Greece Enforces Rules Germany Sidesteps

Greece spent the last euro crisis being lectured on fiscal discipline. Now its finance minister is chairing the room where that discipline is policed. Kyriakos Pierrakakis was elected Eurogroup president in December 2025, the first minister from a former crisis country to hold the job. Around his table, France, Austria and Finland now explain how they plan to bring their deficits back under control.

The reversal is sharp. Greece recorded a +1.7% of GDP budget surplus in 2025, while its debt fell eight percentage points to 146.1% of GDP (Eurostat). Germany, long the stern voice in the eurozone, ran a -3.7% deficit, according to the Commission's Spring 2026 forecast. Finland posted -3.4% in 2025 (Statistics Finland), and the Commission expects that to widen to -4.5% this year.

Both Germany and Finland are over the Maastricht Treaty's 3% deficit ceiling, the limit EU governments set in 1992 as the entry price for sharing a currency. Across the bloc, thirteen member states are now above it, and nine are in the EU's formal correction process, the excessive deficit procedure.

Germany's exemption, Finland's squeeze

Germany's deficit is bigger than Finland's. Germany, however, avoided formal proceedings. Finland was put into them in January 2026.

The reason is not thrift. It is the National Escape Clause, a carve-out that allows countries to subtract up to 1.5 percentage points of GDP in defence spending from their deficit calculations. Fifteen countries activated it. Once Germany's defence bill is stripped out, its adjusted deficit falls to roughly 2.9%, just below the ceiling.

Finland used the same clause, but the arithmetic did not save it. Its deficit is being driven by welfare costs linked to an ageing population and growth of just 0.2% in 2025, rather than mainly by defence. The Bundesbank also warns that even Germany's adjusted deficit will move back above 3% in 2026 and 2027, heading towards 5%. The exemption gives Berlin space. It does not repair the budget.

Cutting benefits to pay for guns

Finland's defence spending is on course to reach €14-15 billion a year by 2029, roughly twice today's level. To make room, the government has cut unemployment benefits, housing allowances and vocational education (SAK). VAT has risen to 25.5%. Long-term homelessness rose 29% last year, the first increase in a decade.

Commissioner Valdis Dombrovskis went to Helsinki and said Finland was taking "effective action" (Finnish Ministry of Finance). In EU fiscal law, that phrase has a narrow meaning: the country is following the spending path prescribed by Brussels. It does not mean the deficit target is being reached.

ETLA, Finland's independent economic research institute, says the country will miss every one of its own fiscal goals: not a 1% deficit by 2027, and not balance by 2031. The OECD and the IMF have reached much the same conclusion. The path is compliant, but the destination is still out of reach.

The bailout countries balance the books

Greece, Portugal, Ireland and Cyprus all ran surpluses in 2025 (Eurostat). For Irish readers, there is a familiar edge to that list. These were the countries that lived through bailouts, imposed cuts and the institutional humiliation of the 2010s. The forced restructuring left habits that now show up in the fiscal numbers. In June 2026, the Commission removed Greece from its high-risk watchlist for economic imbalances entirely.

The EU has never fined a country for running an excessive deficit. The nearest example was an €18.9 million penalty on Spain in 2015 for falsifying statistics, not for overspending. In 2003, France and Germany blocked sanctions against themselves at the Council. Finance ministers vote on penalties for other finance ministers. That flaw in the machinery remains.

Finland is cutting housing support and freezing benefits to stay on the prescribed path. Germany has created a €500 billion off-budget infrastructure fund and secured an exemption. Both are following the rules. Only one is shrinking its safety net to do it.