Finland's fiscal deficit grows due to reduced Russian trade and increased spending

Finland faces a significant fiscal deficit, exceeding EU limits, due to increased defense spending and reduced trade with Russia following the Ukraine war. The European Commission has formally placed Finland under its Excessive Deficit Procedure, warning of potential financial sanctions and stricter fiscal oversight. The deficit is projected to reach 4.5% of GDP in 2025, with public debt nearing 90%. The nation's economic challenges are compounded by a decline in bilateral trade with Russia, a shift away from Russian energy imports, and rising social welfare costs, impacting its traditionally strong fiscal discipline.