  peatlands  and  old-growth  forests 
where  relevant,  and  by  ensuring  that 
harvesting  levels  and  forest  use  remain 
consistent  with  sink  recovery,  biodiversity, 
and  water  objectives.  This  could  be  done  by 
reforming  the  Forest  Act  and  instilling  climate-
smart forestry with long-term financing; subsidies 
and incentives for sustainable forest management 
and  carbon-sequestration  practices;  infrastructure 
like  BECCS  facilities 
for 
(bioenergy with carbon capture); and just transition 
support  for  forestry.(336)  In  addition  to  increasing 
LULUCF  net  removals,  further  investments  in 
healthy  forests  and  soils  are  key  to  building 
resilient  bio-based  product  value  chains  and 
enabling  a  growing,  competitive  EU  bioeconomy. 
in 
Continued 
supporting  timely  and  effective  action  in  the 
sector.  Emissions 
from  drained  peatlands, 
including those under agricultural and forestry use, 
are a significant component of land-use emissions 
in  Finland  and  contribute  to  the  recent  decline  in 
net  carbon  removals 
in  the  LULUCF  sector, 
indicating  their  relevance  for  addressing  the 
sector’s overall performance. 

removal  data  will  be  crucial 

Finland’s  bioeconomy  strategy  (337) 
links 
economic  growth  from  renewable  resources 
It 
with  the  country’s  climate  objectives. 
promotes  the  sustainable  use  of  renewable 
biological  resources  –  particularly  forests  –  to 
produce 
food,  materials  and  energy  while 
increasing  value  added  and  reducing  fossil  fuel 
dependence,  supporting  the  country’s  climate-
neutrality  goal  for  2035.  As  forest  biomass 
underpins both the bioeconomy and Finland’s main 
carbon  sink,  the  bioeconomy  strategy  can  act  as 
an 
to  meeting  EU  climate 
obligations  (notably  the  LULUCF  Regulation),  by 
promoting  sustainable  forest  management,  long-
land-use 
lived  wood  products  and  careful 

important 

lever 

(336) Report by Kone Foundation: Finland’s carbon neutrality target 
for  2035  can  be  achieved  while  strengthening  economic 
growth, 
https://koneensaatio.fi/en/news/report-finlands-
carbon-neutrality-target-for-2035-can-be-achieved-while-
strengthening-economic-growth/.  

(337) Bioeconomy  Strategy  2022-2035  –  Sustainably  towards 
higher 
Government, 
https://valtioneuvosto.fi/en/-/1410877/bioeconomy-strategy-
2022-2035-sustainably-towards-higher-value-added.  

Finnish 

added 

value 

– 

 
 
 
Commission  recommendations  for  Finland’s  CAP 
strategic  plan,  the  share  of  ammonia  emissions 
from  agriculture  in  the  country  is  still  relatively 
high  at  88.17%  in  2023,  and  Finland  has  been 
found to be at high risk of non-compliance with its 
commitments to reduce ammonia emissions. 

Finland  had  a  high  surplus  for  nitrogen  in  2023 
and  is  one  of  the  Member  States  facing  the 
greatest  challenges  in  tackling  nutrient  pollution 
from agriculture.  

practices,  which  all  help  maintain  or  strengthen 
net removals. 

Finland’s  organic  farming  occupies  13.49  % 
of  all  utilised  agricultural  land  area,  among 
the best rates in the EU and higher than the 
EU  average  of  10.50  %.  However,  peatland 
degradation,  affecting  7  %  of  the  national 
territory,  is  contributing  to  Finland’s  unhealthy 
soils, including agricultural land. (338) (339).  

Water  quality  pressures  are  intensifying. 
Under the EU Nitrates Directive, 6.8% of Finland’s 
groundwater monitoring stations recorded average 
nitrate  concentrations  exceeding  25 mg/l  (and 
1.6%  above  50 mg/l,  the  EU  threshold  for  safe 
drinking water) between 2016 and 2019 (340). The 
agricultural  pressure  due  to  Finland’s  livestock 
density is 0.39 livestock units per hectare in 2023 
(341), compared to the EU average of 0.75. A 16% 
in  agricultural  ammonia  emissions 
reduction 
(342)  underscores 
between  2018  and  2023 
improvement in emission control in Finland (343) to 
meet its reduction commitments to be achieved by 
persists, 
nitrate 
2030.  However, 
indicating gaps in nutrient management strategies.  

pollution 

31%  of  rivers  in  Finland  contain  pesticide 
the 
exceeding 

thresholds.  According 

to 

(338) [sdg_02_40] Area under organic farming 

(339) IMPACT 

ASSESSMENT 

REPORT_ANNEXES_SWD_2023_417_part4.pdf                                                                            

(340)EEA,  Nitrate 

groundwater 
https://www.eea.europa.eu/en/analysis/indicators/nitrate-in-
groundwater-8th-eap. 

Europe, 

in 

in 

2025. 

(341)Eurostat, 

index. 
https://ec.europa.eu/eurostat/databrowser/view/tai09/default/t
able?lang=en 

Livestock 

density 

(342) EEA, Air pollutant emissions data viewer (Gothenburg 

Protocol, Air Convention) 1990-2023. 
https://www.eea.europa.eu/en/topics/in-depth/air-
pollution/air-pollutant-emissions-data-viewer-1990-2023. 

(343) EEA, Magnitude of emission reductions (percentage) required 
by EU Member States to meet their emission reduction 
commitments for 2030 onwards, based on 2023 data, 2025. 
https://www.eea.europa.eu/en/analysis/publications/air-
pollution-in-europe-2025-reporting-status-under-the-
national-emission-reduction-commitments-
directive/magnitude-of-emission-reductions-percentage-
required-by-eu-member-states-to-meet-their-emission-
reduction-commitments-for-2030-onwards-based-on-2023-
data 

89 

 
 
 
Table A10.1:Key Adaptation Indicators 

(1) EFFIS (European Forest Fire Information System). https://forest-fire.emergency.copernicus.eu/apps/effis.statistics/estimates. 
(2) The climate protection gap refers to the share of non-insured economic losses caused by climate-related disasters, based on 
modelling of the risk from floods, wildfires, windstorms, and the insurance penetration rate. Scale: 0 (no protection gap) – 4 (very 
high gap). EIOPA, 2025, Dashboard on insurance protection gap for natural catastrophes. 
(3) Measures total water consumption as a percentage of the renewable freshwater resources available for a given territory and 
period. Values above 20 % are generally considered to be a sign of water scarcity, while values equal or greater than 40 % 
indicate situations of severe water scarcity. 
(4) European Commission, 2024, seventh Implementation Report from the Commission to the Council and the European 
Parliament on the implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC) (Third 
River Basin Management Plans  and Second Flood Risk Management Plans). 
(5) Indicator refers to concentrations of nitrate (NO3) in groundwater, measured as milligrams per litre (mg NO3/L). Nitrate can 
persist in groundwater for a long time and accumulate at a high level through inputs from anthropogenic sources (mainly 
agriculture). The EU drinking water standard is limited to 50 mg NO3/L to avoid threats to human health. 
(6)  Net removals are expressed in negative figures, net emissions in positive figures. Reported data are from the 2025 
greenhouse gas inventory submission. 2030 value of net greenhouse gas removals as in Regulation (EU) 2023/839 – Annex IIa. 
Source: Eurostat, EEA, JRC 

90 

Climate adaptation and preparedness:EU-27201920202021202220232024latest dataDrought impact on ecosystems6.732.8711.951.342.09-2.76[area impacted by drought as % of total]Forest fires burned area (1)-          -          2,558       160          205          124          354,510     [burned area in ha. per year]Economic losses from extreme events-          98            50            -          -          -           40,452        [EUR million at constant 2022 prices]Insurance protection gap (2)---1              1              1              -[composite score between 0 and 4]Sub-national climate adaptation action41            43            44            44            45            45            34               [% of population covered by the EU Covenant of Mayors for Climate & Energy]Water resilience:EU-27201920202021202220232024latest dataWater Exploitation Index Plus, WEI+ (3)0.79          0.57          0.60          0.60          0.50          -4.53            [total water consumption as % of renewable freshwater resources]Water productivity---100          --151[EUR per m3]Water abstractionWater abstraction by source (% from surface water)------Water abstraction by sectorAgricultureElectricity coolingManufactu-ringPublic water supplyMining and QuarryingConstru- ction 2.24%23.15%53.59%20.55%0.47%0.00%Status of water bodies (4)[% of water bodies in a good status]Surface water bodies (ecological)-----75%38%Groundwater bodies (quantitative)-----93%93%Nature restoration:EU-27201920202021202220232024latest dataEcosystem dependency---50%--44%[% of direct dependency]Protected area13.213.213.313.313.426.4[% of terrestrial protected areas]Invasive alien species (IAS)-----1829.2[number of IAS of Union concern]Damage cost of IAS----0.271.69[EUR billion]Eutrophication 22295[AAE of area at risk of euthrophication]Sustainable agriculture and land use:EU-272012-20182018-2021latest dataYearly net land taken by Member State275          379          670            [ppm of total urban surface per Member State]Land conversion in functional urban area [% of total land taken from 2018-2021]Arable land18%Complex and mixed cultivation0%Forests71%Herbaceous vegetation associations5%Open spaces with little or no vegetation0%Pastures6%Permanent crops0%Water0%Wetlands0%201920202021202220232024latest dataNitrates in groundwater (5)4.84.74.94.94.9[mgNO₃/l]Livestock density0.420.390.75(number of livestock units per hectare of utilised agricultural area)Ammonia emissions 89%89%88%88%88%-94%[% of total utilised agricultural area]Pesticide contamination on rivers and lakes water bodiesrivers31%27%[% of monitoring sites with pesticides exceeding thresholds, 2018-2023]lakes0%18%Pesticide contamination in soil 78%57%[% of samples with a concentration over 0.5 mg/Kg⁻¹]Net greenhouse gas removals from LULUCF (6)3339.91812.511358.312066.411998.4--198,421 [ktCO₂-eq] 
 
  
 
FAIRNESS 
ANNEX 11: LABOUR MARKET 

to 

continue 

they  may 

employment, 

In Finland, high unemployment and structural 
weaknesses 
constrain 
productivity and competitiveness. While recent 
reforms,  such  as  on  social  assistance,  aim  to 
strengthen 
have 
inadvertently  worsened  labour  market  outcomes 
for  vulnerable  groups  (see  Annex 12).  Therefore, 
addressing  skills  gaps  and 
the 
effectiveness  of  the  public  employment  services 
will  be  key  to  supporting  a  more  robust  and 
inclusive  labour  market  and  a  thriving  economy. 
The  2025  country-specific  recommendations  for 
Finland highlighted the need to improve incentives 
to  work  and  to  strengthen  active  labour  market 
policies (ALMPs) for all. 

improving 

Graph A11.1: Key labour market indicators 

Source: Eurostat, LFS [lfsi_emp_a, une_rt_a, lfsi_neet_a, 
une_ltu_a]. 

has 

and 

factors. 

weakened 

Employment 
and 
unemployment  has  risen  sharply,  reflecting 
The 
structural 
cyclical 
employment rate decreased from 77% in 2024 to 
76.3%  in  2025,  remaining  above  the  EU  average 
of  75.8%  but  below  the  2030  national  target  of 
80%.  The  unemployment  rate  rose  from  6.8%  in 
2022 to 9.7% in 2025, in contrast to the EU trend. 
Contributing 
the  prolonged 
economic  downturn,  high  interest  rates  (which 
have a negative impact on construction and other 
sectors),  reductions  in  public  employment,  and 
inflows  of  people  who  have  hitherto  remained 
outside  the  workforce  into  the  labour  market. 

include 

factors 

According  to  the  spring  2026  economic  forecast, 
employment  is  expected  to  increase  gradually 
after  declining  in  2025,  as  the  economy  starts  to 
recover.  However,  unemployment  is  expected  to 
average  10.1%  in  2026  and  9.8%  in  2027, 
remaining at elevated levels (344). 

Unemployment  grew  most  among  young 
people.  Youth  unemployment 
(unemployment 
among  people  aged  15-24)  rose  from  14.2%  in 
2022  to  21.8%  in  2025.  The  share  of  young 
people neither in employment nor in education and 
training  (NEETs)  increased  from  9.2%  in  2023  to 
11%  in  2025,  in  line  with  the  EU  average.  For 
young  persons  with  disabilities,  the  rate  was 
24.3%  in  2024.  These  trends  likely  reflect  limited 
job  opportunities  and  insufficient  support  for  the 
transition  from  education  to  work,  contributing  to 
the  feeling  of  demotivation  among  young  people. 
Finland receives EUR 320 000 in funding from the 
European 
and 
Fund 
EUR 6.5 million  from  the  Recovery  and  Resilience 
the  Youth  Guarantee 
Facility 
scheme. 

implement 

(ESF+) 

Social 

Plus 

to 

Immigration  and  educational  disparities 
continue  to  shape  the  labour  market,  with 
non-EU  nationals  and  low-educated  workers 
facing  a  disproportionately  high  risk  of 
unemployment.  The  long-term  unemployment 
rate  rose  from  1.5%  in  2022  to  2.4%  in  2025, 
above  the  EU  average  of  1.9%.  Non-EU  nationals 
contributed  to 
increasing  both  the  available 
workforce  and  overall  employment  but  continued 
to face a significantly higher risk of unemployment 
than  the  native  population.  Workers  with  at  most 
lower  secondary  education  accounted  for  the 
largest  share  of  the  increase  in  unemployment in 
the last three years, with their unemployment rate 
reaching  22.9% 
in  2025.  While  the  gender 
employment gap in Finland is the lowest in the EU, 
the gender pay gap remains persistently above the 
EU average, rising from 16% in 2022 to 16.3% in 
2025.  The  gap  in  employment  between  persons 
with  and  without  disabilities  is  20.4  pps  (against 
24 pps in the EU in 2024). The Finnish government 
addresses  the  problem  of  unemployment  through 

(344)European Commission, Economic forecast for Finland – May 
2026 

91 

757677787980818283848505101520252009201020112012201320142015201620172018201920202021202220232024%%FIActivity rate 20-64 (rhs)Unemployment rate 15-74 (lhs)Long-term unemployment rate 15-74 (lhs)Youth unemployment rate 15-24 (lhs)NEET rate 15-29 (lhs) 
 
 
   
 
 
 
labour  market  policies 

(ALMPs) (345),  a 
active 
reform  of  the  public  employment  services (346), 
social  security  adjustments  (see  Annex  12)  and 
targeted  support  for  specific  groups.  Measures  to 
improve  the  situation  of  women  on  the  labour 
market include the action plan for gender equality 
2024-2027 
pay 
programme (347).  

targeted 

equal 

and 

a 

While  regional  disparities  are  comparatively 
low,  rural  areas  in  Northern  and  Eastern 
Finland  face  structural  challenges.  Over  the 
in  employment  and 
past  decade,  differences 
unemployment  at  NUTS-2  level  have  decreased 
and are among the lowest in the EU. Nevertheless, 
until  2024  regional  differences  in  employment 
rates, unemployment rates and the share of young 
people neither in employment nor in education and 
training  (NEETs)  remained  slightly  above  pre-
COVID  levels.  These  gaps  reflect  variations  in 
labour  demand  and  bigger  regional  differences  in 
the  rate  of  early  school  leavers.  Problems  in 
predominantly rural areas include shrinking labour 
supply, long distances from economic centres and 
low  labour  mobility.  In  addition,  regions  close  to 
the eastern border have been particularly affected 
by  Russia’s  war  of  aggression  against  Ukraine, 
with  declining  economic  activity  and  shrinking 
working-age  population  (see  Annex 18).  According 
to  national  data (348),  unemployment  is  above  the 
national  average 
in  several  eastern  districts, 
including  North  Karelia,  Kymenlaakso,  South 
Karelia and North Ostrobothnia. 

The  government  is  committed  to  supporting 
including  young  people  and 
jobseekers, 
vulnerable  groups,  but  further  measures  are 
needed. ALMP expenditure remained above the EU 
average  in  2024,  standing  at  1.9%  of  GDP  (EU: 
1.5%). However, challenges remain as regards the 
quality of job offers and outreach activities, and it 
is  necessary  to  better  align  school  curricula  and 

(345) Ministry of Economic Affairs and Employment, Government’s 
labour market reforms , Development of jobseekers’ service 
process and employment services; Finnish Government: 
Jobseekers to receive more individual support in proposed 
Nordic labour market service model. 

(346) Ministry of Economic Affairs and Employment, Employment 
services will be reformed on 1 January 2025; Ministry of 
Economic Affairs and Employment, Implementation project 
of the Economic development Centres.  

(347) Ministry of Social Affairs and Health, Equal pay.  

