Finland's 2027 Budget Sees Deficit Widen to €12.4 Billion

Finland's ruling right-wing coalition has approved a 2027 budget that projects a government deficit of €12.4 billion, a significant increase from the €8.7 billion initially planned for 2026. The announcement comes as the government prepares for its final budget before the April 2027 parliamentary elections.

The 2026 deficit estimate has since been revised upward to €13.4 billion following supplementary budgets. The original 2026 figure had included a one-off €2.3 billion transfer from Finland's National Housing Fund, which is not repeated in the new projections.

Total spending for 2027 is set at €92.5 billion, compared to the €90.3 billion originally budgeted for 2026. Current-year spending has also risen to €91.7 billion after adjustments.

Prime Minister Petteri Orpo acknowledged the persistent fiscal challenges, stating that Finland's public finances remain seriously out of balance and that achieving sustainability will require efforts in future parliamentary terms as well.

The government, in office since 2023, has pledged to cut public spending to stabilise the country's debt burden and avoid disciplinary measures from the European Union. The EU has already launched proceedings against Finland over its excessive deficit, giving Helsinki until 2028 to comply with the bloc's 3% of GDP limit.

Efforts to improve finances have been hampered by weak economic growth, which has restrained tax revenue, while an aging population and increased defence spending have driven costs higher. Finnish parliamentary groups have agreed on a joint target to reduce the deficit to roughly 3% of GDP between 2027 and 2033.

The Bank of Finland sees a gradual economic recovery, forecasting growth of 0.7% this year and 1.2% in 2027, though expansion is being slowed by conflict in the Middle East.