By Katherine Hamilton

Fitch Ratings downgraded Finland due to its rising government debt and lack of fiscal consolidation.

Fitch on Friday lowered Finland's long-term foreign-currency issuer default rating to AA from AA+.

The Scandinavian country's debt ratio is expected to reach 86.3% of GDP this year, up four percentage points from 2024 and well over the median 49.4% for AA-rated countries, Fitch said. Finland's consolidation packages, which were aimed at stabilizing the debt trajectory by 2027, are insufficient against the high level of government spending, Fitch said.

Fitch predicts Finland's government deficit will remain above the AA-rated median percentage and narrow only slightly this year. It doesn't anticipate that Finland will enact any large fiscal consolidation measures before its 2027 elections.

Finland's growth has been among the weakest in the European Union, with GDP roughly flat from 2019 levels compared with a 5% average for the continent, Fitch said. Growth will likely make a small recovery over the next two years, Fitch said, but the country's aging population, weak productivity and potential threat from U.S. tariffs all pose risks.

Write to Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

July 25, 2025 17:32 ET (21:32 GMT)

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