(348) Employment Bulletin March 2026. 

training  offers  with  labour  market  needs.  Greater 
support  for  social  enterprises  and  other  social 
economy  entities  could  help 
integrate  young 
people and vulnerable groups more effectively into 
the labour market.  

and 

increased 

regional  and 

EU  funding  provides  substantial  support  for 
employment 
skills 
promotion 
development.  Employment  promotion  and  skills 
development account for EUR 324 million, or 60%, 
of  current  ESF+  funding.  The  focus  is  on  the 
development  of  employment  support  services, 
inter-
promotion  of 
occupational  labour  mobility,  development  of  job 
opportunities  for  people  with  partial  work  ability 
and  people  with  migrant  backgrounds,  as  well  as 
training. The social inclusion objective of the ESF+ 
allocates  EUR 139  million  to  support  long-term 
unemployed  people  and  the  most  vulnerable 
groups in their labour market integration. The Just 
Transition Fund targets those who have lost or are 
at risk of losing their jobs in the peat sector, and it 
provides  an  additional  EUR 30  million 
for 
measures  improving  access  to  employment.  In 
addition,  EUR 11  million  is  provided  to  support 
self-employment  and  start-ups,  and  EUR 19 
million  to  support  the  adaptation  of  workers, 
enterprises and entrepreneurs to change, including 
through  training. The  Recovery  and  Resilience 
Facility  (RRF)  provides  EUR 114 million  in  grants 
for measures aimed at improving work ability and 
continuous 
quality 
boosting 
learning. Looking  forward,  the  ESF+  provides  the 
option  to  support  measures  implemented  by  the 
public employment services.  

the 

of 

services 

The  2022  Nordic  model  of  employment 
services  and  the  2025  transfer  of  public 
employment 
to  municipalities 
increased  the  incentives  for  jobseekers  and 
employment  service  providers  but  created 
challenges  for  vulnerable  groups.  The  Nordic 
model  involves  an  obligation  for  jobseekers  to 
actively search for jobs and for public employment 
services to  hold 
interviews  with 
in-person 
candidates (349).  However,  studies  suggest  that 
vulnerable  jobseekers  often  receive  insufficient 
individual  support,  mainly  due  to  limited  staff 
resources  at  employment  agencies (350).  Uneven 

(349) Ministry of Finance, 2021, Individual services to support job 

search in the Nordic labour market service model. 

(350) National Audit Office, 2023, Employment services for 

persons who are difficult to employ. 

92 

 
 
 
of 

across 

resources 

allocation 
different 
employment  areas,  coupled  with  an  estimated 
EUR 100  million  funding  shortfall (351),  makes  it 
challenging  for  municipalities  to  manage  these 
new  responsibilities  effectively.  Recent  evidence 
suggests that  fewer  activation measures,  such  as 
training  and  education,  are  being  offered  to 
unemployed  people,  which  is  likely  to  have  a 
disproportionate effect on disadvantaged groups.  

Finland  has  made  the  use  of  fixed-term 
contracts  easier  and  implemented  several 
tax relief measures to stimulate the creation 
of jobs. Recent measures include an indexation of 
tax brackets for personal income tax and increases 
in income credits for employment income in 2024 
and  2025.  New  incentives  to  work  include  a 
reduction  in  taxes  on  labour  for  low-income  and 
middle-income  earners  worth  EUR 520  million 
starting  in  2026  plus  an  additional  EUR 125 
is  being 
million 
implemented  alongside  an  increase  in  the  child 
increment  for  earned  income  deductions  and  a 
reduction  in  the  top  marginal  tax  rate  to  around 
52%  (see  Annex 3).  Following  recent  legislative 
changes  and  proposals (352), 
the  use  and 
termination  of  fixed-term  contracts  has  been 
made  easier  for  employers (353),  raising  concerns 
among trade unions over reduced job security and 
potential  discrimination, 
particularly  against 
women and foreign workers (354). 

in  2027.  This  measure 

Wage growth remains relatively low, and the 
rebound in real wages has only partly offset 
past losses. Wage growth reached 1.8% in 2024 
and 2.6% in 2025. Nominal wages are expected to 
grow at 2.7% in 2026. Following declines in 2022 
and 2023  due  to  high inflation,  real  wage growth 
reached  1.7%  in  2024.  It  then  dipped  to  0.2%  in 
2025 and is forecast to remain at 0.2% in 2026. 

has 

past 

decade 

supported 

Low  labour  productivity  growth  constrains 
wage increases and competitiveness over the 
medium  term.  Relatively  low  wage  growth  over 
the 
cost 
competitiveness,  particularly  within  the  euro  area, 
and  remained  well below the  levels  suggested  by 
standard  macroeconomic  drivers  of  wage 
growth (355).  Over  recent  years,  unit  labour  costs 
(ULC) have risen less sharply than in most Member 
States.  Structurally,  labour  productivity  remains  a 
key  determinant  of  ULC  dynamics  in  Finland,  and 
subdued  productivity  prospects  are  likely  to  limit 
both  future  competitiveness  gains  and  wage 
growth over time.  

Collective  bargaining  coverage 
remains 
among the highest in the EU, although it has 
decreased over the past years, just like trade 
union  density.  Collective  bargaining  coverage 
remains  one  of  the  highest  in  the  EU  (88.8%  in 
2022) (356), although the coverage rate decreased 
in recent years (it stood at 91.9 % in 2014). At the 
same time, trade union density fell from 78.7% in 
2000  to  51.4%  in  2024.  Employer  organisation 
in  2022 (357).  Collective 
density  was  75.1% 
bargaining  takes  place  mostly  at  sectoral  level. 
Sectoral 
legally 
collective  agreements  are 
enforceable and are based on national framework 
agreements.  Certain  aspects  of  negotiations, 
however,  can  be  transferred  to  company-level 
collective  bargaining,  and  the  number  of  such 
legislative 
agreements  has 
changes to promote local collective bargaining are 
not  expected  to  lead  to  a  significant  reduction  in 
legislative 
collective  bargaining  coverage.  The 
force  on 
amendments 
1 January 2025  clarified  certain  provisions  of  the 
Collective  Agreements  Act.  These  changes  ensure 
that  only  agreements  in  which  the  contracting 
parties  genuinely  represent  the  employer  and  the 
employees are considered collective agreements. 

increased.  Recent 

that  entered 

into 

(351) Finnish Association of Municipalities, 2025, 

Työllisyystilanteen heikkeneminen kasvattaa kuntatalouden 
paineita. 

(352) Ministry of Economic Affairs and Employment, 2026, 

Government’s labour market reforms. 

(353) With the new legislation, employers can offer fixed-term 
contracts of up to one year without providing a specific 
reason. Under previous law, a valid justification was required. 

While  aggregate 
labour  shortages  have 
eased,  the  supply  of  high-skilled  workers 
remains  insufficient  in  specific  sectors.  The 
share of employers expecting labour shortages to 
constrain  their  production  is  significantly  lower 
than  the  pre-pandemic  level  and  the  EU  average. 

(355) Wage benchmarks are predicted by developments in 
inflation, productivity and the unemployment rate. 

(354) ETUC Women’s Committee statement on the Finnish 

government’s working life reforms on gender equality and on 
women’s position in the labour market | ETUC. 

(356) OECD/AIAS ICTWSS v2.0. 

(357) OECD/AIAS ICTWSS v2.0. 

93 

 
 
 
employment  shares  of  the  environmental  goods 
and services sector in the EU. 

accounting 

Overall job satisfaction is relatively high, but 
there are growing concerns over job security 
for vulnerable groups. In 2023, Finland had one 
of  the  highest  average  job  satisfaction  scores  in 
the  EU  (7.9  out  of  10  vs  EU:  7.4).  However, 
involuntary temporary contracts  are still  relatively 
common, 
total 
employment (above the EU average of 6.4%) and 
69.1%  of  all  temporary  contracts.  This  raises 
labour  market  segmentation, 
concerns  about 
human capital investment and fairness. The recent 
relaxation  of 
fixed-term 
requirements 
contracts raised concerns among trade unions (see 
involuntary  part-time 
above).  The  share  of 
employment  has  also  remained  above  the  EU 
average since 2020 (5.1% vs 3.3% in 2025).  

for  9.8% 

for 

of 

Nevertheless,  there  is  a  lack  of  skilled  workforce 
particularly  in  electrical  and  civil  engineering,  as 
well  as  in  software  development  and  IT.  There  is 
also  a  shortage  of  care  workers.  Possible 
explanations of this trend include a rapidly ageing 
population,  the  higher  education  system’s  failure 
to  meet  labour  market  demand,  low  occupational 
and  geographical  mobility,  language  barriers  for 
skilled  immigrants,  and  the  quickly  evolving  skills 
needs linked to the green and digital transitions. A 
recent study (358)  identifies the shortage of skilled 
labour as the primary risk to economic growth. 

The government is making efforts to address 
labour  and  skills  shortages,  seeking  to 
balance  targeted  foreign  recruitment  with 
stricter immigration measures. Initiatives such 
as  the  2023-2027  Talent  Boost  Programme  aim 
to  attract  workers  from  non-EU  countries  by 
streamlining  the  work  permit  procedure  and 
facilitating  the  employment  of  foreign  workers  in 
sectors  facing  labour  shortages (359).  At  the  same 
time,  restrictive  measures  have  been  introduced, 
including  an  income  threshold  of  EUR 1 600  for 
residence  permits (360)  and  stricter  unemployment 
rules (361).  Further  plans  have  been 
period 
announced  to  raise  the  financial  thresholds  for 
immigrants,  postpone  family  reunification  and 
introduce language tests for non-EU students (362). 
Balancing these incentives and restrictions will be 
key to effectively attracting international talent.  

Finland  is  performing  relatively  well  in  its 
efforts  towards  decarbonisation.  While  the 
emission  intensity  of  employment  was  above  the 
EU average in 2023, the country registered one of 
the  largest  reductions in the  EU.  The  employment 
share of energy-intensive industries was below the 
EU average in 2025 (1.9% vs 3.5%). Also, at 5.2% 
the  highest 
in  2023,  Finland  has  one  of 

(358) OECD Economic Surveys: Finland 2025.  

(359) The June 2025 legislative change allows holders of 

residence permits for employed persons to work in officially 
designated sectors with labour shortages without the need 
to be issued with a new permit. 

(360) Ministry of Economic affairs and Employment, Income limit 

of EUR 1 600 for a residence permit for an employed person 
set.  

(361) Ministry of Economic Affairs and Employment, Three-month 

unemployment rule 

(362) Hallitus linjasi keinoista puuttua ulkomaalaisten 

opiskelijoiden lupien ja toimeentulon haasteisiin - 
Valtioneuvosto. 

94 

 
 
ANNEX 12: SOCIAL POLICIES 

Finland  is  reforming  its  social  protection 
system amid rising poverty and high levels of 
self-reported  unmet  needs  for  social  and 
healthcare  services.  The  2025  country-specific 
recommendations called on Finland to increase the 
efficiency  of  its  social  benefits  system  while 
addressing the needs of vulnerable groups, and to 
improve  access  to  social  and  healthcare  services.  
Recent  policy  measures  aim  to  support  the  long-
term sustainability of public finances and prepare 
for  future  demographic  challenges.  While  reforms 
to the social safety net and social and healthcare 
incentives  and 
improved  work 
services  have 
substantially  strengthened  the  budgetary  position 
of the wellbeing services counties (363), they could 
also  increase  poverty  and  exclusion  risks  among 
vulnerable  groups.  Socio-economic  challenges  in 
the  predominantly  rural  eastern  border  regions 
have  been  exacerbated  by  Russia’s  war  of 
aggression  against  Ukraine.  Further  efforts  are 
needed  if  Finland  is  to  reach  its  2030  poverty 
reduction  target.  Addressing  these  challenges 
would contribute to Finland’s inclusive growth and 
competitiveness. 

The  risk  of  poverty  or  social  exclusion  is 
increasing,  particularly  among  children  and 
disadvantaged  groups.  Although  the  at-risk-of-
poverty  or  social  exclusion  (AROPE)  rate  remains 
below  the  EU  average  at  17.2%  (17.1%  for 
children), it has increased by 1.4 percentage points 
(pps) (3.3 pps for children) since 2023. Finland has 
set  a  national  target  of  reducing  the  number  of 
people at risk of poverty or social exclusion by 100 
000  people  by  2030,  with  one  third  of  that 
reduction relating to children. However, since 2019 
the  number  of people in this group  has increased 
by  164  000,  including  26  000  children.  Since 
2023, the proportion of the population living in low 
work intensity households has increased by 2 pps 
to  10.7%  (EU:  7.9%),  while  the  at-risk-of-poverty 
(AROP) rate for this category has increased by 6.4 
pps to 69.7% (EU: 66.3%). The poverty rate is also 
above  average  among  families  with  young 
children  under  school  age.  In  Finland,  41%  of 
children  at  risk  of  poverty  or  social  exclusion  are 
from  single-parent  families,  compared  with  23% 
in  the  EU.  Among  children  in  families  where  at 

(363) In 2023, Finland established 21 wellbeing services counties 
to provide social welfare, healthcare and rescue services in a 
major RRF supported reform. In addition, the City of Helsinki 
and autonomous Åland islands provide services in their 
respective territories.  

95 

least one parent has a disability, the AROPE rate is 
33%,  which  is  above  the  EU  average of  24%.  A 
comprehensive  approach  could  help  address  the 
multiple  dimensions  of  poverty  and  achieve  the 
national anti-poverty target.   

Graph A12.1: At-risk-of-poverty or social exclusion 
rate by age group 

(1) AROPE: At-risk-of-poverty or social exclusion rate (% of 
total population). 
Source: Eurostat, EU-SILC [ilc_peps01n] 

Finland is facing growing social challenges as 
a  country  on  the  eastern  border  of  the  EU. 
The Russian war of aggression against Ukraine has 
aggravated  existing  social 
issues  across  the 
country,  while  Finland  continues  to  host  people 
fleeing  the  conflict.  In  2025,  around  50 000 
Ukrainians  had  temporary  protection  status  in 
Finland,  many  of  whom  had  transitioned  into  the 
labour  market.  After  one  year  of  residence,  in 
general,  Ukrainians  have  the  right  to  residence-
based  social  protection.  The  loss  of  economic 
opportunities  following the  closure  of  the  Russian 
border  has  further  intensified  social  challenges  in 
the  eastern  border  regions  (see  Annex  11).  The 
proportion  of  the  population  aged  65  and  over  in 
eastern and northern Finland is above the national 
average, contributing to higher morbidity rates and 
greater demand for social and healthcare services. 
The  proportion  of  young  people  at  risk  of  poverty 
or  social  exclusion  is  also  above  the  national 
average,  ranging  from  15.2%  in  North  Karelia  to 
in  Kymenlaakso.  This  may  be  partly 
19.1% 
explained by gaps in access to social services, such 
as youth support networks for young people facing 
mental  health  problems  or  social  exclusion,  which 

051015202520152016201720182019202020212022202320242025% of populationFIChildren (<18y)Working age (18-64)Older people (65+) 
 
 
   
 
 
are more pronounced in the eastern border regions 
(364).  Finland’s 
resilience  plan 
recovery  and 
allocates  EUR 44  million  for  the  development  of 
mental  health  services  and  Ohjaamo  one-stop 
shops,  which provide  multidisciplinary  services  for 
young people.    

incentives  for 

The  social  security  reform  has  strengthened 
work  incentives  but  it  may  also  create  risks 
for  the  most  vulnerable.  The  headline  reforms 
due to take effect in 2026 include introducing the 
general  social  security  benefit,  clarifying  the 
nature  of  social  assistance  as  a  last-resort  and 
temporary  form  of  support,  developing  the  public 
employment  service  process  and  simplifying 
rehabilitative  work  activities.  These  reforms  are 
labour 
expected  to  strengthen 
market 
imposing 
integration,  for  example  by 
greater obligations on recipients and strengthening 
sanctions  for  non-compliance.  However,  there  are 
also risks for the most vulnerable. Calculations by 
the Joint Research Centre estimate that failure to 
comply  with  job  search  requirements  of  the 
reformed  social  assistance  benefit  could  result  in 
monthly  income  losses  of  between  15.8%  and 
28.5% (365). This financial penalty would add to the 
impact  of  the  reforms  that  took  effect  in  2024 
and 2025 (see 2025 country report), including cuts 
housing 
to 
allowances, which have had an adverse cumulative 
effect  on  vulnerable  groups  such  as  unemployed 
people,  young  adults,  single-person  households, 
single  parents  and  people  with  mental  health 
difficulties. Strengthening work incentives during a 
period  of  low  labour  demand  has  resulted  in  a 
considerable  increase  in  transitions  from  outside 
the 
to  unemployment,  while 
transitions  from  outside  the  labour  force  to 
employment are occurring less frequently (366) (see 
Annex  11).  National  authorities  estimate  that  the 
reforms could increase the overall poverty rate by 

unemployment 

benefits 

labour 

force 

and 

2.2  pps  and  the  child  poverty  rate  by  3  pps  (367). 
Various  stakeholders  and  national  authorities  are 
aware of these risks for vulnerable groups and are 
monitoring the impact on beneficiaries (368). 

for 

responsible 

Addressing the needs of vulnerable groups is 
crucial to the implementation of the ongoing 
reform  of  the  social  security  system.  Finland 
is  taking  steps  to  prevent  social  exclusion  among 
from  early  2027  onwards, 
young  people: 
municipalities  will  be 
fully 
financing  basic  social  assistance  for  people  aged 
18-24.  The  reform  of  rehabilitative  work  services 
aims 
for 
jobseekers  with  reduced  capability  to  work.  The 
parliamentary  Social  Security  Committee 
is 
improvements  to  social 
expected  to  propose 
security  for  young  people  and  families  with 
children by the end of 2026. It will be important to 
assess activation requirements on the basis on ex 
post evaluations in order to identify effective  and 
ineffective  policies  and  take  corrective  actions 
where relevant.  

improve  support  mechanisms 

to 

The wellbeing services counties aim to strike 
a  balance  between  economic  efficiency  and 
service provision. Self-reported unmet needs for 
medical  care  present  a  significant  challenge  at 
7.8% in 2025, even though decreasing from 8.5% 
in  2024  (EU  average:  2.4%).  Efforts  to  reduce 
unmet needs are hindered by budget constraints in 
the  wellbeing  services  counties.    Although  the 
quality  of  services  and  equitable  access  have 
improved 
the  pre-reform 
situation, significant regional differences persist in 
the availability of individual services. (369) In 2023 
and  2024,  the  counties  recorded  a  cumulative 
deficit of EUR 2.5 billion due to unexpectedly high 
costs. In 2025, they made substantial cost-saving 
efforts,  including  the  consolidation  of  the  service 
network,  the  expansion  of  remote  services  and 
staff  dismissals  and  lay-offs.  (370)  Combined  with 

in  comparison 

to 

(364) OECD (2025): Transition strategies for Finland’s Eastern and 

South-Eastern border regions. 

