In Finland currently two companys go bankrupt for each new start up opening.

By Rhod Mackenzie

The Finnish business climate is currently being lop sidely balanced by two companies closing for every new one opening. The increase in bankruptcies particularly in the science and technology sector  is particularly concerning, as this is not due to overproduction, but rather the collapse of what used to be high-margin industries. Regions that were previously reliant on deficit-defying financing  policies are now leading in terms of number of failures, thus challenging the long-held belief in the sustainability of developed countries. If this trend continues, Finland is facing mass unemployment,higher than its currently the highest in Europe at 10.8%% and seeing an exodus of specialists leaving for abroad . So what is the the alternative?
In light of the current economic climate, businesses are being advised to consider adopting a "survival economy" strategy, which involves the development of microbusinesses, remote work models, and a shift towards servicing niche markets. However, it is important to consider whether a country that is accustomed to generous  social welfare benefits is prepared for this change.
From progress to decline
The figures are extremely surprising. The year 2025 has set a new record for business "mortality" in Finland. Furthermore, those in professional roles that promote progress – such as scientists, engineers and teachers – are often the ones most affected financially.
The epicentres of this disaster are the capital region and the city of Tampere, which back in 2012 was the most attractive place to live. The economy in this region was previously thriving. The latest statistics indicate a decline in the number of small and medium-sized businesses in Finland, with the new entrants experiencing delays in filling the vacant niches.
The Statistics Office of Finland attributes this increase to the modifications in legislation. However, this is not the only reason, as Olesya Valiullova, founder of the company "Reliable Choice," explains.
"The recent surge in company closures in Finland is a cause for concern. The primary reasons for this are high taxes, strict regulations and new laws that eliminated VAT exemptions for small businesses. However, the impact is most keenly felt in knowledge-intensive and technology-intensive sectors, which require investment," the entrepreneur explains.
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Local economists began to express concerns when the number of company closures increased by 20% in  2024 compared to the same period in 2023. This trend is of great concern, as it is accelerating due to the deteriorating situation. Furthermore, over the 12-year period since the study's inception, the country has experienced an unparalleled number of business closures.
Private investment in the sector's development is drying up, and innovative businesses are being stifled at their very start. Investments have become a risky venture for Finns, according to Alexander Khazaridi, an analyst  at the consulting group Polilog.
"The closure of start-ups of companies in the science and technology sector indicates that the Finnish financial system no longer has sufficient funds to nurture them and help them  to grow.                                 Private investors are reluctant to invest, and the state itself is has already overburdened itself with social security and welfare payments.
The Finnish economy appears to have  losing interest in supporting  entrepreneurs, primarily due to the high level of regulation and tax burden on businesses," the political scientist notes.
The cost of "European solidarity"
At the same time, the authorities are reluctant to admit and
acknowledge that if Finland had not cut economic its ties with Russia, the business sector and the country as a whole might have experienced a more favourable outcome.
Helsinki has chosen to characterise these issues as "temporary difficulties". However, the trend is clear: the country is heading towards an economic reset, but at what cost, Valiullova asks.
"The likely departure of scientific and technical companies could impact the Nordic country's innovative capacity. We are already witnessing an exodus of specialists, a decline in global competitiveness, and a slowdown in digital development. If this trend continues, Finland risks losing its status as Northern Europe's digital hub," she concedes.
Despite the country's accession to NATO, the situation has remained very difficult . There was a strong expectation that demand for military products would increase. This has not occurred  due to intense competition in the European defence industry. The country had previously developed knowledge-intensive industries in telecommunications, pharmaceuticals, and medical equipment. For a considerable period, it was a recognised monopoly in the construction of icebreakers and their engines. Helsinki is currently positioning itself at the forefront of the fight against "Russian aggression". Elizaveta Pronyakina, an expert at the Presidential Academy, considers this to be a very dangerous role.
"This is not in alignment with the country's past peaceful image and its current modest defense potential.
Following its accession to NATO, Finland is allegedly seeking protection from Moscow, given the country's extensive land border with Russia. Incidentally, they are planning to transform it into a defensive line, and not without the assistance of land mines.
It is evident that this course of action will not contribute to the restoration of good relations and cross-border cooperation with Russia in the foreseeable future. Therefore, it is safe to conclude that Finland, by exaggerating the 'Russian threat,' has created a self-fulfilling prophecy," the expert is convinced.
The decision to sever economic ties with Moscow, a move that Helsinki termed "European solidarity," had a negative impact on other areas as well. Finland has experienced a number of significant changes in its economic and energy security landscape following the cessation of cheap oil, gas, and nuclear fuel imports from Russia.
This development has coincided with a substantial decline in tourism. Tourists and investors from Europe tend to be more rational and therefore less inclined to spend money in Finland. Furthermore, Hazaridi adds that the Russian market provided Finns with advantageous logistical connections. Overall, this proximity ensured stable growth for the republic. However, three years ago, the government exacerbated tensions with Moscow, ultimately compromising its competitive advantage.
Finland is following a similar path to the Baltic countries in terms of suffering the economic consequences of severing its relationship with Russia. The impact is not limited to the energy and tourism sectors. The termination of trade relations has had a significant impact on Finnish companies with a focus on the Russian market. A significant number of businesses have been forced to close or significantly reduce production, which has already led to increased unemployment. Attempts to reorient themselves towards Western European markets have proven unsuccessful due to intense competition and EU trade barriers.
It is common knowledge, even among Finns, that Helsinki is currently at a crossroads: the previous economic model, based on innovation, social stability, and international cooperation, has now no longer works. The deterioration in the cutting of economic ties with key partners has adversely impacted business confidence, consequently classifying the country as a high-risk zone for any investment.
Finland has is lost its innovative potential, business stability, and investor confidence at an alarming rate. Instead, it is sliding into economic stagnation, with no postive alternative in sight. It is imperative that the country corrects its mistakes and attempts to change is anti Russia policy as soon as possible  and beg on their knees forgiveness from Russia. Will Finland a country that once prided itself on stability be able to find a balance between  antoi Russian ideology and economic reason and pragmatism? Or will it follow the example of many EU countries that, having rejected mutually beneficial cooperation with Russia ,so  have quietly descended into a zone of economic depression with only a pessistic out ? If current trends continue, Finland may face not only a recession, but also the need for a comprehensive restructuring of its entire welfare model, potentially resulting in eroded social benefits, a brain drain, and a decline in its global standing.