EU to warn Finland over budget deficits - media

May 12, 2015 6:13 PM

HELSINKI, May 12 (Reuters) - The European Commission will issue a warning for Finland over its budget deficit and public debt that are seen breaching the EU limits, Finnish public broadcaster YLE and Helsingin Sanomat daily reported on Tuesday.

According to YLE citing unnamed sources, Finland will be the only member state to get such a warning from the EU on Wednesday. Finnish government officials were not immediately available for comment.

The EU Commission forecast earlier this month that Finland's general budget deficit would remain above 3 percent of GDP and general government debt exceed 60 percent through 2016.

The Finnish economy is yet to return to its 2008 output levels following the downfall of Nokia's phone business and a slowdown in key export markets, Europe and Russia.

According to YLE, the Commission will first ask the government how it aims to improve public finances.

If the answers are unsatisfactory, the Commission will start an excessive deficit procedure, under which it would propose policy measures and oversee their implementation.

Finland had a general election last month and is yet to form a new government.

Outgoing prime minister Alexander Stubb, whose centre-right party should remain in the next coalition, told YLE that such a warning would increase pressure to outline prompt spending cuts in the talks on forming a new government.

"It would be a very serious message. At the moment, we have no economic growth, the employment situation is weak and we have the budget deficit," he said.

Centre Party leader Juha Sipila, the likely next prime minister, has said the government should prepare cuts of 10 billion euros in the short and long term to curb debt growth as the population ages.

The Commission forecast the Finnish economy would grow by only 0.3 percent this year, which was the second-worst projection in the EU after Cyprus.

In March, the EU gave France two more years to cut its deficit in its third extension in six years. (Reporting by Jussi Rosendahl; Editing by Tom Heneghan)