(365) The simulation was performed by the European Commission, 
Joint Research Centre, based on the EUROMOD model J2.0+, 
using hypothetical households (HHoT). The range of 15.8% to 
28.5% refers to the 50% social assistance reduction scenario 
for non-compliance: the lower bound corresponds to a single 
parent with two children and the upper bound to a one-
earner couple without children. 

(366) Bank of Finland (2025) Työntekijävirrat vievät pintaa 

syvemmälle: osallistuminen kasvattanut sekä työllisyyttä 
että työttömyyttä 

(367) Ministry of Social Affairs and Health (2025): Hallituksen 

sosiaaliturvamuutosten yhteisvaikutuksia arvioivat muistiot 
julkaistu. 

(368) Ministry of Social Affairs and Health (2025): 2024-2026 
muutosten yhteisvaikutukset perus- ja ihmisoikeuksien 
toteutumiseen. 

(369) Finnish Government (2025) Interim evaluation of the 

wellbeing services county reform. 

(370) Local Government and County Employers KT (2026): 

Hyvinvointialueet irtisanoivat viime vuonna lähes 1300 
henkilöä, kunnat 340 

96 

 
 
 
increased  overall  funding,  this  resulted  in  an 
estimated  aggregate  surplus  of  EUR  600  million. 
However, financial results vary considerably across 
counties, with nine still in deficit. To address these 
financial  problems,  three  counties  have  been 
undergoing  evaluation  procedures  since  June 
2025.  Staff  composition  has  also  changed 
considerably,  as  counties  have  been  able  to  open 
new  vacancies  despite  ongoing  dismissals,  and 
many  outsourced  services  have  been  brought  in-
house.  Since  the  wellbeing  services  counties  were 
established in 2023, the number of administrative 
staff has declined by 9.6 %, indicating substantial 
progress  in  addressing  inefficiencies.  (371)  Recent 
amendments to  the  steering  legislation permit  an 
extension  of  one  to  three  years  beyond  2026  to 
achieve  budget  neutrality,  provided  that  serious 
and active efforts are made to bring the financial 
situation under control, which remains challenging. 

is  putting 
Finland’s  ageing  population 
increasing  pressure  on  the  long-term  care 
system.  While  the  country  is  generally  a  strong 
performer  in  this  area,  demand  for  services  is 
expected  to  grow  substantially  as  the  population 
ages.  In  2025,  23.6%  of  the  population  was  over 
65, and this percentage is forecast to increase by 
one  fifth  by  2050.  51.7%  of  people  aged  65  and 
over  experience  some  or  severe  level  of  activity 
limitation,  above  the  EU  average  of  47.5%.  The 
situation  also  varies  across  counties.  Differences 
risk 
in  service  structures  between  counties 
weakening equality for older people (372). Coverage 
of home care services among the population aged 
75  and  over  has  declined  in  recent  years,  with 
coverage  rates  ranging  from  9%  to  19%.  Overall, 
public  social  protection  in  Finland  substantially 
reduces poverty risks linked to home care, but they 
remain  higher  than  the  national  poverty  rate  for 
older  people.  The  costs  of  long-term  care  would 
become  a  major  financial  challenge  for  older 
people without public social protection. (373) At the 
other end of the service spectrum, the coverage of 
24-hour care services has remained at a constant 
level. The provision of alternative services, such as 
communal living and family care, remains low, and 

temporarily  alleviated 

expanding these services could help contain rising 
demand for 24-hour care services. Although recent 
policy  reforms  and  the  challenging  economic 
situation  have 
labour 
shortages  in  the  social  and  healthcare  sector, 
remain  acute.  Demand  for 
these  shortages 
specialist  workers  is  expected  to  grow  due  to 
current  workers  retiring  and  the  growing  demand 
for  services  as  the  population  ages,  with  an 
estimated  demand  for  an  additional  20,000 
nurses  by  2030.  Shortages  of  certain  specialists, 
such  as  psychiatrists  and  ophthalmologists,  are  a 
nationwide problem, while  individual  counties  lack 
specific  types  of  specialists.  The  affordability  of 
medicines  poses  an  additional  challenge  for  low-
income  groups. 
In  autumn  2025,  the  Social 
Insurance  Institution  launched  a  pilot  offering 
interest-free loans for medicine purchases. (374) 

While the social benefits system is generally 
efficient,  some  concerns  exist  about  the 
adequacy  of  minimum  income  protection.  In 
2023,  the  net  income  of  a  minimum  income 
recipient was only 71.8% of the smoothed poverty 
threshold  (EU:  56.3%),  and  only  57.6%  of  the 
income  of  a  low-wage  earner  (EU:  50%).(375) 
Despite  a  slight  decline  since  2022,  particularly 
among  men,  the 
impact  of  social  transfers 
(excluding pensions) on poverty reduction remains 
one  of  the  highest  in  the  EU.  In  2025,  social 
transfers reduced poverty by  43 pps for men and 
46 pps for women, compared with an EU average 
of 33 pps. As part of the comprehensive reform of 
social  assistance,  in  February  2026,  the  basic 
amount  of  the  benefit  was  reduced  by  2-3%, 
corresponding  to  a  reduction  of  EUR  14-19  per 
month, and the EUR 150 earned income disregard 
was  abolished  in  most  cases.  The  benefit  is  now 
calculated to cover only between 83% and 99% of 
the reference budget required for a life in dignity, 
with  the  greatest  shortfall  affecting  non-working 
(376) 
couples  and  households  with  children. 
National  authorities  estimate  that  the  reform  will 

(371) Finnish Institute for Health and Welfare (2025): Julkisen 
sektorin sosiaali- ja terveydenhuollon henkilöstö 2023. 

(372) Ministry of Social Affairs and Health (2026) Selvitys 
hyvinvointialueiden sosiaali- ja terveydenhuollon 
järjestämisvastuun toteutumisesta 2025, p25 

(373) OECD (2026): Adequacy of social protection for long-term 

care - Finland 

(374) Kela (2025) Pienituloisille kokeilu lääkkeiden 

vuosiomavastuun luotottamiseen syksyllä 2025 

(375) At-risk-of poverty threshold computed as a moving average 

of AROP thresholds for three latest years with available data. 
Source: DG EMPL calculations. 

(376) HE 116/2025 vp, p41. The reduction in adequacy compared 
to the reference budgets amounts to 1-3 percentage points 
depending on the household type. 

97 

 
 
 
affect  people  on  very  low  incomes  and  deepen 
poverty. (377)  

The social sector reforms are contributing to 
fiscal  consolidation  efforts.  In  2024,  Finland 
spent  an  estimated  26.5%  of  its  GDP  on  social 
protection, which is among the highest rates in the 
EU.  In  line  with  the  government  programme, 
considerable fiscal savings are being  sought from 
social  security  and  social and  healthcare  services. 
funding  for  social  and 
Central  government 
healthcare  sector  NGOs  has  been 
reduced 
considerably  since  2024,  (378)  raising  concerns 
about  the  capacity  of  these  organisations  to 
support  vulnerable  groups  while  social  needs  are 
high. The 2040 vision prepared  by the Ministry of 
Social  Affairs  and  Health  acknowledges  that,  to 
address  the  long-term  challenges  of  population 
ageing  and  fiscal  stability,  social  services  and 
healthcare  will  need  to  continue  to  be  reformed 
(379)  One 
over  several  parliamentary 
important step in launching the national debate is 
the  proposal 
‘fundamental 
identify 
principles’  of  the  social  and  healthcare  services 
network,  due  to  be  presented  to  Parliament  in 
2026. Ensuring continued and sustainable funding 
for  social  economy  organisations  would  also  be 
beneficial.  During  the  2020-2027  programming 
period,  the  European  Social  Fund  Plus  (ESF+)  is 
supporting social inclusion in Finland with EUR 156 
million, with an additional EUR 30 million allocated 
to the reform of child protection services. 

terms. 

the 

to 

is  taking  steps  to  address  the 
Finland 
remaining  gaps 
in  the  accessibility  and 
adequacy of social protection. The government 
is  preparing  a  combined  unemployment insurance 
scheme  enabling  the  insurance  of  different  types 
of income for people working simultaneously as an 
employee  and  entrepreneur,  which  is  expected  to 
enter  into  force  in  2027.  Discussions  are  ongoing 
on  reforming  the  pensions  for  self-employed 
people,  with  a  focus  on  small  entrepreneurs.  In 

(377) Ministry of Social Affairs and Health (2025) Arvio hallituksen 

sosiaaliturvamuutosten yhteisvaikutuksista 

(378) From 2024 to 2026, the annual central government funding 
awarded for NGOs in the social and healthcare sector has 
declined from EUR 384 million to EUR 274 million (approx. 
29%). A further reduction of EUR 50 million in central 
government contributions is foreseen for the 2027 state 
budget, while wellbeing services counties may provide an 
additional EUR 25 million in discretionary funding.  

addition,  the  statutory  earnings-related  pensions 
system is being reformed in accord with the social 
partners.  This  reform  is  expected  to  deliver  up  to 
EUR 2 billion in public savings (0.8% of GDP) while 
maintaining an adequate level of benefits.  Private 
sector pension providers will be permitted to take 
on  more  risk  in  their  portfolios,  contributions  to 
funded  pensions will increase, and an index brake 
will  be  introduced  to  statutory  earnings-related 
pensions from 2030 (380). Finland is also analysing 
potential  reform needs on child benefits, focusing 
on  the  livelihood  of  low-income  families  with 
children,  supporting  the  fertility  rate  and  taking 
different  family  types  into  account.  Compliance 
with the European Child Guarantee is high in most 
areas, but 
from 
institutional  care  to  quality  family-based  care 
could be improved.  

transition  of  children 

the 

Energy  poverty  disproportionately  affects 
vulnerable  groups  in  Finland.  In  2025,  only 
2.6% of households were unable to keep the home 
adequately  warm  (EU:  8.8%).  However,  energy 
poverty in Finland is more closely linked to energy 
costs  and  the  energy  efficiency  of  buildings.  In 
2025,  16.0%  of  households  below  the  AROP 
threshold  reported  arrears  on  utility  bills  (EU: 
16.8%), with higher rates among households with 
dependent  children  (18.0%  compared  with  an  EU 
average  of  21.8%)  and  single-parent  households 
(22.1%  compared  with  an  EU  average  of  21.6%). 
More generally, the housing conditions of the most 
vulnerable  groups  are  deteriorating  (see  Annex 
16).  Challenges  persist  with  the  affordability  of 
housing  in  growth  centres,  with  an  additional 
challenge  in  rural  areas  and  areas  affected  by 
outmigration,  where  households  often  struggle  to 
qualify for renovation loans.  

Transport  poverty  is  higher  than  the  EU 
average,  particularly  among  vulnerable 
groups.  Rural  areas  are  more  severely  affected, 
due  to  limited  availability of  public transport  (see 
also  Annex  19)  (381).  Transport  poverty,  measured 
by  the  share  of  people  unable  to  afford  a  car, 
stood  at  11.3%  in  2025  (compared  with  5.5%  in 
the EU). The problem is particularly severe among 
people at risk of poverty (39.2% vs EU: 16.5%). In 
2024,  23%  of  the  population  reported  that  they 

(380) Ministry  of  Social  Affairs  and  Health  (2026)  Eläkeuudistus 

etenee eduskuntaan 

(379) Ministry of Social Affairs and Health (2025) Tulevaisuuden 

(381) VTT Technical Research Centre of Finland (2025): Rural areas 

sote tarjoaa palvelut kaikille tarpeen mukaan 

hit by rising costs 

98 

 
 
 
did  not  use  public  transport  regularly  because 
services  are  unavailable.  As  of  2026,  the  Social 
Climate  Fund  will  provide  vulnerable  households 
and  transport  users  in  Finland  with  up  to  EUR 
464 million in support. 

99 

 
ANNEX 13: EDUCATION AND SKILLS 

implemented.  While  science, 

Further policy  action on  skills and  education 
could  help  address  high  unemployment  and 
boost  growth  and productivity  in the  Finnish 
economy. Early school leaving remains a concern, 
and a limited number of measures to reverse the 
continued decline in basic skills have been adopted 
or 
technology, 
engineering and mathematics (STEM) enrolment in 
higher  education  is  among  the  highest  in  the  EU, 
skills  mismatches  and  shortages  are  contributing 
to  low  productivity  growth  and  high  structural 
unemployment.  Tertiary  educational  attainment  is 
well below the EU average and, despite efforts to 
widen  the  higher-education  offer,  Finland  is  likely 
to miss its 2030 target of a 50% attainment rate 
among  young  adults.  The  2025  country-specific 
recommendation  for  Finland  highlighted  the  need 
to  address  skills  shortages  by  reskilling  and 
upskilling  the  workforce  and  widening  the  higher-
education offer, in particular for the skills most in 
demand in the labour market.   

Declining  basic  skills  and  increasing  early 
school  leaving  call  for attention.  According  to 
the  2022  PISA,  Finnish  students’  basic  skills 
continue  to  decline,  although  they  remain  above 
the  EU  average  (382).  The  proportion  of  students 
underachieving has increased, and for foreign-born 
students  it  is  now  one  of  the  highest  in  the  EU 
(57%).  The  share  of  early  leavers  from  education 
and training (ELET) was 9.9% in 2025 (EU average: 
9.1%). There are regional variations, with the ELET 
rate  at  13.1%  in  rural  areas  and  7.8%  in  urban 
areas in 2025. ELET rates are also lower for young 
people born in Finland (9.4%) than for those born 
abroad  (14.1%).  Unemployment  among  people 
with  only  primary  or 
level 
qualifications stood at a very high 22.9% in 2025, 
emphasising  the  importance  of  promoting  further 
educational  attainment  at  all  levels  (see  graph 
A13.1). To address challenges linked to the decline 
in  the  number  of  school-age  children  across 
Finland, the Ministry of Education and Culture has 
launched  a  government  grant  in  2026  to  ensure 
equal  access  to  quality  compulsory  education 
(384)  promotes 
(‘basic’) 
cooperation  between  municipalities  in  organising 

lower  secondary 

(383).  The 

initiative 

(382) OECD, 2022, PISA. 

(383) Basic education is for pupils who are between 7 and 15 

years old. 

