Peetu Keskinen

EU fiscal rules calculator

How much does Finland have to tighten its budget to meet the EU fiscal rules? That depends on the assumptions you make. Change them below.

A personal project, not an official calculation.

Info

EU countries agree a plan with the Commission that caps how fast public spending may grow. The cap has to be tight enough to put debt on a falling path. Working out how tight means projecting the debt ratio under a set of scenarios and asking how much the budget must improve each year for debt to fall and keep falling. That yearly improvement is the number at the top of this page.

Several criteria apply at once and the strictest one decides. The bars under the chart show what each would ask for on its own, and the spending cap under them is the same answer in the form a plan actually promises.

The criteria, one by one

Debt sustainability analysis: projections of the debt ratio

  • Four scenarios. Debt keeps falling for ten years after the plan under each of them: the plan as written (the Commission's baseline); weaker discipline later (lower SPB); higher rates, lower growth (adverse r−g); and market stress (financial stress).
  • Simulations. Five years after the plan, debt has to be lower than at its end in 70% of 1,000 simulations (the stochastic analysis).

Safeguards: minimums that apply whatever the projections say

  • Debt safeguard. Debt falls during the plan itself: by 0.5 points of GDP a year on average when debt is between 60% and 90% of GDP, and 1 point when it is above 90%. For Finland this is usually the strictest of the lot (the debt sustainability safeguard).
  • 3% deficit rule. If last year's deficit was above 3% of GDP, this year's improvement must be at least 0.5 points (the deficit benchmark).
  • Deficit resilience. Until the structural deficit is below 1.5% of GDP, each year must improve by at least 0.4 points, or 0.25 under a seven-year plan (the deficit resilience safeguard).
Words used here
Adjustment
How much the budget improves in a year, in points of GDP. Spending cuts, tax rises or both — the rules do not say which.
Point of GDP
One percent of the economy. For Finland in 2025 that is about €2.9 billion.
Primary balance
The budget balance before interest payments. "Structural" means with the ups and downs of the economy taken out, so what is left is what policy chose. The headline number is an improvement in the structural primary balance.
Net expenditure
Spending before interest and after any new taxes — the thing the rules actually cap. Shown under "Spending cap", below the bars.
Output gap
How far the economy is running above or below what it could sustain. A negative gap is a slack economy. The Economic cycle slider moves the 2025 gap.
Potential growth
How fast the economy can grow without overheating. Different from a good year: see the two sliders.
Fiscal multiplier
How much output is lost in the short run for each point of GDP the budget tightens.
Interest rate minus growth
Written r − g. When debt costs less than the economy grows, the debt ratio falls by itself; when it costs more, it snowballs.
Scenario
One fixed story about the future that the projection is run under. Four of them count: the plan as written; weaker discipline later; higher rates, lower growth; and market stress. Switch on "Show the adverse scenarios" to draw the other three on the chart.
The simulations
1,000 runs of the projection, drawn from how Finland's growth, budget and interest rates have actually moved in the past. The Commission calls this the stochastic analysis; the shaded fan on the chart is those runs. Distinct from the four scenarios, which are fixed stories rather than random draws.
Safeguard
A minimum that applies whatever the projections say. There are three: the debt safeguard, the 3% deficit rule and deficit resilience.
Stock-flow adjustment
Changes in debt that do not pass through the deficit, such as lending or share purchases. It has been adding to Finnish debt, which is a large part of why the required adjustment is as big as it is.
Where the numbers come from

The Commission's 2024 guidance for Finland (European Commission prior guidance, 2024), with the plan starting in 2025. The method follows the Commission's Debt Sustainability Monitor.

Euro amounts start from Finland's 2023 GDP of €273 billion (Eurostat) and grow with the projection, so they move when you change growth or inflation.

At the settings it ships with, this page reproduces the figures published in the National Audit Office's monitoring report: 0.76 points a year over seven years, about 0.3 without the debt safeguard, and a spending cap near 1.5%.

Sources and code
Worth knowing
  • A personal project, not an official calculation, and not the position of any institution.
  • Changing a control does not load a new forecast. It shows what the rules would ask for if that one assumption were different and everything else stayed put.
  • The fiscal multiplier and the inflation path are assumptions rather than measurements. The 2024 monitoring report argued both deserve more work, which is why they can be moved here.
  • Interest rates move the projection slowly. In the data only 3.2–3.8% of long-term debt matures each year, and only debt that matures is refinanced at new rates.
  • The simulations use one fixed set of 1,000 draws, so everyone sees the same fan and reloading changes nothing.
  • The chart stops five years after the plan, the last year that can decide any of the rules. The projection itself runs ten years past the plan.

Required annual adjustment The budget has to improve by this much every year of the plan, counted before interest costs and with the ups and downs of the economy taken out. It can come from spending cuts, tax rises, or both — the rules do not say which.

—

points of GDP a year

= baseline

Binding criterion: —

Debt 2031
—
Debt 2041
—
The chart stops five years after the plan: the last year that can decide any of the criteria, and where the simulated fan ends. The projection itself runs ten years past the plan, and this is the figure at its end.

Change a setting and a grey line shows the Commission's own settings.

Everything starts at the European Commission's own settings for Finland. A dot marks anything you change, and the mark under a slider is the Commission's value.

Try These combine — switch on as many as you like.

Plan length Seven years is allowed in return for reforms and investment. Finland's plan is seven.

Economy

Debt at the end of 2023; the Commission uses 75.8%. Also decides which safeguard applies: 0.5 or 1 point a year. 75.8% of GDP
Market rates from 2026 on, as a change from the Commission's forecast. Only debt that matures reprices, so the interest bill moves slowly. 0.0 points
Adds this many points to inflation (the GDP deflator) every year from 2025, on top of the Commission’s path, and the same to market interest rates from 2026. The gain comes only from old debt keeping its lower rates. The spending cap rises with inflation. If rates would not react, lower the interest-rate slider too. 0.0 points
Adds this many points to potential growth every year from 2025, on top of the Commission’s path. Real GDP growth moves with it one for one, while inflation and interest rates stay as they are. The output gap is unchanged, so this is a permanently stronger or weaker economy — not a good year, which is the slider below. 0.0 points

How much better or worse the economy is doing in 2025 than the Commission assumed. The gap closes on the Commission's own schedule and is gone three years after the plan ends, so this is a good year or a bad one — not a permanently different economy, which is the slider above. 0.0 points

How much output is lost in the short run for each point of GDP the budget tightens: at 0.75, a one-point tightening costs about 0.75% of GDP that year. The loss fades as the output gap closes, so a higher multiplier raises the tightening the rules demand but leaves output in the long run unchanged. The Commission uses 0.75. 0.75

Criteria used In practice, every criterion has to be satisfied at the same time, and the strictest one sets the required consolidation.

Method and chart options

What each criterion asks for What each criterion would ask for on its own. The longest bar sets the headline. Hollow bars are floors that only bite in some years; a striped bar is one that even 2.00 a year cannot meet.

Spending cap — what the plan promises A plan does not promise the adjustment above but a cap on how fast net spending may grow: spending before interest, after any new taxes. Same requirement, different unit, and it is what the Commission checks.

The economy's trend growth
—
Minus the tightening
—
Spending cap
—

Year by year
What each plan year needs. The euro column is the level reached, not that year’s measures.
Year Tightening, points of GDP Budget tighter by, € bn a year Spending cap, % Debt, % of GDP What sets it

Structural primary balance at the end of the plan: — of GDP.