The EU Mercies Finland’s Government Debt Limit Breach

(FINNBAY) – Brussels, 3 June 2014. The EU Commission published a report analysing the reasons for a planned and forecast breach of the Treaty reference value for public debt (60% of GDP) in the case of Finland. It has concluded that the planned breach is explained by Finland’s support to the mechanisms set up to safeguard financial stability in the euro area. As such, the debt criterion is fulfilled and an EDP should therefore not be opened.

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As set out in Article 126(3) of the Treaty, the Commission has prepared a report to comprehensively assess the excess of Finland’s government debt over the 60% of GDP Treaty reference value, and to conclude whether the breach of the debt criterion merits the launch of an EDP for Finland.

The general government gross debt ratio in Finland has increased rapidly over recent years, growing from 48.7% of GDP in 2010 to 57.0% in 2013. According to Finland’s Stability Programme, general government gross debt is expected to reach 61.0% of GDP by the end of 2015 and to increase further in 2016. The risk of breaching the reference value is confirmed by the Commission 2014 Spring Forecast, which projects gross debt at 61.2% of GDP in 2015.

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According to the Commission’s assessment, though, the planned breach is explained by Finland’s support to the mechanisms set up to safeguard financial stability in the euro area. Overall, therefore, the analysis presented in the report suggests that the debt criterion of the Treaty is fulfilled.

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