(384) Ministy of Education and Culture, 2025, Kuntien yhteistyötä 
perusopetuksen järjestämisessä vahvistetaan ikäluokkien 
pienentyessä. 

and  providing  basic  education 
populated areas. 

in  sparsely 

Graph A13.1: Unemployment rate by educational 
attainment (quarterly) 

(1) Unemployment rates ages 20-64 (% of labour force), 
seasonally adjusted. 
Source: Eurostat, LFS [une_educ_q]. 

to 

skills. 

is  taking  several  measures  to 
Finland 
The 
students’  basic 
strengthen 
legislative  framework  has  been  amended  to 
increase  the  minimum  average  weekly  classroom 
literacy  and  numeracy. 
hours  dedicated 
learning  has  been 
Additionally,  support  for 
reformed  from  preschool  to  upper  secondary 
education,  emphasising  differentiated  instruction, 
co-teaching  and  inclusivity.  While  both  measures 
came into effect in August 2025, their impact still 
needs  to  be  assessed.  To  counter  declining 
learning  outcomes,  the  Ministry  of  Education  and 
Culture  has  begun  preparations  for  a  competence 
guarantee.  The  goal  is  to  ensure  that  all  basic 
education students attain sufficient basic skills for 
further  studies.  The  first  step  will  be  a  reform  of 
the Basic Education Act (entering into force as of 1 
August  2026),  which  includes  an  update  of  the 
National  Core  Curriculum  and  additional  teaching 
in  preparatory  education  for  newly  arrived  pupils, 
when  needed,  to  ensure  sufficient 
linguistic 
competence.  In  addition,  an  equality  fund  was 
established in legislation in 2023, making it easier 
to  target  aid  specifically  to  areas  where  socio-
economic  factors  may  contribute 
to  poorer 
educational outcomes. Finland has also introduced 
a  legislative  amendment  restricting  smartphone 
use  during  lessons  to  educational  or  healthcare 

100 

05101520252009-Q32010-Q32011-Q32012-Q32013-Q32014-Q32015-Q32016-Q32017-Q32018-Q32019-Q32020-Q32021-Q32022-Q32023-Q32024-Q32025-Q3FIHigh skilledMedium skilledLow skilled 
 
 
   
 
 
purposes,  with  the  aim  of  improving  the  learning 
environment (385). 

learning 

strongly 

Vocational  education  and  training  (VET)  is 
being  reformed  to  incentivise  transitions  to 
employment  or  further  study.  Although  work-
based 
in  VET 
features 
programmes, with 79.6% of those completing VET 
in  2025  having  had  at  least  one  month  of  work 
experience  during  their  studies 
(EU  average: 
66.0%),  the  employment  rate  of  recent  VET 
participants  has  fallen  by  a  considerable  5.4  pps 
since  2023  to  75.2%  in  2025,  below  the  EU 
average  of  80.2%).  Since  2022,  the  employment 
rate of male VET participants has fallen by 7.5 pps 
to 72.6%, and by 1.7 pps to 78.4% among women. 
Following  a  one-off  budget  cut  of  EUR  85 million 
in 2025, the central government financing for VET 
programmes  increased  by  EUR  43  million  for 
2026,  the  first  year  of  application  for  the 
reformed funding model. A larger share of funding 
will  be  awarded  on  the  basis  of  completed 
education credits or transitions to employment and 
further study, strengthening the incentives for VET 
providers  to  align  the  education  offer  with  the 
skills  in  demand  on  the  labour  market (386).  While 
providing  the  right  incentives,  the  reform  slightly 
increases the risk of underfunding in times of low 
is  preparing  further 
labour  demand.  Finland 
measures to  strengthen  cooperation  between  VET 
the  offer  of 
and  working 
support 
commissioned 
continuous learning and strengthen the supporting 
measures  during  VET.  From  1  January  2026,  a 
large-scale  operational  steering  pilot  for  VET  was 
for 
launched, 
participating  VET  providers  to  provide  vocational 
education  and  training  leading  to  a  qualification. 
The  pilot  runs  until  the  end  of  2033  and  aims  to 
strengthen  the  effectiveness  of  VET  and  to 
promote cooperation between education providers 
and local labour markets.   

life, 
education 

expand 
in 

freedom 

allowing 

greater 

VET, 

Boosting  STEM  in  vocational  education  and 
is  crucial  for  Finland's  future 
training 
economic  growth. 
competitiveness  and 
Further 
science, 
in 
technology,  engineering  and  mathematics  (STEM) 
in  VET  could  bolster  Finland’s  competitiveness, 
particularly in key sectors such as ICT, defence and 

enrolment 

increasing 

(385) Education and Training Monitor 2025. 

(386) Ministry of Education and Culture, 2025, Ammatillisen 

koulutuksen kehittäminen. 

clean technologies. While enrolment in STEM fields 
is  relatively  high  at  tertiary  level,  it  was  only 
31.4%  in  secondary-level  VET  programmes  in 
2024  (EU  average:  36.6%).  Women  account  for 
23.3%  of  VET  participants  enrolled  in  STEM  (EU 
average:  15.9%).  The  ongoing  development  of 
secondary-level VET to better align with the needs 
of  working  life  could  pay specific  attention to  the 
STEM  sector  and  promoting  further  educational 
attainment  among  men,  while  not  discouraging 
female participation. 

Tertiary  educational  attainment  (TEA)  has 
been  declining  since  2020.  In  2025,  the  TEA 
rate stood at 38.2%, well below the EU average of 
44.8%  and  lagging  behind  the  2030  EU-level 
target of 50%. There has been no sustained long-
term  growth  since  2015,  when  the  rate  stood  at 
40.2%.  Among  men,  in  2025  the  rate  was  30.7% 
(EU  average:  39.3%),  against  46.2%  for  women 
(EU:  50.6%).  Only  23.9%  of  foreign-born  people 
aged  25-34  hold  a  higher  education  qualification, 
compared  to  41.2%  of  people  born  in  Finland. 
Regional  differences  remain  noticeable,  with  the 
Helsinki-Uusimaa  region  being  the  only  one  close 
to  the  EU  average  (43.4%)  and  Northern,  Eastern 
and  Western  Finland  lagging  significantly  behind. 
The TEA attainment rate stands at 43.3% in cities 
and 27.3% in rural areas (see Annex 11). 

Finland  has  adopted  measures  to  widen  the 
higher-education  offer.  To  address  the  lack  of 
skilled  workers,  measures  under  the  National 
Recovery  and  Resilience  Plan  aim  to  boost 
participation in higher education by increasing the 
number of study places and allocating new places 
to  fields  that  support  economic  growth,  such  as 
nuclear  engineering  and  energy  technology.  An 
additional  EUR  42.1  million  of  national  funding 
was  allocated  for  2024-2027,  creating  additional 
places  on  nursing  and  social  care  degree 
programmes  and  early  childhood  education 
teacher  training,  and  permanent  new  places  in 
medicine  and  veterinary  medicine (387),(388). 
In 
2026,  some  1  095  additional  higher  education 
places  will  be  created  as  a  one-time  measure. 
About half of these will be allocated to universities 

(387) Ministry of Education and Culture, 2024, Tiede- ja 

kulttuuriministeri Sari Multala myönsi korkeakouluille 
lisärahoituksen uusiin aloituspaikkoihin. 

(388) Ministry of Education and Culture, 2024, Ministeri Multala: 
Lääkäri- ja eläinlääkäripulaan vastataan historiallisilla 
koulutuslisäyksillä. 

101 

 
 
 
for  five-year  programmes,  and  the  other  half  to 
universities  of  applied  sciences  for  programmes 
lasting three and a half years. A pilot project on a 
draft  national  framework  for  micro-credentials  in 
higher  education  was  introduced  in  2025.  Finland 
is  also  implementing  a  EUR  255  million  doctoral 
education  pilot  (2024–2027)  to  fund  1 000  new 
three-year, salaried PhD positions, aiming to boost 
research, development, and innovation.  

higher 

to  amend 

funding.  Conversely, 

Finland  aims  to  increase  the  admission  of 
first-time  degree  students  with  the  new 
tertiary education funding model. Launched in 
2025,  the  new  funding  model  is  expected  to 
encourage  first-time  admissions  by  including  the 
number  of  new  first-time  students  as  a  criterion 
education 
for 
institutions  will  receive  less  funding  for  students 
pursuing  a  second  or  additional  degree  at  the 
same  level  (a  weighting  co-efficient  of  0.5).  The 
the 
government  also  proposed 
Universities  Act  and  Universities  of  Applied 
Sciences  Act  so  that  a  student’s  previous  study 
right ends if he/she accepts a new study right, and 
‘double  degree’ 
proposed 
reform (389). Under the proposal, the Universities of 
Applied  Sciences  Act  would  be  amended  so  that 
paramedic  science,  midwifery  and  public  health 
regulated 
nursing  would 
programmes,  while 
integrated 
paramedic  science  and  public  health  nursing 
programmes  are  still  available.  The  objective  of 
both initiatives  is to  allocate  study  places  leading 
to a degree to those who do not yet hold a higher 
education  degree  or have the  right  to  study  for  a 
higher  education  degree,  as  well  as  to  close  the 
gaps in fields with skills or labour shortages (390). 

distinct 
the  existing 

introduce  a 

become 

to 

Skills  shortages  are  likely  slowing  down  the 
labour  market  recovery,  especially  in  the 
eastern  border  regions.  While  eastern  border 
regions such as North Savo and North Karelia have 
seen  positive  results  from  vocational  education 
and  training  programmes  and  research-driven 
economic strategies, other regions such as Kainuu 
and  South  Karelia  continue  to  face  difficulties  in 
attracting  and  retaining  skilled  workers  despite 

Higher 

targeted  measures (391). 
education 
institutions  act  as  a  gateway  for  international 
migration  and  skills  development,  with  the  share 
of international students in South Karelia reaching 
9.9%,  above  the  EU  average  of  9.7%.  Finland’s 
Recovery  and  Resilience  Plan  and  the  European 
Social  Fund  Plus  (ESF+)  jointly  provide  EUR  268 
million in dedicated support to upskilling, reskilling 
and  the  anticipation  of  future  skills  and  training 
needs. The strategic use of national and European 
funding to facilitate the long-term development of 
skills  in  line  with  the  needs  of  a  changing  labour 
market will be key when looking to the future. 

could 

registered  a  comparatively 

Investments 
in  green  and  digital  skills, 
together  with  professional  qualifications  in 
support  Finland’s 
manufacturing, 
economic  growth  and  competitiveness.  With 
its  low  energy  prices,  clean  energy  mix  and 
substantial  investments  in  the  circular  economy, 
Finland  is  at  the  forefront  of  the  clean  transition 
as the engine of sustainable growth (392). Although 
Finland  has 
low 
number  of  occupations  relevant  for  the  green 
transition that experience shortages (393), upskilling 
and  reskilling  are 
important  to  address  the 
medium-  and  long-term  demands  in  the  labour 
market. Employers in the technology industries will 
require  an  estimated  140 000  new  skilled 
professionals  over  the  next  decade,  mainly  in 
machinery  and  metal  production,  ICT,  product 
design  and  consulting,  and  the  electronics  and 
electrical  sectors.  Nearly  three  quarters  of  these 
workers  should  have  tertiary  education,  with  the 
greatest demand for university of applied sciences 
graduates (394).  Demand  for  skilled  labour  is  also 
expected to grow in the marine construction sector 
following major partnerships (395). Digital skills are 
consistently  a  strong  point  for  Finland,  with  ICT 
total 
specialists  accounting 
employment  in  2025  (EU  average:  5%)  and  81% 

for  7.8%  of 

(391) OECD, 2025, Transition strategies for Finland’s Eastern and 

South-Eastern border regions. 

(392) Ministry of Economic Affairs and Employment, 2025, TEM:n 
ministerit esittelivät hallituksen kasvu- ja työllisyyspaketin 
kokonaisuuden. 

(393) European Commission calculations based on 2025 data from 

the European Labour Authority. 

(389) Ministry of Education and Culture, 2024, Hallituksen esitys 

(394) Technology Industries of Finland, 2025, 

eduskunnalle laeiksi yliopistolain ja ammattikorkeakoululain 
muuttamisesta (ns. yhden opiskeluoikeuden säännös). 

Teknologiateollisuuden osaajatarpeesta jopa 74 % 
kohdistuu korkeakoulutettuihin. 

(390) Ministry of Education and Culture, 2024, Sosiaali- ja 

(395) Ministry of Economic Affairs and Employment, 2026, Report 

terveysalan kaksoistutkintouudistus. 

on skills needs in the maritime industry.  

102 

 
 
 
those  born  in  the  country  (57.5%  vs  53.1%  in 
2024).  Recent  policy  recommendations  suggest 
developing  state-backed  loans  and  renewing  the 
apprenticeship  model.  However,  without  an 
implementation  plan,  and  with  a  shift  to  loan-
low-income  groups  may  face 
based  funding, 
reduced  opportunities.  The  abolition  of 
the 
education supplement for public sector employers 
from January 2026, on top of the adult education 
allowance  that  was  discontinued  in  2024,  may 
reduce  upskilling  and  reskilling  opportunities.  At 
the  same  time,  Finland 
improving  career 
guidance  by  reforming  continuous  learning  with 
RRF support, including the digital services package 
for  continuous  learning  platform.  The  national 
qualifications database in Finland is not connected 
to Europass. 

is 

of individuals aged 16-74 reporting at least basic 
digital  skills  (EU:  60.4%).  Despite  this,  further 
efforts  towards  digital  upskilling  and  reskilling, 
notably to align with labour market demands in a 
country  where  37.8%  of  enterprises  are  using  AI 
technologies,  would  be  warranted.  The  ESF+  in 
Finland  supports  the  development  of  digital  skills 
among  vulnerable  groups  with  an  investment  of 
approximately  EUR  67  million,  aiming  to  respond 
to  the  demands  and  opportunities  of  the  future 
world of work. The Just Transition Fund invests an 
additional  EUR  20  million  in  promoting  skills 
development  for  smart  specialisation,  industrial 
transition and entrepreneurship. 

is 

actively 

deploying 

Finland 
skills 
intelligence and forecasting tools to identify 
current  and  future  labour  market  needs.  The 
Skills  Needs  Compass,  supported  by  the  Recovery 
and Resilience Facility, aims to proactively support 
the  alignment  of  skills  supply  with  labour  market 
demands,  contribute  to  the  development  of 
continuous 
services  and  promote 
knowledge-driven  decision-making.  Additionally, 
the  Service  Centre  for  Continuous  Learning  and 
Employment  maintains  an  online  database  of 
workforce  education  and  training  needs.  The 
service  anticipates  what  qualifications  will  be 
needed  across  different  sectors  and  vocational 
fields  to  meet  labour  demand  projected  until 
2040.  

learning 

Finland  performs  well  on  adult  learning,  but 
further  efforts  are  required  to  reach  the 
2030 target. In 2022, 51.8% of adults aged 25-
64  participated  in  education  or  training  over  the 
past  12  months.  Reaching  the  national  target  of 
60%  for  2030  will  require  further  engagement 
with  under-represented  groups  and  regions.  In 
2024, the participation rate in training was lowest 
in Åland at 45.0%, considerably below the national 
average  of  53.4%.  Men  have  consistently  lower 
adult learning participation than women (47.9% vs 
level  of 
59.2% 
participation  among  men  with  primary  or  lower 
secondary education (34.7% vs 45.5% for women 
with 
learning 
lower  among  people 
participation 
outside the labour force (39.3%), underscoring the 
need  for  better  targeting  of  active  labour  market 
policies  (see  Annex  11).  The  participation  rate  for 
nationals  of  other  EU  countries  is  only  slightly 
below  the  national  average.  However,  contrary  to 
the  EU 
in  Finland 
participate  in  adult  learning  slightly  more  than 

trend,  non-EU  migrants 

in  2024),  with  the 

education).  Adult 

is  notably 

equivalent 

lowest 

103 

 
ANNEX 14: SOCIAL SCOREBOARD 

Table A14.1:Social Scoreboard for Finland 

Update of 4 May 2026. Members States are categorised based on the Social Scoreboard according to a methodology agreed with 
the EMCO and SPC Committees. Please consult the Annex of the Joint Employment Report 2026 for details on the methodology 
(https://employment-social-affairs.ec.europa.eu/joint-employment-report-2026_en). 
Source: Eurostat 

104 

51.89.981.011.01.33.9376.39.72.4108.717.217.144.620.54.743.27.8Critical situationTo watchWeak but improvingGood but to monitorOn averageAdult participation in learning (during the last 12 months, excl. guided on the job training, % of the population aged 25-64, 2022)Equal opportunities and access to the labour marketBest performersBetter than averageEarly leavers from education and training(% of  the population aged 18-24, 2025)Young people not in employment, education or training(% of the population aged 15-29, 2025)Gender employment gap(percentage points, population aged 20-64, 2025)Income quintile ratio (S80/S20, 2025)At risk of poverty or social exclusion (AROPE) rate (% of the total population, 2025)Employment rate(% of the population aged 20-64, 2025)Unemployment rate(% of the active population aged 15-74, 2025)Long term unemployment(% of the active population aged 15-74, 2025)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2024)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2025)Dynamic labour markets and fair working conditionsSocial protection and inclusionShare of individuals who have basic or above basic overall digital skills(% of the population aged 16-74, 2025)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2025)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2025)Self-reported unmet need for medical care (% of the population aged 16+, 2025)Disability employment gap (percentage points, population aged 20-64, 2025)Housing cost overburden (% of the total population, 2025) 
 
 
 
   
 
 
ANNEX 15: HEALTH AND HEALTH SYSTEMS 

health 

system 

performs 
Finland’s 
life 
comparatively  well,  with  a  high 
expectancy  at  birth  and 
low  rate  of 
avoidable  mortality.  However,  Finland  faces 
limited  access  to  healthcare  mainly  in  relation  to 
(i) shortages and uneven geographical distribution 
of  the  healthcare  workforce;  (ii)  fragmentation  in 
healthcare  delivery;  and  (iii)  higher  demand  for 
to  population  ageing.  Several 
services  due 
measures  are  underway  to  address  these  issues 
that could place the country in a better position to 
ensure the health of its population, social fairness 
and  productivity.  The  2025  country  specific 
recommendations  (CSRs)  refer  to  the  need  to 
ensure  that  the  reform  of  social  and  healthcare 
services 
cost-
improves 
to  social  and 
effectiveness  of  and  access 
healthcare services and addresses inefficiencies. 

the  delivery  and 

Graph A15.1: Life expectancy at birth, years 

Source: Eurostat (indicator: demo_mlexpec) 

Life  expectancy  at  birth  in  Finland  was 
higher  than  the  EU  average  in  2024,  and 
2023 treatable mortality was lower than the 
EU  average.  There is  a  gender  gap,  with  women 
expected  to  live  5.2  years  longer  than  men  (in 
2024).  However,  women  are  expected  to  spend 
around  2.2  fewer  years  in  good  health  than men. 
Treatable  mortality  in  Finland  is  relatively  low 
pointing to the overall effectiveness of the health 
the  circulatory  system 
system.  Diseases  of 
(‘cardiovascular  diseases  (CVDs))  and  cancer  are 
the  leading  causes  of  death,  but  both  remain 
below the EU averages. Well-established screening 
programmes  contribute  to  Finland’s  relatively 
strong  cancer  outcomes,  particularly  for  breast, 
cervical  and  colorectal  cancers.    Alzheimer  and 
other  dementias  –  are  the  third  death  cause  (396). 

