Finland Eyes Smaller Fiscal Deficit in 2026

Finland’s centre-right coalition has agreed on a fiscal plan for 2026, forecasting a smaller budget deficit while continuing to support economic growth, the government said late Tuesday, as reported by Reuters. The budget deficit is projected to decline to €8.7 billion next year, partly due to a drop in transfers to Finland’s National Housing Fund, which is set to fall to €2.3 billion from €13.2 billion in 2025. Adjusted for the housing fund transfer, the 2026 deficit would stand at €11.0 billion, the government added. In office since 2023, the government has pledged to cut public spending to stabilize the national debt ratio and avoid European Union disciplinary measures. The Finnish central bank has noted that the country’s recovery from recession remains slow and difficult, with the finance ministry forecasting just 1% GDP growth in 2025. Public spending in 2026 is expected to rise slightly to €90.3 billion, up from €90.1 billion projected for this year.