Finland

Recovery remains gradual amid external uncertainties

Building on the trend from 2026, Finland's economy is expected to strengthen modestly throughout 2027 following a prolonged period of weak growth. Domestic demand is gradually recovering as inflation eases, real incomes improve and consumer confidence begins to stabilise. Household spending is expected to contribute more positively to growth after a period of subdued consumption, while public investment in infrastructure, defence and the green transition will provide additional support. Nevertheless, the recovery is likely to remain moderate, reflecting still-cautious consumers, a weak housing market and subdued business confidence. Growth is expected to accelerate in 2027 as financing conditions become more favourable and investment activity improves.

External risks continue to weigh on the outlook. Finland's highly open economy remains exposed to weaker demand from key European trading partners, geopolitical tensions and volatility in energy markets. While recent increases in energy prices have added to inflationary pressures, Finland is better insulated than many European economies thanks to its largely fossil-free electricity production, which reduces its dependence on imported energy. Investment in areas such as clean energy, data centres and advanced manufacturing should provide longer-term growth opportunities, helping to offset some of the challenges facing traditional export sectors.

Corporate insolvencies are expected to remain elevated as businesses continue to face weak demand, high labour costs and tight financing conditions. Export-oriented industries, including forestry products, chemicals, metals and manufacturing, remain vulnerable to slower global growth and trade disruption. However, gradually improving domestic demand should help limit a broader deterioration in corporate performance over the forecast period.

Rising public debt remains a key challenge

Public finances continue to be one of Finland's main economic vulnerabilities. Government deficits are expected to persist through 2027 as spending pressures from an ageing population, higher defence commitments and the welfare system continue to outpace revenue growth. Although the government has introduced measures aimed at controlling expenditure and improving labour market participation, public debt is projected to continue rising and remain well above European fiscal benchmarks. Fiscal consolidation is therefore expected to remain a policy priority over the coming years.

Finland's external position is expected to weaken somewhat over 2027, with the current account moving back into a wider deficit after recording a modest surplus in 2025. Stronger domestic demand, rising imports linked to defence procurement and infrastructure investment, and still-subdued external demand are likely to outweigh gains in exports. Nevertheless, the deterioration is not expected to reach the levels seen in the years immediately following the pandemic, when high energy costs and weaker competitiveness weighed heavily on the external balance. As global demand gradually recovers, export growth in technology, industrial goods and green-transition sectors should provide some support, helping to contain the deficit and maintain an overall resilient external position.

Government balances fiscal reform, defence and growth

Prime Minister Petteri Orpo's centre-right coalition government, comprising the National Coalition Party, the Finns Party, the Swedish People's Party and the Christian Democrats, remains focused on improving Finland's long-term growth prospects while restoring fiscal sustainability. Alongside labour market reforms and measures to boost productivity, the government has introduced a series of tax reductions, including lower income taxes and a reduction in the corporate tax burden, aimed at strengthening competitiveness, supporting investment and encouraging employment.

At the same time, the government has pursued a stricter immigration agenda, tightening requirements for residence permits, family reunification and access to permanent residency while seeking to prioritise labour migration that addresses skills shortages. These policies reflect the growing political focus on migration and integration, particularly among parties within the governing coalition.

However, it is the government's fiscal consolidation programme that has proven most controversial. Spending cuts to welfare programmes, social benefits and public services have faced significant public opposition and contributed to a decline in support for the coalition in recent opinion polls. As a result, the Social Democratic Party has regained a lead in the polls ahead of the next parliamentary election, which is scheduled for spring 2027. While political debate is expected to intensify in the run-up to the election, broad consensus remains around the need to strengthen Finland's competitiveness, increase defence spending and improve the economy's long-term growth potential.

Payment

Bills of exchange are not commonly used in Finland because they signal the supplier’s distrust of the buyer. A bill of exchange primarily substantiates a claim and constitutes a valid acknowledgment of debt.

Cheques, also little used in domestic and international transactions, only constitute acknowledgement of debt. However, cheques that are uncovered at the time of issue can result in the issuers being liable to criminal penalties. Moreover, as cheque collection takes a particularly long time in Finland (20 days for domestic cheques or cheques drawn in European and Mediterranean coastal countries; 70 days for cheques drawn outside Europe), this payment method is not recommended.

Conversely, SWIFT bank transfers are increasingly used to settle domestic and international commercial transactions. When using this instrument, sellers are advised to provide full and accurate bank details to facilitate timely payment, while it should not be forgotten that the transfer payment order will ultimately depend on the buyer’s good faith. Banks in Finland have adopted the SEPA standards for euro-denominated payments.