(396) OECD/European Observatory on Health Systems and Policies 
(2025), Country Health Profile 2025: Finland. State of Health 
in the EU. 

Finland  participates  in  several  EU4Health-funded 
joint  actions  aimed  at  reducing  the  burden  of 
cardiovascular  diseases,  cancer,  diabetes  and 
respiratory diseases, and improving mental health.  

Graph A15.2: Treatable mortality 

Age-standardised death rate - mortality that could be avoided 
through optimal quality healthcare. 
Source: Eurostat (indicator: hlth_cd_apr) 

Preventable  mortality  in  Finland  is  only 
slightly  below  the  EU  average  despite 
relatively  high  spending  on  prevention.  In 
2023, spending on prevention in Finland accounted 
for  4.6%  (from  6.4%  in  2022)  of  total  public 
spending on health, higher than the EU average of 
3.7%.  Rates  of  obesity  and  overweight  are  a 
growing public health concern. In 2022, more than 
22% of adults in Finland were classified as obese 
(397).  Poor  nutrition  is  a  key  driver  with  too  few 
consuming fruits and vegetables. A big proportion 
of  Finnish  adults  engage  regularly  in  physical 
activities.  This  is  however  not  the  case  for  the 
adolescents.  Finland  is  introducing  measures  to 
improve  disease  prevention,  also  as  part  of  its 
recovery  and  resilience  plan  (RRP).  The  new 
measures  aim  to  strengthen  prevention  and 
identify  health  problems  early  by  rolling  out 
service 
integrated  multi-sector 
regional 
management  models  (bundling  healthcare  with 
other  services)  in the  well-being  services  counties 
(WSCs).   

Nearly  one  third  of  deaths  in  Finland  are 
(398). 
linked  to  behavioural  risk  factors 
Although  average  alcohol  consumption  in  the 
population is relatively low, alcohol-related causes 

(397) European Observatory on Health Systems and Policies/OECD 
(2025), Synthesis Report 2025: Health Policy Reform Trends 
in the EU.  

(398) Country Health Profile 2025: Finland - see earlier footnote. 

105 

82.081.981.281.682.2808080.681.481.520202021202220232024FinlandEU77.469.171.369.870.968.294.889.291.793.389.786.8201420192020202120222023per 100 000 populationFinlandEU 
 
      
 
      
 
 
 
Table A15.1:Key health indicators 

*The EU average is weighted for all indicators except for doctors and nurses per 1 000 population, for which the EU simple 
average is used based on 2023 data (or latest available). Doctors’ density data refer to practising doctors in all countries except 
Greece, Portugal (licensed to practise) and Slovakia (professionally active). Density of nurses: data refer to practising nurses (EU 
recognised qualification) in most countries except Portugal (licensed to practice) and Slovakia (professionally active). Latest data 
update on nurses for Belgium and Sweden: 2022; for France: 2021; for Luxembourg: 2017. 
** latest available 10-year trend: ratio 2023/2014 or 2024/2013; a factor of 2.00 means that it has doubled in 10 years. 
***‘Available hospital beds’ covers somatic care, not psychiatric care. 
Source: Eurostat 

to  be 

the  main  contributor 

to 
continued 
preventable mortality in 2022. Standardised death 
rates  related  to  dementia  and  mental  and 
behavioural  disorders  related  to  alcohol  were 
among the highest in the EU  for the 65 and over 
age  group  (in  2022).  Despite  recent  tax increases 
to  curb  alcohol  consumption,  a  2024  law  raising 
the  alcohol  content  of  grocery-sold  beverages 
from  5.5%  to  8%  raised  concerns  that  easier 
access  to  stronger  drinks  could  reverse  public 
health  gains.  Lung  cancer  and  ischaemic  heart 
disease  each  accounted  for  13%  of  preventable 
deaths  (399).  Finland  aims  to  reduce  tobacco  and 
nicotine use to below 5% by 2030, with  series of 
legislative measures - including expanded smoking 
bans,  plain  packaging,  flavour  restrictions,  and 
limits  on  vapes  and  nicotine  pouches 
- 
strengthening  regulation  across  products  and 
settings  (2025).  The  suicide  rate 
in  Finland 
remains  among  the  highest  in  the  EU.  Deaths 
related  to  drug  dependency  are  particularly  high 
for  the  younger  population.  This  can  be  partially 
explained  by  relatively  high  unmet  needs  for 
mental health in Finland. As in most EU countries, 
behavioural risk factors are more common among 
people with lower education levels. 

Health  spending  in  Finland  is  slightly  above 
the  EU  average,  as  is  the  share  of  health 
costs  paid  by  public  funds.  In  2023,  Finland 
spent EUR 3 996 per capita on health (adjusted for 
differences  in  purchasing  power)  equal  to  10.5% 

of GDP. This was slightly above the EU average of 
10%. In 2023, 42% of total health spending went 
to outpatient care, one of the highest shares in the 
EU. Inpatient care accounted  for 20%, down from 
25%  in  2015.  This,  together  with  a  relatively  low 
number  of  hospital  beds  (see  Graph  A15.1) 
reflects  longstanding  efforts  to  reduce  hospital 
bed  capacity,  consolidate  hospital  services  and 
shift  care  towards  outpatient  and  community 
settings.  In  2023,  Finland  recorded  low  avoidable 
hospital  admission  rates  for  asthma  and  chronic 
obstructive pulmonary disease (115 per 100 000, 
compared  with  an  EU  average  of  158)  and  for 
diabetes  (85  per  100  000),  indicating  relatively 
effective  primary  care  management.  By  contrast, 
avoidable  admissions  for  congestive  heart  failure 
were  higher,  though  still  below  the  EU  average 
(400).  

While public financing plays a dominant role 
in  Finland’s  health  system,  affordability 
remains a concern. Public sources accounted for 
81%  of  current  health  expenditure  (the  highest 
level in two decades). The out-of-pocket payments 
were 14% in 2023 - just below the EU average of 
15%.  The 
largest  shares  of  out-of-pocket 
payments  went  towards  outpatient  medicines, 
followed  by  dental  care  and  long-term  care.  In 
2021,  Finland  reformed  the  User  Charges  in 
Health  and  Social  Services  Act  to  lower  co-
payments  for  public  care.  However,  patients’  fees 
were  increased  again  at  the  beginning  of  2025  - 

(399) Country Health Profile 2025: Finland - see earlier footnote. 

(400) Country Health Profile 2025: Finland - see earlier footnote. 

106 

2020202120222023202410-year change**EU average* (latest year) Cancer mortality per 100 000 population211.4209.9204.9208.0n.a.0.95233.1 (2023)Mortality due to circulatory diseases per 100 000 population 306.8 304.0 310.2 303.8n.a.0.80313.0 (2023)Current expenditure on health, purchasing power standards, per capita3 2313 4613 6193 995n.a.1.383834.9 (2023)Public share of health expenditure, % of current health expenditure 79.1 79.2 79.6 81.0n.a.1.0480.6 (2023)Spending on prevention, % of current health expenditure 5.68.26.44.6n.a.1.393.7 (2023)Available hospital beds per 100 000 population*** 239 246 231 225n.a.0.58440 (2023)Doctors per 1 000 population*2.92.92.92.9n.a.1.084.3 (2023)*Nurses per 1 000 population* 12.5 12.8 12.8 12.7n.a.1.137.6 (2023)*Mortality at working age (20-64 years), % of total mortality13.512.711.711.711.60.7514.3 (2023)Consumption of antibiotics in the community and hospital sectors,      defined daily doses per 1 000 inhabitants 11.9 11.3 12.5 12.9 13.70.7620.3 (2024) 
 
 
 
      
 
further  undermining  affordability  for  those  most 
at  risk.  Funding  under  Finland’s  RRP  aims  to  (i) 
clear  the service  backlog due  to  COVID-19;  (ii) 
support equal access to healthcare; (iii) strengthen 
prevention  and  early 
identification  of  health 
problems;  (iv)  improve  knowledgebase  for  social 
and  healthcare  services;  and  (v)  increase  the 
digitalisation of the health system. 

pressures. 

responding 

Fragmentation 

Finland's  2023  reform  centralised  health 
services  with  some 
‘well-being  services 
counties’ struggling with deficits. According to 
the  2024  ageing  report,  Finland  is  among  the  EU 
countries where age-related  spending is projected 
to  rise  significantly.  This  is  linked  with  increasing 
utilisation  of  services,  chronic  disease  prevalence, 
and greater needs linked to multimorbidity among 
older  people  (see  Annex  2).  At  the  same  time, 
structural  inefficiencies  within  the  system  add  to 
fiscal 
between 
occupational,  public and private service pathways, 
and uneven regional workforce distribution tend to 
contribute  to  cost  growth.  The  ongoing  reform 
establishing  wellbeing  services  counties  (WSCs) 
aims  to  improve  coordination,  but  deficits  at 
regional  level  may  illustrate  the  difficulty  of 
containing  costs  while 
rising 
demand.  While  service  provision  is  now  centrally 
financed  based  on  population  needs,  national 
health insurance (Kela), employers and households 
continue  to  play  complementary  roles  through 
coverage  of  medicines,  occupational  healthcare 
and  private  services.  A  mid-term  review  of  the 
reform  underlined  the  need  to  re-evaluate  the 
WSCs  funding  model.  Finland  has  requested 
technical support as part of a multi-country project 
to apply a performance pathway approach in their 
health  system  performance  assessment  HSPA)  to 
strengthen 
improve 
resource  allocation,  and  accelerate  progress 
toward  national  health  goals.  The  project,  funded 
through  the  Technical  Support  Instrument,  should 
lead  to  a  (i)  systematic  identification  of  areas  of 
suboptimal performance; (ii) understanding of root 
causes; and (iii) timely development of appropriate 
policies to address challenges through an expected 
increase  in  HSPA  use  focusing  on  performance 
pathways. 

decision-making, 

policy 

to 

Finland  faces  challenges  with  access  to 
healthcare and socio-economic disparities.  In 
2025,  7.8%  of  the  Finnish  population  reported 
having unmet medical care needs, down from 8.5 
in 2024, but much higher than the EU average of 
2.4%.  Self-reported  unmet  dental  care  needs  are 

also  among  the  highest  in  the  EU  (more  than 
double  the  EU  average  in  2024).  Long  waiting 
times  are  the  main  reason  for  unmet  needs.  The 
difference 
in  unmet  medical  needs  between 
income  groups  in  Finland  is  also  among  the 
highest in the EU, with a 85% poverty gap in 2025. 
In  2024,  9%  of  adults  in  Finland  reported  unmet 
needs  for  primary  care  and  12%  for  mental 
healthcare  -  among  the  highest  rates  in  the  EU 
and a marked increase since 2021 (401). According 
to national data, access to primary healthcare has 
improved. This is also confirmed by the findings of 
the mid-term evaluation on the ongoing reform. It 
underlines improved access to healthcare in some 
areas  as  well  as  improvements  in  fair  access 
linked to income. To address unmet mental health 
needs,  a  statutory  “therapy  guarantee”  entered 
into  force  in  May  2025,  requiring  free  access  to 
short-term  psychotherapy or  psychosocial  support 
for those under the age of 23, to take place within 
one month of the needs assessment. 

Maintaining  a  sustainable  health  workforce 
remains  a  major  challenge. 
In  2023,  the 
country  had  2.9  practising  physicians  per  1 000 
people,  below  the  EU  average  of  4.3.  Physician 
shortages  persist,  especially  in  rural  and  northern 
regions  (see  Annex  18).  Nurse  density  remains 
high  at  12.7  per  1 000,  reflecting  expanded 
nursing roles in primary and hospital care. Finland 
trains  74  nursing  graduates  per  100 000 
population,  well  above  the  EU  average.  Although 
there are only 13 medical graduates per 100 000, 
there  is  a  significant  number  of  medical  students 
studying  abroad(402).  Workforce  pressures  are 
compounded  by  an  ageing  workforce  with  around 
20%  of  both  nurses  and physicians  being  55  and 
over. Vacancies fell from over 7 300 in early 2023 
to around 2 500 by early 2025, yet staffing gaps 
in  remote  areas,  and  unemployment 
remain 
among  assistant  nurses,  points  to  mismatches  in 
supply and demand.  

Efforts  are  underway  to  strengthen  the 
health  workforce, 
including  measures  to 
improve  recruitment,  retention,  skills  and 
working  conditions.  In  response  to  challenges, 
authorities have increased study places, promoted 
inter-regional  mobility  and  strengthened  support 
for  international  recruits.  The  2021  structural 

(401) Country Health Profile 2025: Finland - see earlier footnote. 

(402) https://www.laakariliitto.fi/tutkittua-tietoa/koulutus-ja-

ammatillinen-kehittyminen/ 

107 

 
 
semantic 
interoperability  of  health  data  and 
facilitate  the  implementation  of  the  European 
Health Data Space. 

sector 

Finland’s  pharmaceutical 
is  of 
comparatively modest economic significance. 
Employment 
in  pharmaceutical  manufacturing 
remains among the lowest in the EU. However, the 
number of clinical trials per million population was 
slightly above the EU average at 18.7 in 2024 with 
a  recent  downward  trend  in  clinical  research 
activity 
in 
pharmaceuticals improved significantly, it dropped 
again to 3% in 2025 - much below the EU average 
of 13.9%). Finland’s pharmaceutical patent activity 
was  only  1.1  per  million  population,  compared  to 
1.8 in the EU in 2024 (405).  

(404).  While 

extra-EU 

exports 

professionals, 

reform  and  establishment  of  WSCs  are  expected 
to  improve  workforce  planning,  coordination  and 
retention across the health and social care sector. 
Working  conditions  for  health  professionals  are  a 
significant  issue,  with  low  pay  acting  as  a  barrier 
to  working  in  healthcare,  particularly  for  hospital 
nurses  and  physicians  (403).  The  country  has  long 
sought  to  address  health  workforce  shortages 
through a range of measures, including expanding 
recruiting 
medical  school  enrolment,  actively 
foreign 
skill-mix 
introducing 
innovations  to  boost  nursing  employment,  and 
using  technology  to  enhance  productivity  and 
overcome  geographic  barriers.  Nursing  roles  have 
been broadened to cover patient consultations for 
acute and chronic conditions, prescribing and care 
outpatient 
primary 
coordination 
consultations, and advanced functions in operating 
theatres.  In  2023,  the  government  launched  the 
“Good  Work”  programme  to  ensure  sufficient 
staffing  across  healthcare,  social  welfare,  and 
rescue  services,  focusing  on  improving  working 
conditions, 
training  pathways, 
implementing recruitment and retention strategies 
in underserved areas, and supporting staff mental 
well-being and occupational health. 

strengthening 

care, 

in 

Finns  make  greater  use  of  digital  health 
services  than  the  EU  average.  The  shares  of 
people  accessing  their  personal  health  records 
online  and  using  online  health  services  (excluding 
phone)  instead  of  in-person  consultations  were 
both among the highest in the EU (74% compared 
to  28%  at  the  EU  level).  This  reflects  Finland’s 
relatively  strong  digital  infrastructure,  high  public 
trust  (with  some  challenges  in  cybersecurity)  and 
digital  literacy  -  satisfaction  with  digital  health 
services  continues  to  grow,  especially  among 
younger  and  more  digitally  engaged  users. 
Investments to boost the digital transformation of 
the health sector are being implemented under the 
RRP. Measures focus on increasing the public’s use 
of  healthcare  and  social  welfare  e-services  and 
developing  digital  methods  to  support  a  ‘care 
guarantee’  in  social  care  and  healthcare.  Digital 
solutions have their role to play in addressing the 
2025  CSR  on  both  access  and  efficiency. 
Investments  under  the  RRP  are  complemented  by 
2021-2027  cohesion  policy  funds.  In  addition, 
Finland  participates  in  joint  actions  and  benefits 
from direct grants under EU4Health to improve the 

(403) OECD (2025), Health at a Glance 2025: OECD Indicators, 

OECD Publishing, Paris, https://doi.org/10.1787/8f9e3f98-en. 

(404) US National Library of Medicine, https://clinicaltrials.gov. 

(405) European Patent Office: Statistics & Trends Centre | epo.org. 

108 

 
 
 
 
 
 
 
 
 
 
 
ANNEX 16: HOUSING 

The housing market is Finland is experiencing 
a  contraction  characterised  by  declining 
prices  and  sales,  as  well  as  declining 
constructions.  This  situation  is  the  consequence 
of:  (i)  an  increased  supply  of  dwellings  between 
2016  and  2022,  in  particular  single  flats,  due  to 
temporarily high construction levels in the context 
of low interest rates; (ii) a decrease in demand due 
to the increase in inflation and interest rates; and 
(iii)  high  construction  costs  and  low  prices  that 
reduce  the  profitability  of  projects  for  promoters. 
The  construction  sector  is  expected  to  start  to 
recover  gradually  in  2026.  Budget  resources  for 
social  housing  construction  are  being  reduced  in 
the  2025-2027  central  government  budget  and 
stakeholders  are  concerned  that  this  could  make 
counter-cyclical investments more difficult. 

