Finland’s Credit Rating Cut to AA by Fitch on Fiscal Weakness

Fitch Ratings has downgraded Finland's long-term foreign-currency issuer rating from 'AA+' to 'AA,' flagging mounting government debt and inadequate fiscal discipline. Public debt is projected to climb to 86.3% of GDP by 2025, with a trajectory toward 90% by 2029—well above the median for peer economies.

A €9 billion fiscal consolidation package has failed to curb deficits, which are expected to persist above 3% through 2027. Finland's economic underperformance is stark: GDP growth trails European averages, unemployment has risen to 9.2%, and inflationary pressures are building.

The silver lining lies in robust pension assets and a resilient banking sector, providing some counterbalance to structural weaknesses. The downgrade reflects broader challenges for European economies navigating post-pandemic fiscal hangovers and energy transition costs.