Under euro rules, the 19 eurozone countries must keep their budget deficits at or below 3% of annual GDP and debt may not exceed 60% of GDP. While seven countries received an admonishment that budget drafts might not comply with the rules governing the single currency, Finland was one of a shorter list where "the planned fiscal adjustments fall short, or risk doing so, of what is required."
Serious, but expected
Finland's Finance Minister Petteri Orpo reacted to the warning by saying that while the message heard is a serious one, it was to be expected.
"This did not surprise us. We've already been involved in this process with the Commission for a few weeks already. While the Commission did not ask us for a new draft budget, the situation continues to be worrying," said Orpo.
The Commission's judgment is, however, conditional. Finland can still avoid sanctions by pointing to the structural reforms that are being implemented.
This, according to Orpo, may require even more strict adherence to savings measures and efforts to boost employment. He added that carrying out reforms in the economy to create jobs is crucial. If the economy and employment do not improve in time for the Commission's next interim review in April, the government will have to impose further austerity measures.
Finland has several times come close to being subject to EU excessive debt procedures. Last spring the EU Commission decided that even though Finland had exceeded the 60% limit of debt to GDP, it was still in overall compliance with the Stability and Growth Pact.
Prime Minister Juha Sipilä stated in September 2015 that becoming subject to excessive deficit procedures would in practice mean that decision-making power concerning budget cuts would shift to the EU Commission.