Debt Collection

Amicable phase

The goal of the amicable phase is to reach a voluntary settlement between the creditor and debtor without beginning legal proceedings. Finnish legislation obliges creditors to begin the amicable phase amicable phase via letters, followed up as necessary with a final demand for payment by recorded delivery or ordinary mail. This demand for payment asks the debtor to pay the outstanding principal increased by past-due interest as stipulated in the contract.

In the absence of an interest rate clause in the agreement, interest automatically accrues from the due date of the unpaid invoice at a rate equal to the central bank of Finland’s (Suomen Pankki) six-monthly rate, calculated by reference to the European Central Bank’s refinancing rate, plus seven percentage points.

The Interest Act (Korkolaki) already required debtors to pay up within contractually agreed timeframes or become liable to interest penalties.

Since 2004, the ordinary statute of limitations for Finnish contract law is three years.

Legal proceedings

Fast-track proceedings

For clear and uncontested claims, creditors may use the fast-track procedure, resulting in an injunction to pay (suppea haastehakemus). This is a simple written procedure based on submission of whatever documents substantiate the claim (invoices, bills of exchange, acknowledgement of debt, etc.). The court sets a time limit of approximately two weeks to permit the defendant to either respond to or oppose the petition. In addition, this fast track procedure can also be initiated electronically for cases of undisputed claims. The presence of a lawyer, although commonplace, is not required for this type of action.

Ordinary proceedings

Ordinary legal action usually commences when amicable collection has failed. A written application for summons must be addressed to the registry of the District Court, which then serves the debtor with a Writ of Summons. The debtor is given approximately two weeks to file a defence.

During the preliminary hearing, the court bases its deliberations on the parties’ written submissions and supporting documentation. The court then convokes the litigants to hear their arguments and decide on the relevance of the evidence. During this preliminary phase, and with the judge’s assistance, it is possible for the litigants to resolve their dispute via mediation and subsequently protect their business relationship.

Where the dispute remains unresolved after this preliminary hearing, plenary proceedings are held before the court of first instance (Käräjäoikeus) comprising between one and three presiding judges, depending on the case’s complexity. During this hearing, the judge examines the submitted evidence and hears the parties’ witnesses. The litigants then state their final claims, before the judge delivers the ruling, generally within 14 days.

The losing party is liable for all or part of the legal costs (depending on the judgement) incurred by the winning party. The average time required for obtaining a writ of execution is about 12 months. Undisputed claims in Finland can normally last from three to six months. Disputed claims and the subsequent legal proceedings can take up to a year.

Commercial cases are generally heard by civil courts, although a Market Court (Markkinaoikeus) located in Helsinki has been in operation as a single entity since 2002, following a merger of the Competition Council and the former Market Court.

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Enforcement of a Legal Decision

A judgment is enforceable for fifteen years as soon as it becomes final. If the debtor fails to comply with the judgment, the creditor may have it enforced by a bailiff, who will try to obtain an instalment agreement with the debtor, or enforce it through a seizure of assets.

For foreign awards, since Finland is part of the EU, it has adopted enforcement mechanisms applicable to court decisions issued by other EU members, such as the EU Payment Order and the European Enforcement Order. For judgments issued by non-EU members, the issuing country must be part of a bilateral or multilateral agreement with Finland.

Insolvency Proceedings

OUT-OF-COURT PROCEEDINGS

Finnish law provides no specific rules for out-of-court settlements. Negotiations between creditors and debtors are made informally. If an agreement is reached, it must still be validated by the court.

RESTRUCTURING PROCEEDINGS

The goal of restructuring is to allow an insolvent company to remain operational through administration, with the view that if the company is able to continue its business, it will be able to repay a larger part of its debts than would have been possible in the case of bankruptcy of the company. The commencement of these proceedings triggers an automatic moratorium, providing the company with protection from its creditors.

The board of directors maintains its power of decision but the receiver is entitled to control certain aspects of the company’s operations, including the creation of new debts and overseeing transfers of ownership.

LIQUIDATION

When debtors are unable to pay their debts when due and this inability is not temporary, they are placed into liquidation. Upon acceptance of a liquidation petition by the court, the debtor is declared bankrupt. A receiver is appointed, and a time limit is established for any creditors to present their claims. The receiver then establishes a proposed distribution scheme, whilst creditors supervise the selling of the estate and the distribution of the sales’ proceeds.

Last updated: July 2025