Finland facing EU warning over deficit

(iStock)
(iStock)
The European Commission is set to warn Finland to rein in its state budget deficit and government debt after they breached limits laid out in the EU’s budget surveillance mechanism.

The commission is to ask Finland to explain why state finances have deteriorated–with penalties to follow if they don’t turn around.

Finland is to be asked for an explanation of its state budget deficit and growing government debt. The Commission is scheduled to decide at a meeting on Wednesday how it will react to Finland’s worsening public finances.

The commission published economic forecasts last week showing that the deficit, which is predicted to remain above the stipulated limit of 3 percent, and the state debt, which will grow past 60 percent of GDP this year, are causes for concern.

The next steps

Last year Finland’s budget deficit was 3.2 percent of GDP, and it is set to rise to 3.3 percent this year. The public debt is forecast to hit 62.6 percent this year and 64.8 percent the following year. According to information received by Yle, the Commission is set to issue a warning over the breach of fiscal criteria, which would in turn force the government to tighten spending plans.

The government will then have several weeks to produce an explanation of the economic figures and explain how Finland will address the problem. If the Commission is not satisfied with the government’s plans, Finland would then be placed in the “excessive deficit procedure”, with the Commission recommending measures to turn around the public finances.

If that doesn’t work, then Finland could face financial penalties.

According to Yle’s information, Finland is the only country facing censure at this meeting of the Commission. Some countries are set to leave the excessive deficit procedure thanks to improved economic figures.

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