Total  household  expenditure  on  housing 
remains  high,  but  the  decreasing  prices  and 
rents  have  made  housing  more  affordable 
for people entering the housing market such 
as  first-time  buyers  or  young  people.  There 
are  significant  regional  disparities,  with  high 
demand for social and affordable housing in major 
cities  and  growth  areas,  while  in  rural  areas  or 
regions  affected  by  outmigration  the  value  of 
housing  is  low  and  renovation  and  energy  costs 
high. 

for 

While  government  expenditure  on  social 
protection  is  being  reduced,  recent  data 
suggest  worsening  housing  access  and 
affordability 
the  most  vulnerable. 
Homelessness  has  increased  over  the  past  two 
living  and  social 
years,  with  high  costs  of 
protection  reforms  cited  as  contributing  factors. 
The  housing  cost  overburden  rate,  mortgage 
arrears, energy arrears and energy poverty follow 
similar  trends,  in  particular  for  households  at  risk 
of poverty. 

Housing market developments 

tightening,  nominal 
Following  monetary 
house  prices  have  been  decreasing  over  the 
past three years. The economic response to the 
COVID-19  pandemic  caused  interest  rates  to  fall 
below  zero.  Furthermore,  as  a  large  majority  of 
Finnish  household  mortgages  are  tied  to  Euribor 

interest rates (406), this has resulted in an increase 
in  construction,  transactions  and  prices.  In  2021, 
nominal prices increased by 4.6%, but Russia’s war 
of  aggression  against  Ukraine,  high  inflation  and 
tighter  monetary  policy  reversed  the  positive 
trends.  As  borrowing  costs  increased  significantly 
in  2022-2023,  fewer  households  took  out  new 
mortgage 
loans  and  purchased  dwellings. 
Consequently,  after  the  peak  in  2022,  nominal 
house  prices  declined  by  9%  in  2023-2024  and 
Finland has been the only country in the EU where 
house prices continued to decline in 2025, by 2.5% 
year-on-year.  In  2025,  house  prices  were  roughly 
at the same level as in 2013. Due to high inflation, 
real  house  prices  also  fell  significantly  in  2022-
2025.  The  price-to-income  ratio  fell  as  well  in 
2025,  attaining  around  80%  of  its  long-term 
average. 

Graph A16.1: House prices, rents and price-to-
income evolution in FI and EU27 since 2005 

Source: European Commission 

Rents  have  increased  steadily  since  2005, 
but  the  rise  in  aggregate  income  has  led  to 
more  affordable  housing  for  tenants  on 
average.  Around  30%  of  the  population  lives  in 
rental  apartments.  Rents  (including  existing  and 
new rental  contracts) have increased by  2.5% per 
year between 2005 and 2024. In 2021-2024, the 
average  increase  in  rents  was  1.6%.  Despite  this, 
the  rent-to-income  ratio  has  declined  by  10% 
since 2020. 

While  affordability  has  improved,  household 
expenditure  on  housing  remains  high 
in 
expenses 
Finland. 

Housing 

related 

and 

(406) With the 12-month Euribor interest being the most popular 

interest rate. Source: Bank of Finland.  

109 

50751001251501752000507091113151719212325Index (2005 = 100)Nominal prices FINominal prices EU27Rental prices FIRental prices EU27Price-to-income ratio FIPrice-to-income ratio EU27 
 
   
 
 
 
represented  29.6%  of  household  consumption 
expenditure  in  2024,  compared  with  the  EU 
average  of  23.6%.  Both  the  price-to-income  ratio 
and real house prices were at their lowest levels in 
2005-2024.  These  developments  imply,  on  the 
one hand, that the value of household real assets 
has  declined  significantly,  which  may  have 
impacted perceived household wealth and reduced 
private consumption, and, on the other hand, that 
dwellings have become more affordable overall. 

Graph A16.2: House supply indicators in FI since 
2005 

This  coincides  with  the  fall  in  residential  building 
permits. 

Medium-term  construction  needs  remain 
significant and will drive the recovery of the 
construction  sector  once  demand  for  new 
housing  picks  up.  A  medium-term  forecast 
suggests  that  Finland  should  build  approximately 
31 000  to  35 000  dwellings  annually  to  meet 
future demand, while between 21 000 and 46 500 
(407).  The 
dwellings  are  actually  being  built 
Commission  estimates  a  cumulative  housing 
construction  gap  of  around  8,000  dwellings 
annually (408)). Vacant housing rates, as calculated 
by Eurostat, are amongst the lowest in Europe. 

Graph A16.3: Borrowing costs and housing loans, in 
FI and EA since 2018 

Source: European Commission 

in 

recent 

contraction 

The 
residential 
investment appears to be driven mainly by a 
temporary fall in incentives for promoters to 
start  new  projects.  Since  2005,  investment  in 
dwellings  has  seen  three  periods  of  significant 
decline in terms of its share of GDP (Graph A16.2). 
The  most  recent  fall  in  residential  investment 
started in 2023, and was preceded by a period of 
zero  interest  rates,  increased  construction  and 
supply of dwellings, with the start of construction 
of more than 40 000 dwellings per year. While the 
situation  may  have  stabilised  in  the  course  of 
2025  (when  the  construction  of  around  16 400 
new  dwellings  in  total  was  started),  construction 
levels  are  still  at  their  lowest  since  2005.  The 
recent fall in construction appears to be driven by 
a  rapid  and  significant  deterioration  of  incentives 
for promoters to build new dwellings. Construction 
costs  started  to  increase  rapidly  in  2021  due  to 
disruptions  in  global  supply  chains  and  increased 
further in 2022 with the outbreak of Russia’s war 
of  aggression  against  Ukraine.  Soon  after,  as 
discussed  above,  house  prices  started  to  fall  and 
this has resulted in a house-price-to-construction-
costs  ratio  that  is  at  its  lowest  level  since  2005. 

Source: European Commission 

The  contraction  in  the  housing  market  may 
hide  underlying  skills  shortages 
in  the 
construction  sector,  which  will  resurface 
when  construction  picks  up  again.  The  weak 
economic times led to increased unemployment in 
fields  such  as 
construction  and  supporting 
architecture 
Although 
employment  in  construction  and  related  services 
had already increased slightly in 2025, a stronger 
recovery in the construction sector is not expected 
until 2027 (409). In 2024, Finland reported not only 
surpluses  in  many  occupations  related  to  housing 
in  building 
construction,  but  also  shortages 

engineering. 

and 

(407) VTT Technology (2025) Asuntotuotantotarve 2025-2045. 

(408) Balouktsi et al. (2026) Housing investment needs in the EU. 

JRC Technical Report 144419. 

(409) Ministry of Economic Affairs and Employment (2025) Lyhyen 

aikavälin työmarkkinaennuste: syksy 2025. 

110 

45678910112550751001251501750507091113151719212325% of GDPIndex (2005 = 100)Residential building permits in m2, indexResidential buildings producer prices, indexHouse prices to residential buildings producer prices, indexinvestment in dwellings, % of GDP (right-hand side axis)0246810121819202122232425in % (interest rates) or in % of GDP (loans)Interest rates FIInterest rates EAPure new loans FIPure new loans EA 
   
   
 
labourers  (410). 

construction 
long  run, 
however,  skills  shortages  and  mismatches  could 
limit  growth  and  job  creation  in  the  construction 
sector (411). 

In  the 

 Structural policies 

The  governance  of  the  social  housing  sector 
has changed. ARA, the public agency in charge of 
managing applications by social housing providers 
for  state  support,  was  dissolved  in  March  2025 
and  has  been  replaced  by  Varke,  which  operates 
as  part  of  the  Ministry  of  the  Environment.  From 
2026,  the  State  Housing  Fund  will  be  included  in 
the  state  budget  to  strengthen  parliamentary 
oversight. 

Finland  has  been  lauded  for  its  model  of 
public 
land  ownership  and  development 
(412) (413)  as  well  as  its  efficient  permitting 
system.  Municipalities  acquire,  plan,  service  and 
sell  or  lease  land,  in  particular  to  affordable 
housing providers. The ‘MAL agreements’ between 
the  state  and  certain  regions  concern  land  use, 
housing and transportation. They  can also contain 
targets  for  affordable  and  social  housing,  though 
in  practice  these  targets  have  not  always  been 
met  (414).  The  permitting  process  is  one  of  the 
fastest in Europe (415). The Construction Act, which 
entered  into  force  in  January  2025,  requires  all 

(410) ELA EURES report on Labour Shortages and Surpluses 2024. 

(411) Rakentamisen alho ei vähentänyt alan osaajatarvetta – 

Rakennusteollisuus RT Aloitusdia Avenir Next LT Pro Demi 
48pt Rakennusalalta on kadonnut jopa 40 000 työntekijää – 
osa on lähtenyt ulkomaille siirtämään kokonaista kaupunkia | 
Uusimaa | Yle 

(412) European Parliament (2025) Mapping the housing needs in 
the EU, assessing the impacts of scarcity and providing an 
overview of relevant EU legislation. 

(413) Perspective Brussels, 2025, 

planningmatters_highlight_webinars_2025.pdf. More than 
60% of the land within Helsinki is owned by the city. 

(414) Rasinkangas, J., Sirkiä, T., Kortelainen, M., Kuronen, M. & 

Laine, S., 2024, Objectives and barriers to promoting social 
housing policy in urban Finland, University of Turku. Available 
at: 
https://www.utupub.fi/bitstream/handle/10024/193026/rasin
kangas-et-al-2024-objectives-and-barriersto-promoting-
social-housing-policy-in-urban-finland.pdf. 

(415) European Commission (2005) Housing in the European 
Union: Market Developments, Underlying Drivers, and 
Policies. 

building  permit  applications  to  be  submitted  in 
building  information  modelling  format  and  sets  a 
three-month  limit  for  processing  permits  (six 
months for complex projects). 

recently  abolished  several 

tax 
Finland 
deductions 
that  benefited  homeowners. 
Mortgage interest tax relief was abolished in 2023 
for  people  buying  their  permanent  residence 
(including  first-time  buyers).  Rental  investments, 
however, continue to benefit from a favourable tax 
system  (see  Annex  3).  In  January  2024,  the 
exemption of property transfer taxes for first-time 
buyers was also abolished, which led to a peak in 
sales  at  the  end  of  2023  as  first-time  buyers 
rushed to complete their sales. At the same time, 
transfer  taxes  were  lowered  both  for  detached 
houses  and  appartements.  The  government  still 
provides subsidised loans and free guarantees for 
first-time buyers (ASP loan).  

the  past 

few  years, 

state-subsidised 

In  2024,  according  to  Eurostat,  11.8%  of 
Finland’s  population  rented  a  flat  at  a 
reduced price or for free down from 17.5% in 
fiscal 
2005.  Over 
consolidation efforts have reduced the budget for 
building  state-subsidised  housing.  In  2024  and 
2025, the government allocated loans of EUR 2.25 
billion  and  EUR 1.75  billion,  respectively,  for 
building 
while 
investment  grants  for  special-needs  housing  fell 
In 
from  EUR 63  million 
anticipation  of  a 
the  private 
construction  sector,  this  loan  budget  is  set  to 
decline  to  EUR 1.14  billion  in  2026  and  EUR 0.5 
billion in 2027. The stock of normal social housing 
rental  units  has  declined  from  293  000units  in 
2010 (11,4% of total dwelling stock) and stood at 
around 240 000 dwellings in 2024  (8,4% of total 
dwelling stock) despite the 7 800 subsidised rental 
apartments 
2023-
2025(416)(417)(418). 

to  EUR 15  million. 

recovery 

annually 

housing, 

built 

in 

in 

Cost-based  rents  have  increased  faster  in 
social  housing  than  in  the  private  sector.  As 
rents  in  social  housing  are  determined  on  a  cost-

(416) ARA (2021) ARA-asuntokannan ja asukkaiden kehitys 2010-

luvulla. 

(417) Centre for State-Subsidised Housing Construction (2025) 
Selvitys valtion tuella rakennetuista erityisryhmien 
asunnoista 

(418) Centre for State-Subsidised Housing Construction (2026) 

PowerPoint Presentation 

111 

 
 
 
price  basis,  strong  inflation,  higher  interest  rates 
and  an  ageing  property  stock  in  need  of  repairs, 
have increased the cost  of running social  housing 
and ultimately the rents for tenants. 

main  contributing  factors  cited  by  municipalities 
were  the  lack  of  small  and  affordable  housing, 
reforms  to  social  protection,  high  costs  of  living 
and  housing,  and  the  increase  in  arrears  and 
household indebtedness (422). 

in 

Reforms  of  the  housing  benefit  system  are 
underway to improve spending efficiency. The 
Finnish housing benefit system is among the most 
the  EU,  with  382 000 
comprehensive 
households  (13.8%  of  the  population  under  65) 
receiving  the  general  housing  allowance  in  2024, 
amounting to total expenditure of EUR 1.67 billion. 
The government has implemented several reforms 
since  2024  to  target  housing  benefits  more 
accurately  and  contain  costs.  In  particular,  it  has 
reduced  the  maximum  compensation  amounts, 
strengthened  asset-testing  and  tightened  the 
eligibility conditions. Both the number of recipients 
and  total  payments  are  falling  as  a  result  of  the 
policy (419).  From  1 January 2025,  an  income  limit 
was  reintroduced  for  tenants  of  state-subsidised 
rental  housing  to  target  it  more  towards  low-
income tenants  (420).  The  changes 
in  housing 
allowances  for  students, 
in  particular,  have 
rental 
reduced 
apartments  especially  in  university  cities,  which 
may have had an impact on recent housing market 
dynamics. 

single-person 

demand 

for 

to  disposable  household 

The  affordability  of  housing  and  energy  are 
becoming  growing  challenges,  particularly 
among  low-income  renters  and  mortgage 
holders, whose situation regarding housing is 
worsening.  In  this  context,  stakeholders  have 
raised  concerns  that  the  changes  in  housing 
allowances  have  made  housing  less  affordable, 
especially  among  students,  young  adults (423)  and 
households who are unable or unwilling to move to 
more  affordable  housing (424).  The  proportion  of 
for 
rent 
households at risk of poverty was 45.1% in 2025. 
The housing cost overburden rate has increased in 
recent years for households at risk of poverty (an 
increase of 3.3 pps since 2020, to reach 20.7% in 
2025).  Given  that  most  Finnish  mortgages  are 
variable-rate,  mortgage  holders  were  therefore 
exceptionally  squeezed  by  the  steep  increase  in 
interest rates in 2022-2023, with the proportion of 
households going into arrears on their mortgage or 
rent payments rising by  0.7 pps to 5.0% in 2025, 
considerably  above  the  EU  average  of  3.0%.  For 
households  at  risk  of  poverty,  this  proportion 
increased by 5.7 pps to 15.5%. 

income 

Vulnerable groups 

implementing 

While  Finland  is  traditionally  a  front  runner 
in  addressing  homelessness,  after  years  of 
continuous  decline,  homelessness  started 
increasing again in 2024. The country has been 
successfully 
the  Housing  First 
strategy  since  2008,  providing  unconditional 
housing and social support to people experiencing 
homelessness.  The  implementation  of  this  policy 
has  strongly  contributed  to  Finland’s  long-term 
record with reducing homelessness, with a decline 
of 80% since the start of data collection in 1986. 
In  2024  and  2025,  however,  the  number  of 
homeless people increased to reach 4 579 people: 
a  33%  increase  compared  with  2023  (421).  The 

(419) Kela (2025) Yleisen asumistuen saajamäärä ja kulut 
kääntyivät laskuun vuonna 2024 – muutos kiihtyi 
tammikuussa 2025 voimaan tulleiden lakimuutosten myötä. 

(420) Ministry of the Environment (2025) Valtion tukemien vuokra-
asuntojen asukasvalintaan otetaan käyttöön tulorajat. 

(421) ARA (2025) Asunnottomat 2024. 

Energy poverty in Finland is closely linked to 
the  cost  of  energy  and  the  condition  of 
residential buildings (see Annexes 9 and 14). 
From 2022 to 2025, the proportion of households 
reporting  arrears  on  utility  bills  increased  by  1.9 
pps to 7.6%, with a substantive increase of 3.5 pps 
to 16.0% among households at risk of poverty. As 
of  2026,  the  Social  Climate  Fund  can  provide 
support  for  energy-efficiency  renovations  and  the 
decarbonisation  of  heating  in  buildings  occupied 
by vulnerable groups. 

(422) VATT (2025) Häädöt Suomessa 2015–2024. 

(423) Kela (2025) Nuorten aikuisten pienituloisuus on Suomessa 
verrattain yleistä, mutta ei niin syvää kuin verrokkimaissa. 

(424) Kela (2025) Kuudesosa muuttamaan ohjatuista 

toimeentulotuen saajista muutti lakimuutoksen jälkeen. 

112 

 
 
 
Graph A16.4: Housing affordability selected indicators 

Source: Eurostat and European Commission calculations.  The overburden rate should be read together with the tenure structure 
(homeowner, tenants), that may differ across country and regions. 

