Credit ratings agency Fitch downgraded Finland's long-term sovereign credit rating on Friday from AA+ to AA — the country's lowest level in nearly three decades — citing high and rising public debt, persistent budget deficits, and insufficient fiscal consolidation efforts.
Despite the downgrade, Fitch maintained Finland's economic outlook as "stable".
In its statement, the agency warned that government measures already in place are unlikely to stabilise the debt-to-GDP ratio over the medium term. It cited rising costs linked to an ageing population, growing social spending, and increased defence expenditures as key drivers of fiscal pressure.
Fitch also expressed scepticism over the scope and timing of new consolidation plans. The agency pointed to a proposed legal framework by the current government that would aim to reduce the debt ratio by one percentage point per year — but noted the legislation would not come into effect until the next decade.
"The proposal's effectiveness and political feasibility are uncertain," the agency wrote.
Finland last held an AA rating from Fitch in 1996. The country was rated AA+ from 2016 until Friday's downgrade.
Government responds: "A serious signal"
Prime Minister Petteri Orpo (NCP) described the downgrade as "a serious signal" and said the government will consider additional fiscal measures during its upcoming budget talks.
"The decision was not unexpected," Orpo wrote on X (formerly Twitter). "The government has worked hard to improve the situation, but economic growth and cyclical conditions have been weaker than forecast."
Finance Minister Riikka Purra (Finns) echoed Orpo's concerns, saying the downgrade did not come as a surprise. She acknowledged that Finland is on a "concerning path" and that the government's efforts so far have not been enough to reverse the country's deteriorating public finances.
"We cannot afford to wait," Purra said in a statement. "Further adjustment measures are needed, and they must continue over several government terms in order to bring the debt ratio down."
