Although Finland’s economic recovery will gather pace in the coming years, the general government deficit will steadily increase while unemployment will remain stubbornly high.
Finland’s Ministry of Finance is not renowned for sprinkling its economic forecasts with quotes from playwrights, but the decision to do so in its latest report suggests a lightening of the mood among civil servants about Finland’s economic prospects.
The ministry’s report begins with a quote from the Finnish adaptation of a play by Irish playwright and poet Samuel Beckett.
“We expected him to come tomorrow, but he already came yesterday.”
The “him” referred to in the report is economic growth, as the ministry’s revised figures for 2024 and 2025 reveal that the Finnish economy fared better than previously thought — growing at a rate of about one percent per year.
The ministry therefore notes that Finland is already on the path to economic recovery, adding that it expects this trend to continue upwards in the coming years.
This year, the ministry forecasts Finland’s gross domestic product (GDP) to increase by 1.6 percent and next year by 1.8 percent.
“It would seem that the brake that prevented demand and output growing last year has lost some of its effect, and the prerequisites for genuine economic growth are now in place,” the ministry’s Director General Mikko Spolander noted.
In addition to the more positive outlook, the ministry’s report was prepared in mid-August and therefore does not take into account the potential impact of tech giant Google’s 13 billion euro investment in Finland, announced at the start of this month.
Debt will continue to grow
However, while the ministry’s outlook for economic growth seems rosy, the forecast for Finland’s general government finances remains grim.
“The upturn in general government finances is expected to remain weak because the economic recovery will be insufficient to correct the structural imbalance in general government finances,” Spolander said.
This means the general government deficit will reach 4.2 percent of GDP this year, according to the ministry’s figures, climb to 4.5 percent in 2027 and remain at that level for the remainder of the decade.
Meanwhile Finland’s debt-to-GDP ratio (meaning a country’s total public debt compared to its annual economic output) is expected to rise above 90 percent this year before spiralling to nearly 98 percent by 2030.
According to EU rules, a member state’s debt-to-GDP ratio should be 60 percent of GDP at most, and the general government deficit should remain at or below 3 percent. According to the ministry’s outlook, Finland looks set to continue to break these rules for the foreseeable future.
The European Commission has previously suggested taking disciplinary steps against Finland over its excessive state deficit.
Unemployment to remain stubbornly high
The ministry also notes that Finland’s unemployment rate “is now higher than at any point during the first two decades of this century”, with any improvement in the situation expected to be slow.
Unemployment is expected to reach 10.3 percent this year, the report states, before the rate falls below 10 percent in 2027.
“More rapid output growth is expected to put employment growth on an upward trajectory by the end of the year. However, the employment forecast has not been revised to the same extent as the GDP forecast, as the updated forecasts concern work productivity rather than labour input,” the report notes.
There was some much-needed good news for Finland’s beleaguered jobs market last month, when the number of open vacancies being advertised by potential employers rose on a quarterly basis for the first time since 2022.
However, the Ministry of Economic Affairs and Employment’s assessment, published in May, suggests a slow and protracted recovery for the Finnish jobs market.