113 

 
 
HORIZONTAL 
ANNEX 17: SUSTAINABLE DEVELOPMENT GOALS 

social 

fairness 

This  annex  assesses  Finland’s  progress  on 
the  sustainable  development  goals  (SDGs) 
along  the  dimensions  of  competitiveness, 
and 
sustainability, 
macroeconomic stability. The 17 SDGs and their 
related  indicators  provide  a  policy  framework 
under  the  UN’s  2030  Agenda  for  Sustainable 
Development.  The  aim  is  to  end  all  forms  of 
inequalities  and  tackle  climate 
poverty,  fight 
change  and 
the  environmental  crisis,  while 
ensuring that no one is left behind. The EU and its 
Member  States  are  committed  to  this  historic 
global  framework  agreement  and  to  playing  an 
active  role  in  maximising  progress  on  the  SDGs. 
Graph  A1.1  is  based  on  the  EU  SDG  indicator  set 
developed to monitor progress on the SDGs in the 
EU. 

On  competitiveness,  Finland  is  moving  away 
from  SDG 4  (Quality  education)  and  SDG 8 
(Decent  work  and  economic  growth).  While 
Finland’s  employment  rate  (SDG 8)  has  been 

Graph A17.1: Progress towards the SDGs in Finland 

stable  between  2019  and  2025,  at  76.3%,  the 
long-term unemployment rate has been gradually 
increasing,  now  standing  slightly  just  below  EU 
average. In turn, the rate of young people neither 
in  employment  nor  in  education  and  training 
(NEET)  has  increased  from  9.1%  in  2019  to  11% 
in 2025. Finland is one the leading countries in the 
EU  regarding  the  percentage  of  adults  with  at 
least  basic  digital  skills  (SDG 4).  However,  while 
still below the EU average, the percentage of low-
achieving  15-year-olds  in  mathematics  increased 
by  almost  10 percentage  points  (pps)  between 
2018 and 2022.  

SDG 9 

(industry 

innovation 

However,  it  is  improving  and  performs  well 
on 
and 
infrastructure). Finland increased its spending on 
R&D  from  2.82%  of  GDP  in  2019  to  3.22%  in 
2024 and has set a national target of 4% (SDG 9) 
by  2030.  The  recovery  and  resilience  plan  (RRP) 
includes  measures  to  further  improve  Finland’s 
productivity by boosting spending on R&D through 

For a detailed progress assessment towards the various SDGs, see the annual Eurostat report ‘Sustainable development in the 
European Union’; for extensive data on the short-term SDG progress of EU countries, see Key findings – Sustainable development 
indicators; for an interactive visualization of SDG progress of EU countries, see SDG country overview. A high status does not 
mean that a country is close to reaching a specific SDG, but signals that it is doing better than the EU on average. The progress 
score is an absolute measure based on the indicator trends over the past five or six years. The calculation does not take into 
account any target values, as most EU policy targets are only valid for the aggregate EU level. Depending on data availability for 
each goal, not all 17 SDGs are shown for each country. 
Source: Eurostat, latest update of 29 April 2026. Data refer mainly to the period 2019-2024 or 2019-2025. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

114 

 
 
 
 
 
 
 
funding packages to promote the green and digital 
transitions, notably in components P3C3 (research 
infrastructure) 
(strengthening 
competitiveness) of the plan. 

P3C4 

and 

Finland  is  making  progress  on  some  SDGs 
related  to  sustainability  (2,  6,  7,  9,  12,  13, 
15),  but 
is  moving  away  from  SDG 11 
(Sustainable  cities  and  communities),  and 
SDG 14  (Life  below  water).  While  Finland 
performs  above  the  EU  average  on  most  SDGs  in 
this  area,  there  are  some  negative  trends  that 
deserve  attention.  For  instance,  waste  generation 
per  capita  remains  well  above  the  EU  average 
(SDG 12)  combined  with  lower  recycling  rates 
(SDG 11),  and  the  percentage  of  forested  area  in 
Finland  compared  to  total  land  area  fell  from 
71.3% in 2015 to 66.5% in 2023 (SDG 15).  

for 

improvement 

The  need 
is  most 
pronounced  for  SDG 14  (Life  below  water), 
which  is  both  below  the  EU  average  and 
deteriorating.  At  the  same  time,  the  percentage 
in  gross  final  energy 
of  renewable  energy 
consumption  (SDG 7)  has  continued  to  increase, 
from 42.8% in 2018 to 52.1% in 2024, more than 
double the EU average. In addition, energy  import 
dependency  drastically  decreased  from  42.9%  in 
2019 to 33% in 2024 in a country with a relatively 
high energy consumption per capita, almost double 
the  EU  average.  The  first  strand  of  the  RRP 
includes  investments  in  clean  energy  (SDG 7), 
decarbonisation 
and 
biodiversity (SDGs 14 and 15). On the reform side, 
the  Waste  Act  was  amended  in  2025,  including 
new  separate  collection  targets  (SDG 11)  and  the 
Nature  Conservation  Act  was  updated  in  June 
2023. 

industry 

(SDG 9) 

of 

there 

In  addition,  Finland  has  made  progress  on 
several indicators related to good health and 
well-being (SDG 3), such as reducing smoking 
prevalence  from  20%  in  2017  to  15%  in 
for 
2023.  However, 
improvement  in  other  indicators,  such  as  the 
obesity  rate,  which  is  increasing (23.2% in  2025), 
and  above  the  EU  average  (16.3%).  The  RRP 
includes  measures  to  support  the  ongoing  reform 
of  health  and  long-term  care,  aiming  to  improve 
the  health  and  well-being  status,  in  component 
P4C1 (social welfare and healthcare services). 

room 

still 

is 

While Finland performs well on SDGs related 
to  macroeconomic  stability  (SDGs 8  and  16), 
it  needs  to  slightly  catch  up  for  SDG 17 
In  addition, 
(partnership  for  the  goals). 
Finland  is  moving  away  from  the  goals  on 
SGDs  8  and  17  but  is  improving  on  16. 
Finland’s  real  GDP  per  capita  remains  well  above 
the  EU  average  but  slightly  decreased  between 
2019 and 2025, from EUR 43 910 to EUR 43 010 
(SDG  8).  Finland  performs  very  well  on  the 
perceived independence of the justice system and 
the Corruption Perceptions Index (SDG 16). Official 
development  assistance  increased  from  0.42%  of 
GNI  in  2019  to  0.47%  in  2024,  closing  the  gap 
with the EU average at 0.50%. 

As the SDGs form an overarching framework, any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other annexes. 

fairness-related 

Finland  performs  well  on  most  SDGs  related 
to social fairness (SDGs 1, 3, 4, 5, 8, 10), but 
needs  to  catch  up  with  the  EU  average  on 
SDG7.  The  country  is  above  the  EU  average  for 
several 
indicators,  such  as 
persons  at  risk  of  poverty  or  social  exclusion 
(SDG 1; 16.8% of population in 2024, vs 21.0% in 
the EU) or the percentage of population unable to 
keep their home adequately warm (SDG 7: 2.7% in 
2024; EU: 9.2%). However both indicators deserve 
further  attention  as  they  show  a  deteriorating 
trend. On gender equality, the gender employment 
gap  has  narrowed  to  1.3%  in  2024,  vs  3.3%  in 
2019  and  an  EU  average  of  9.6%  in  2025)  and 
women’s  representation  in  leadership  positions 
has improved. 

115 

 
ANNEX 18: COMPETITIVE REGIONS 

Regional development trends 

Overall,  Finland’s  GDP  per  head  (PPS) has 
diverged from the EU average in the last 20 
years,  while  regional  disparities  within  the 
country  have  narrowed  (Map  A18.1).  Helsinki-
Uusimaa  region,  which  has  the  highest  GDP  per 
head in the country, has not grown in the past 10 
years, and has lost the most  in terms of GDP per 
head  compared  with  the  EU  average  since  2008. 
Together  with  the  moderate  growth  in  GDP  per 
head of Finland’s other greater regions, Pohjois- ja 
Itä-Suomi,  Länsi-Suomi  and  Etelä-Suomi,  the 
country’s  internal  disparities  between  the  capital 
region  and  the  rest  of  the  country  remain,  but 
have decreased compared with 10 years ago (Map 
A18.2).  Internal  disparities  within  the  NUTS2  and 
even  within  the  NUTS3  regions  exist  across  the 
whole  country  (see  map  A18.2).  Åland  still  has  a 
comparatively  high  GDP  per  head  in  absolute 
terms.  However,  a  decline  in  GDP  over  the  past 
decade  meant  that  Åland’s  GDP  per  head  fell 
relative  to  the  EU  average  between  2012-2020 
(from 144% of the EE average in 2012 to 103% in 
2020).  It  is  only  in  the  last  few  years  that  Åland 
began to again improve its relative position. 

Map A18.1:  GDP per head compared with the EU 
average 

2021-2023 average GDP per head in purchasing power 
standard compared with the EU average 
Source: Commission calculations based on Eurostat 16 July 
2025 data. 

Relatedly,  the  productivity  gap  between 
Finland’s  capital  region  and  the  rest  of  the 
country  is  narrowing.  Labour  productivity  is 
greatest  in  the  capital  region,  but  the  region 
experienced no productivity growth between 2013 
and 2023. Growth in productivity in this period was 
the  strongest  in  Åland    and  Länsi-Suomi  (Graph 
A18.1). 

Map A18.2:  GDP per head (PPS, EU=100), NUTS3, 
2024 

Source: REGIO calculations based on JRC (ARDECO) data 

this  growth  was 

Finland’s demographic profile is marked by a 
growing  divide  between  the  capital  region 
and the rest of the country. Between 2015 and 
2024,  the  national  population  increased  by  a 
yearly  average  of  2.9  people  per  1 000 
inhabitants,  but 
largely 
concentrated in the Helsinki-Uusimaa region, while 
Etelä-Suomi and Pohjois- ja Itä-Suomi experienced 
a  decline  in  population.  Notably,  the  migration 
patterns  of  young  people  aged  15-39  show 
distinct  regional  differences.  In  the  region  of 
Pohjois-  ja  Itä-Suomi  there  was  a  notable  net 
migration  loss  in  this  period  (-3.6  per  1 000), 
contrasting with the significant net migration gain 
in the capital region (+20.4 per 1 000) (425). Across 
the  country,  population  growth  is  concentrated  in 
urban areas, while the population in rural areas is 
is  already  shaping 
shrinking.  This  dynamic 

(425) Average annual change per 1 000 residents aged 15-39 

between 2014 and 2023. 

116 

 
 
 
 
 
 
 
 
 
 
 
Table A18.1:Main development trends, challenges and the concentration of resources. 

(1) https://www.asub.ax/en/facts-about-aland 
(2) https://www.oecd.org/en/publications/transition-strategies-for-finland-s-eastern-and-south-eastern-border-regions_b03b0b04-
en/full-report/overview-of-the-finnish-eastern-and-southeastern-border-region_23e2214b.html 
Source: European Commission based on Eurostat data; categories of regions based on Map A18.1. 

economic  prospects.  In  the  medium-to-long  term, 
regional  divergence  may  constrain  Finland’s 
growth  potential  and  amplify  socio-economic 
challenges,  including  in  social  and  healthcare 
services (see Annex 12).  

Finland  is  experiencing  simultaneously  a 
relatively  high  employment  rate  combined 
with  a  high  unemployment  rate,  with  young 

affected 

particularly 

people 
by 
unemployment  in  Etelä-Suomi.  In  2025,  the 
nationwide  employment  rate  (76.3%)  exceeded 
slightly  the  EU  average  (76.1%),  with  strong 
performance  across  the  board,  especially  in  rural 
areas (79%) compared with cities (75%). However, 
Finland’s  unemployment  rate  of  9.7%  is  higher 
than  the  EU  average  of  6%,  with  no  considerable 
regional differences at the NUTS 2 level, although 

117 

Transition regions(population 3 813 773) Etelä-Suomi,Länsi-Suomi,andPohjois-jaItä-Suomiarecharacterisedbyoverallpopulationdecline,lowereducationlevels,skillsshortagesandhigherunemployment.OnGDPperhead,theNUTS2regionsofFinlandshowinternaldisparitiesatbothNUTS3level(i.e.betweendifferentNUTS3regionsinthesameNUTS2region)andbetweengrowthcentresandtherest.Despitebeinghometosuccessfulinnovationclustersandecosystems,theregionsarelessabletoharnessgrowthtrendsindynamicandadvancedsectorsoftheeconomy. More developed regions(population 1 790 078)TheHelsinki-UusimaaregioniswellequippedtokeeppacewiththerestoftheEUandevenoutperformit.However,itsgrowth,productivityandinnovationcapacityhavestagnatedoverthepast10years.Theregionalsosuffersfromhighunemployment.Theregionremainsthedriverofthecountry’spopulationgrowthandisits best connected in terms of accessibility and digital connectivity. ÅlandmaintainsrelativelystrongGDP,eventhoughithasexperiencednorealgrowthinGDPbetween2014-2024.Itseconomicstructureisconcentratedinshippingandmaritimeindustriesanddominatedbysmallenterprises.Itslabourmarketneedstobetterintegrateitsmigrantpopulationandaddressskillsmismatches[1}.Despite relatively low R&D expenditure, Åland maintains a positive innovation trend. Specific territoriesEasternborderregion’ssecurityandsocioeconomiclandscapehasbeenimpactedbyRussia’sfull-scaleinvasionofUkraine.ExaminedatNUTS3level(Etelä-Karjala,Kymenlaakso,Pohjois-Karjala,Etelä-Savo,Pohjois-Savo,Kainuu,Pohjois-PohjanmaaandLappi),theeasternborderregionisexperiencingpopulationdecline,especiallyofyoungpeopleandtheworking-agepopulation(downby-6%between2019-2024,excludingLappiandPohjois-Pohjanmaa).RelativetotherestofFinland,theborderregionshavebecomelesseconomicallysignificantasGDP,businessactivity,andemploymenthavedeclinedovertime.Since2022,therehavebeensignificantlymorebusinessclosuresintheeasternborderregionthanelsewhereinthecountry,especiallyinEtelä-KarjalaandKymenlaakso.Whileotherregionsarefacingchallenges,LappiandPohjois-Pohjanmaahaveremainedresilient,withtourism,professionalservices,andhealthcareallexpanding.Withdifferencesinemploymentratesbetweentheregions,alsotheemploymenttrendsshowshiftsintheregionallabourmarket.Manufacturingjobshavedeclinedacrosstheeasternborderregion,especiallyItä-LappiandKymenlaakso.Targetedeconomicsupportmeasures,forexamplebypilotingspecialeconomiczone(s),intheregionsandsectors particularly affected could help to ease the transition of these economies [2].NorthernSparselyPopulatedArea(NSPA)inFinlandoverlapsinsignificantpartswiththeeasternborderregion.TheNSPAcoverstheNUTS2regionPohjois-jaItä-Suomi,which,alongwithEtelä-SuomiisoneofthetwoNUTS2regionsborderingRussia.Pohjois-jaItä-SuomiincludessevenNUTS3regions,sixofwhicharecoveredbyaboveanalysisoftheeasternborderregion.CompetitivenessintheNSPAishamperedby:(i)longdistances;(ii)limitedtransport,digitalandenergyconnectivity;and(iii)decreasingpopulationscausedbyinterregionalemigrationtogrowthcentres.ThereareinterregionaldisparitiesinGDPperheadbetweendifferentNUTS 3 regions in the NSPA (Map A18.2).Main development trends 
 
   
 
differences  at  NUTS  3  level  can  be  observed. 
Youth unemployment (among people aged 15-24) 
is  high  nationwide  (21.8%  vs  EU  average  of 
15.2%), and is highest in Helsinki (22.9%), while it 
is lowest in Etelä-Suomi (20.8%) (see Annex 11). 

Key challenges for regional 
competitiveness 

The  shutdown  of  the  Finnish-Russian  border 
and  the  consequences  of  Russia’s  full-scale 
war  of  aggression  against  Ukraine  have 
altered  the  economic  prospects  of  eastern 
border  regions.  Finland  has  the  EU’s  longest 
border  with  Russia,  stretching  over  1 300 
kilometres  from  north  to  south.  The  border  has 
been  closed  since  2023. 
In  addition  to  the 
interruptions  during  the  COVID-19  pandemic  and 
the significant slowdown of cross-border economic 
activity  after  2022,  this  border  closure  has 
weighed  on  the  border  regions’  economies  and 
employment  (particularly  in  tourism,  services  and 
retail,  manufacturing  and  forestry,  and  transport 
and  logistics).  This  has  amplified  long-standing 
structural  weaknesses  in  Finland’s  eastern  border 
regions, 
sectoral 
composition of the economy in the eastern border 
regions;  (ii)  declining  manufacturing  capacity;  and 
(iii) limited economic diversification (426). 

