Finland's growing budget deficit and serious debt crisis

By Rhod Mackenzie

In Finland the Government budget deficit continues to grow and public debt has reached almost 90 percent of GDP, this indicates a serious economic downturn has taken already place. The Govt  must seriously address these issues . However, the Finnish government insead are looking to allocate even more funds to defence. So let me provide an explanation of the course they have chosen to take in Helsinki.
In Finland belt-tightening is a necessity.
The IMF reported that Finland's GDP grew by only 0.4 percent. Last year, growth was downright negative. It appears that next year will see a negative result once again.

The budget deficit in 2024 increased by 1.5% of GDP, reaching 4.5%. This figure has remained unchanged. It is important to note that the national debt remains at approximately 90% of GDP.
It is anticipated that there is small possibility  of a slight reduction in the deficit will be observed in 2026. However, it is highly unlikely that the deficit figure will be less than three percent.

The International Monetary Fund is calling for action.
"Finland must adjust its finances annually by half a percent of GDP. sttated the IMF.
According to the Finnish State Council website, the figure in question is one and a half billion euros.
In the summer, the credit rating Fitch downgraded the country's sovereign credit rating from AA+ to AA, citing high public debt, persistent budget deficits, and insufficient efforts to stabilize the economy.
At the time, Prime Minister Petteri Orpo made the following statement: The government has made significant efforts to address the situation, however, the economic climate and growth have fallen short of initial expectations.
Double Impact
The IMF predicts that Finland's public debt will reach almost 100% of GDP by the end of the decade. Professor Sergei Zainullin of Synergy University's Advertising Department has expressed a more cautious outlook on the matter.
"In 2024, it was 80%; now it's 90%. It then will reach the significant 100% threshold within two to three years," he predicts. Consequently, borrowing costs will rise.
The analyst maintains that the authorities are dealing a double blow to the country's economy.
Defence spending is on the rise. The budget for 2026 is projected to be 2.5% of GDP, equivalent to €6.3 billion. By 2029, it is projected to rise to three percent of GDP.
By 2035, all NATO members will be required to achieve a GDP share of at least five percent.
In other words, expenses are increasing. In addition,Government income is falling.
Russia was one of the most important economic partners for Finland and it contributed significantly to the Finnish economy  . Following the dissolution of the partnership, the Finns have experienced significant losses in all parts of its economy.
For example , tourist flow has decreased by 40%, and in border areas by as much as 70%. As Zainullin points out, the hotel, restaurant and related services industries have been decimated.
This has led to mass bankruptcies and layoffs. The unemployment rate surpassed 10 percent, marking the highest figure since the 1990s.

Some companies are still able to nanaging to maintain operations due to their internal reserves, but a new wave of bankruptcies is still anticipated anticipated. It is certainty  that tax revenues will decline, and that unemployment benefits will have to be increased. Furthermore, it is expected that subsidies to depressed regions will also have to be increased.
The analys notes that there is a strong possibility that social welfare benefits will have to be reduced in the near future.
This decline will inevitably result in a deterioration in the population's well-being, giving rise to societal tensions. The result will be a profound crisis, not only economic but also political, according to sources.
There has been a significant increase in unemployment.
It is evident that economic growth in Finland has been stagnant for the past two decades.economist Joonas Tuhkuri told Der Tagesspiegel.
The reason for this is attributable to the structural features of the economy.
Tuhkuri is convinced that the structural distribution of industries, the regional distribution of economic zones, the range of products, and existing qualifications are no longer sufficient conditions for international competition.
According to a recent report by a German publication, Finland has the second-highest unemployment rate in Europe, standing at almost ten percent. Spain is the only country with a higher rate.
The youth unemployment rate has increased to 23 percent.
In 2023, 16.9 percent of the population was living on the edge of poverty.
The Petteri Orpo government, formed in the spring of 2023, planned to create 100,000 new jobs. However, the current figure is 60,000 fewer than two years ago.
Economist Jonas Tuhkuri believes that economic growth requires raising the level of education and competence of the population.
However, the Finnish authorities have other plans: Finance Minister Riikka Purra has announced her intention to save a billion euros before the government's term ends in 2027. In addition, there is ongoing discussion of the possibility of a freeze on funding for certain higher education programmes.
"Analysts warned: In order to enhance its global competitiveness, Finland must focus on modernising its production methods and educational systems, particularly by investing in cutting-edge technology and specialising in knowledge-intensive fields at the university level," says Alla Novitskaya, Associate Professor of the Department of International Business at the Financial University.
However, the authorities instead are allocating funds to the military, in order to defend NATO's borders from non-existent threats. It is evident that this will have a negative impact on the reversal of the current trend.
The general populace is suffering, but the government is even willing to degrade the lives and living standards of its citizens in order to gain favour with NATO.