”Watchdog Category” For Finland In 2026#

Finance Minister Riikka Purra strongly predicts that Finland will be placed in the EU’s “watchdog category” right at the beginning of the year due to its large government debt. The government’s parliamentary debt brake proposal was discussed in Parliament.

“There is reason to be prepared for the possibility that Finland will be subject to the excessive deficit procedure at the beginning of the year. This seems completely clear based on the figures. Defense spending does not explain our current deficit, but rather the weak development of the revenue base in relation to other growing expenditures, such as rapidly growing social and health care spending and income transfers in the state transfer economy,” Purra said in Parliament on Tuesday.

”We Have Built Too Big A Welfare State”#

Purra, who believes that Finland needs a lot more economic balancing, had an explanation for the situation.

“The big picture, in all its simplicity, unfortunately, is that over the decades we have built too big a welfare state, whose spending needs were scaled to the boom years of the Nokia cluster. That boom, dear listeners, was a mirage, and there is simply not enough money for the increased and increased benefits, rights and subsidies — especially with these security and defense needs and such demographic development.”

The state alone will soon have a debt of 200 billion euros, and on top of that will come the debts of welfare areas and the debts of municipalities, Purra listed.

“We can no longer imagine in this country adjusting public finances with frivolous growth hopes.”

Purra also brought up Finland’s credit rating, which has been slowly falling.

“The risk premium paid on debt has increased over the years. The state alone will soon spend four billion euros a year on interest. The equation is unbearable.”

Purra also warned that “the position of a small member state with excessive debt in the euro area is fragile and its fate is hard.”

In the parliamentary debate, many agreed on the serious economic situation.

Purra’s Attitude Surprises The SDP#

However, Pia Viitanen of the opposition party SDP wondered about Purra’s attitude.

“What caught my attention, Minister, was that you used the word that there should be no more talk of growth. I am very surprised by this, because it is precisely with growth that Finland will rise out of this swamp. Perhaps this very attitude explains and is the reason why the government has practically lacked almost all growth measures. And what has followed from that, if politics is just a policy of cuts? Unemployment has increased, debt has increased, bankruptcies have increased, and poverty has increased. Of course, we are not building the future with this approach,” Viitanen said.

“The final seal for the government,” says Kaikkonen.

Antti Kaikkonen, the chairman of the opposition Centre Party, accuses in his press release that “Finland will become more indebted than ever under the current government,” even though the main government parties, the National Coalition Party and the Finns Party, promised to end the indebtedness.

“Ending up in the Brussels “watchdog” would be the final seal on the government’s failure. It would mean that government policy would be shipwrecked,” Kaikkonen interprets.

Kaikkonen believes that jobs will mainly come from small and medium-sized enterprises, if they come at all, and improving the purchasing power of middle-income earners would in turn help to get the wheels of the economy turning. Therefore, the operating conditions of SMEs and the purchasing power of middle-income earners should be improved.

Source: Kauppalehti (in Finnish)