(i)  an  uneven 

including: 

Graph A18.1: Labour productivity growth (2013-
2023) and labour productivity (2023), Finland 
(NUTS 2 regions) 

(1) Productivity growth is measured as average annual 
change 
Source: REGIO calculations based on JRC (ARDECO) data 

R&D  expenditure  remains  low  outside  the 
capital  region  and  the  growth  centres  of 
Tampere,  Turku,  and  Oulu.  Finland  aims  to 
increase its  national-level R&D  intensity to 4% of 
GDP  by  2030  (see  Annex  4),  but  current  R&D 
performance  varies  significantly  between  regions. 
The  capital  region  is  driving  progress  on  R&D 
expenditure,  having  already  hit  the  4%  target  in 
2023. By contrast, Etelä-Suomi recorded just 1.9% 
R&D  intensity,  and  Åland  only  0.5%.  The  same 
divide  appears  in  business-sector  R&D  spending 
(BERD). Innovation performance relative to the EU 
average  decreased  between  2023-2025  in  all 
mainland  regions  (i.e.  excluding  the  autonomous 
Åland Islands), while  all Finnish regions lag in the 
diffusion  of  new  production  technology  and  ideas 
compared  with  their  European  peers  (427)  (see 
Annex  4).  Addressing  regional  R&D  disparities 
requires  targeted  investment  to  boost  private-
sector  R&D  in  lagging  regions  and  strengthen 
regional  innovation  ecosystems.  By  helping  SMEs 
become  more  competitive, 
in 
transition  regions  with  less  developed  private 
capital  markets,  it  is  possible  to  give  these 
ambitions an economic foundation. 

in  particular 

is 

At the regional and local level, innovation is 
through  smart 
in  Finland 
fostered 
specialisation  strategies  and 
innovation 
ecosystem  agreements  (428).  Regions  and  cities 
that  have  used  these  strategies  systematically 
have seen improvements in their R&D intensity. It 
is  possible  to  increase  the  impact  of  regional 
development 
linking  national 
strategies  to:  (i)  regional  and  local  strengths;  (ii) 
regional  and  local  development  efforts;  and  (iii) 
interregional  cooperation 
it 
remains  essential  to  ensure  and  enhance  regions’ 
innovative capacity.  

(429).  Furthermore, 

initiatives  by 

(427) Regional Innovation Scoreboard 2025. 

(428) Ecosystem agreements were signed between Finnish 

governments and several cities to strengthen cooperation in 
research and innovation activities. For more, see 
Ekosysteemisopimukset - Työ- ja elinkeinoministeriö. 

(426) Transition Strategies for Finland’s Eastern and South-Eastern 

(429) Parlamentaarisen TKI-työryhmän loppuraportti, OECD 

Border Regions (EN). 

Reviews of Innovation Policy. 

118 

0.70.30.50.50.40.3-0.1100106971019799118EUFinlandÅlandLänsi-SuomiPohjois- ja Itä-SuomiEtelä-SuomiHelsinki-UusimaaAverage annual growth2013-2023 (%)Productivity in 2023GDP/hour, EU27 = 100 
     
 
 
Finland’s  mineral-rich  regions,  mainly  in  the 
north  of  the  country,  are  of  strategic 
importance,  yet 
face  challenges. 
they 
Although  deposits  of  critical  raw  materials  have 
been  identified  across  the  country  (see  Annex  5), 
mining  activities  have  progressed  furthest 
in 
Pohjois-  ja  Itä  -Suomi,  which  includes  NUTS  3 
region  of  Lappi  in  the  north  of  the  country.  The 
Lappi  region  alone  accounts  for  31%  of  Finland’s 
mining turnover and 32% of its metal refining (430). 
This  activity  contributes  to  the  region’s  economy 
and employment, accounting directly for 6% of the 
latter.  Nevertheless,  the  regions  of  Lappi  and 
Kainuu,  another  mining  region  in  the  east  of  the 
country,  would  benefit  from  further  integration 
into industrial and economic ecosystems, including 
in  the  fields  of  R&D  and  the  circular  economy. 
These 
regions  have  also  experienced 
shortages  in  strategic  high-skilled  occupations 
within  the  mining  sector, 
in 
digital 
environmental  management 
technologies  (431).  Another  issue  is  that  mining 
activities  often  occur  in  sensitive  environments, 
creating  cumulative 
land-use  pressures  and 
impacting local and indigenous communities. 

including  roles 
and 

two 

A  lack  of  skilled  workers,  visible  in  skills 
shortages and mismatches, may limit growth 
potential  outside  the  capital  region.  In  2025, 
Helsinki-Uusimaa  was  the  only  region  where  the 
proportion  of  25–34-year-olds  with  a  tertiary 
education was close to the EU average (43.4% vs 
44.8%).  The  regions  of  Pohjois-  ja  Itä-Suomi  and 
Etelä-Suomi 
lag  significantly  behind  on  this 
measure, at nearly 10 percentage points below the 
EU average (see also Annex 13). At the same time, 
opportunities  in  the  clean  and  green  transition  in 
Länsi-Suomi  and  Pohjois-  ja  Itä-Suomi  may  be 
hampered  by  skills  shortages  despite  sectoral 
potential (432).  

Digital  adoption  among  SMEs  lags  behind  in 
predominantly  rural  regions.  In  2025  in  the 

(430) OECD (2025), “Enhancing regional mining ecosystems in 
Lapland, Finland”, OECD Regional Development Papers, 
No. 140, OECD Publishing, 
Paris, https://doi.org/10.1787/5eec7f8a-en. 

(431) OECD (2025), “Enhancing regional mining ecosystems in 
Kainuu, Finland”, OECD Regional Development Papers, 
No. 140, OECD Publishing, Paris, Enhancing regional mining 
ecosystems in Kainuu, Finland | OECD. 

(432) Job Creation and Local Economic Development 2024 - 

Country Notes: Finland | OECD. 

capital  region,  nearly  63%  of  the  workforce  is 
in  high-technology  and  knowledge-
employed 
intensive  sectors,  compared  with  48%  in  Etelä-
Suomi  and  49%  in  Länsi-Suomi  and  Pohjois-  ja 
Itä-Suomi. Jobs related to AI and information and 
highly 
technology 
communications 
concentrated  in  Helsinki-Uusimaa,  which  also  has 
the greatest exposure in the country to generative 
AI  (433).  The  digital  transition's  full  potential 
remains untapped in the rural areas of Pohjois- ja 
Itä-Suomi,  where  digital  adoption  rates  by  SMEs 
are markedly lower than the national average (434). 

are 

Transport accessibility is more difficult – and 
travel  times  are  significantly  longer  –  in 
remote  and  sparsely  populated  areas,  both 
for road and railway (435). This is especially the 
case in the northern sparely populated area and in 
Åland,  although  all  regions  of  Finland  except  for 
Helsinki-Uusimaa  perform  below  the  EU  average 
on these indicators.  

is 

insufficient 

Broadband  coverage 
in 
Finland’s  sparsely  populated  rural  areas. 
Although  high-speed  mobile  and  fixed  broadband 
networks  are  available  to most  households in  the 
country  (436),  regional  differences  persist.  5G 
connectivity of  at 
is  almost 
universally  available in  urban  centres  and  coastal 
areas,  where  investments  in  fibre  broadband 
continue (437). However, in sparsely populated rural 
areas, particularly in northern and eastern Finland, 
network  coverage  remains  visibly  lower,  and  this 
may  compromise  the  economic  activity  and 
potential of those regions (438).  

least  100 Mbps 

regional 

The 
has 
security 
fundamentally changed since Russia’s war of 

landscape 

(433) Exposure measured as the share of employment exposed to 

Generative AI. See: Job Creation and Local Economic 
Development 2024 - Country Notes: Finland | OECD. 

(434) OECD (2023), Regions in Industrial Transition 2023: New 
Approaches to Persistent Problems, OECD Regional 
Development Studies, OECD Publishing, 
Paris, https://doi.org/10.1787/5604c2ab-en. 

(435) Eurostat: share of population within a 120-km radius that 

can be reached within 1h30 by rail (%) by NUTS 2 region in 
2021, share of population in 120-km radius accessible 
within 1h30 by NUTS 2 region in 2023. 

(436) 5G coverage: 99.5%, fixed very-high capacity network 

(VHCN) coverage: 81.7%, DESI 2025. 

(437) https://www.traficom.fi/. 

(438) https://tieto.traficom.fi; https://www.traficom.fi. 

119 

 
 
 
 
 
 
Table A18.2:Key regional indicators (at NUTS 2 level) for Finland 

Dark green - the indicator is 120% or more of the EU average. 
Light green - the indicator is 100% or more, but less than 120% of the EU average. 
Yellow - the indicator is 90% or more, but less than 100% of the EU average. 
Light red – the indicator is 75% or more, but less than 90% of the EU average. 
Dark red – the indicator is below 75% of the EU average. 
This colour scale applies to ‘positive’ indicators, where higher values are favourable. 
For ‘negative’ indicators (where higher values are unfavourable), the colours are reversed. 
Source: Eurostat and JRC 

aggression  in  Ukraine  and  Finland’s  decision 
to  join  NATO.  A  vital  component  of  military 
security  is  a  robust,  viable,  and  internationally 
competitive  domestic  defence  industry.  To  this 
end,  the  industry  must  be  helped  to  both:  (i) 
develop  and  integrate  new  dual-use  technologies 
and solutions; and (ii) increase production capacity 
across  the  country.  Although  defence  industry 
companies are spread across the country, they are 
concentrated  in  the  capital  region,  Tampere,  and 
Oulu.  Significant  investment  will  be  needed  to 
the  country’s 
infrastructure  on 
upgrade 
military  mobility  corridors  and  networks  (439). 
Upgraded dual-use infrastructure will also support 
local  businesses  and  improve  access  for  local 
residents. 

the 

Territorial just transition plans in 14 NUTS 3 
regions  in  Finland  focus  on  broader  climate 
action  and  reductions  in  greenhouse-gas 
emissions,  with  additional  measures  focused 
on  halting  biodiversity  loss,  preventing  the 
degradation 
and 
through 
mitigating 

of  water 
climate 

systems, 

change 

environmental  restoration  efforts. Northern 
peatlands  are  especially  vulnerable  to  climate 
change.  In  northern  Finland  (notably  in  Lappi, 
Kainuu  and  Pohjois-Pohjanmaa),  peatlands  are  a 
dominant  landscape  feature.  In  Keski-Suomi  the 
water  economy  of  peatlands  has  already 
deteriorated,  and  the  general  situation  is  bad.  In 
many areas of Finland, forestry plays a significant 
role  in  the  regional  economy.  Climate  change 
poses  significant  challenges 
forest 
economies  of  Kainuu,  Pohjois-Karjala  and  Etelä-
Savo,  Lappi,  Pohjois-Pohjanmaa,  Keski-Suomi  and 
Pohjois-Savo (see Annex 10).  

the 

to 

‘Blue economy’ activities in Finland’s coastal 
regions face environmental and coordination 
challenges.  Across  all  coastal 
the 
ecological  fragility  of  the  Baltic  Sea  is  placing 
limits  on  fisheries,  aquaculture,  tourism  and  port 
to  address 
expansion,  making 
environmental  concerns  for  long-term  economic 
resilience  and 
In 
Ostrobothnia  and  the  Gulf  of  Bothnia,  traditional 

regional  development(440). 

it  essential 

regions, 

(439) Government Defence Report 2024. 

(440) https://helcom.fi/wp-content/uploads/2023/06/HELCOM-

Thematic-assessment-of-eutrophication-2016-2021.pdf . 

120 

GDP per head (PPS, index)Real GDP growthReal GDP per head growthPopulation aged 20-64Change in working age population (20-64)Population aged 25-34 with high educational attainmentUnemployment rateR&D expenditureR&D expenditure in business enterprise sector (BERD)EU27=100Average annual % changeAverage annual % change% of total populationAverage annual % change% of population aged 25-34% of labour force% of GDP% of GDP20242014-20242014-202420252016-20252025202520232023EU1001,61,458,3-2,644,86,02,241,51Finland1020,90,656,20,038,29,73,222,09Länsi-Suomi930,90,755,0-1,136,09,22,962,11Helsinki-Uusimaa1281,10,160,59,243,410,63,882,75Etelä-Suomi890,40,554,4-4,734,89,61,911,05Pohjois- ja Itä-Suomi890,91,153,0-8,234,59,02,781,74Åland111-0,3-0,954,2-0,40,530,46  
 
 
 
     
 
and 

industries 

maritime 
fisheries  must 
increasingly coexist with large-scale offshore wind 
development,  creating  spatial  planning  and 
investment  coordination  challenges  that  have 
implications  for  regional  growth  and employment. 
Environmental  degradation,  lengthy  processes  for 
permit  granting,  and  a  lack  of  skilled  labour 
constrain  the  development  of  the  sustainable 
competitive  aquaculture  sector,  both  at  sea  and 
inland(441).  

(441) https://aquaculture.ec.europa.eu/country-information/finland. 

121 

 
 
ANNEX 19: TRANSPORT 

This  Transport  Annex  presents  the  state  of  play 
and  the  challenges  Finland  is  facing  with  the 
implementation  of  the  trans-European  transport 
network  (TEN-T),  the  European  railway  traffic 
management  system  (ERTMS)  and  the  roll-out  of 
sustainable aviation fuels (SAF). 

Finland  is  connected  to  the  trans-European 
transport  network  primarily  through  the 
North  Sea – Baltic  European 
transport 
corridor,  the  Scandinavian  –  Mediterranean 
corridor  and  the  Baltic  Sea  –  Black  Sea  – 
Aegean  Sea  corridor.  Finland’s  railway  network 
is  built  on  the  Finnish  railway  gauge  (1 524 mm). 
The  TEN-T  in  Finland  comprises  3 813 km  of  rail 
(1 148 of  which  are  on  the  core  network)  and 
5 896 km  of  road  (1 173 of  which  on  the  core 
network). Finland has 595 km of inland waterways 
on  the  TEN-T,  20  airports  (including  two  core 
airport),  19  ports  (including  six  core  ports)  and 
seven urban nodes (442). 

The  priority  projects 
include  the  West 
Railway,  the  Helsinki-Tampere  line  and  the 
East Railway, which all aim to increase speed 
and  capacity  through  upgrades  and  new 
construction.  These  rail  investments  strengthen 
TEN-T  core  connectivity  at  the  EU’s  north-eastern 
edge:  improving  passenger  and  freight  reliability 
between Finland’s main urban and port nodes and 
the  wider  corridor  system,  supporting  smoother 
flows  into  the  Baltic  Sea  region  through  the 
maritime  network  and  onward  to  Central  Europe, 
helping  the  EU  meet  its  goals  for  a  more 
integrated,  resilient,  and  sustainable  transport 
network.  

risk  of  accidents. 

The  ERTMS  is  essential  to  digitalising  the 
railways and to modernising and harmonising 
railway  operations  across  Europe.  The  ERTMS 
ensures the safety of rail networks by providing a 
unified signalling system that significantly reduces 
It  also  provides 
the 
interoperability  between  national  rail  systems, 
improving  cross-border  train  movements.  Finally, 
the  ERTMS  enhances  network  capacity  and 
the 
operational 
competitiveness  of  the  rail  sector.  Harmonising 
technical  and  operational 
the 
minimisation  of  national  rules  in  line  with  the  EU 

rules  with 

increasing 

efficiency, 

directives  on  rail 
remains also critical. 

interoperability  and  safety 

In  Finland,  the  ERTMS  was  not  yet 
in 
operation by the end of 2024 (443). To meet its 
national  plan’s  ERTMS  roll-out  target  by  2035, 
Finland  aims  to  deploy  ERTMS  along  a  length  of 
1 480 km.  Decommissioning  the  legacy  signalling 
system remains a priority. 

The  administrative  organisation  at  national 
level,  with  the  Ministry  of  Transport  and 
Communications,  supported  by  the  two 
national  agencies,  the  Finnish  Transport 
Infrastructure Agency (FTIA), and the Finnish 
Transport  and  Communications  Agency 
(Traficom),  leads  in  general  to  an  efficient 
and  effective  implementation  of  transport 
infrastructure projects in Finland.  In February 
2026,  the  government  presented  an  amendment 
to the Public Procurement Law. The full impact on 
major  infrastructure  projects  remains  to  be  seen, 
as  its  effects  will  only  become  visible  over  a 
longer period of implementation. Finland does not 
yet  have  a  roadmap  for  the  transition  to  the 
European  standard  railway  gauge,  with  priority 
given  to  cross-border  sections,  for  instance  in 
northern  Finland  at  the  border  with  Sweden. 
However,  planning  has  been 
initiated  for  a 
standard gauge railway connection between Tornio 
(Tornio-Haparanda border crossing) and Kemi.  

Finland  has  a  strong  industrial  base  for 
sustainable  aviation  fuel  (SAF)  production 
and  offtake.  It  focuses  both  on  existing  bioSAF 
(biological  origin)  facilities  as  well  as  emerging 
eSAF projects (hydrogen based), but these projects 
have  failed  to  reach  final  investment  decision. 
Targeted  investment  support  is  needed  to  kick 
start  commercial-scale  eSAF  deployment  and 
ramp-up of bioSAF in Finland. Making use of pilot 
investment  structures 
(such  as  double-sided 
auctions)  through  the  EU’s  e-SAF  Early  Movers 
Coalition  could  help  secure  and  de-risk  Finland’s 
projects. 

(442) TENtec Information System, according to Reg. 2024/1679. 

Coordinator Matthias Ruete. 

(443) Based on ERTMS – Third work plan of the European 

122 

 
 
 
 
 
 
Table A19.1:ERTMS deployment in Finland. 

Source: Based on ERTMS – Third work plan of the European Coordinator Matthias Ruete. 

Map A19.1:  TEN-T Cross-Border & National Priority Sections in Finland. 

123