Former Finnish PM Esko Aho warns debt-fueled economic policies must end

Finland has delayed necessary economic reforms through excessive borrowing, and the next government must implement strict fiscal adjustments, former Prime Minister Esko Aho has warned in an interview with public broadcaster Yle.

Aho, who led Finland through the severe economic crisis of the early 1990s, stated that the country’s current debt levels—now at 66.9 percent of GDP, the highest since 1944—demand a fundamental shift in policy. “We’ve been buying time with debt just to continue old habits that lead to a dead end,” he said, urging a return to “basic economic truths” in upcoming budget negotiations.

The former prime minister emphasised that only growth in private enterprise and exports can rescue Finland’s economy, not public-sector stimulus. “The 1990s crisis forced us to question the old ways. Now we must do the same,” he said, calling for a “brutally simple” economic concept where the state and municipalities stop driving the economy.

Aho also criticised political short-termism, suggesting policymakers adopt a “social media fast” to focus on long-term solutions. He stressed that public finances are a symptom—not the cause—of deeper structural problems in private-sector productivity and industrial output. “When the national economy recovers, it will save public finances too,” he noted, drawing parallels to the post-1990s recovery.

The next government faces mandatory adjustments of €8–11 billion under Finland’s debt brake rules and EU fiscal constraints, equivalent to 2.4–3.2 percent of GDP by 2031. Economist Vesa Vihriälä compared the scale to past austerity measures, such as the 1995–1999 Lipponen government’s cuts (under 3 percent of GDP) during a boom, or the 2011–2015 Katainen-Stubb era, when Finland’s economic conditions closely resembled today’s stagnation.

Historian Sakari Heikkinen warned that while Finland’s debt-to-GDP ratio remains below the eurozone average, its rapid upward trajectory poses risks. “The concern is whether we can still control this growth,” he said.