The Finnish economy is recovering from a recession, and economic growth is expected to be modest in the near future. The Finnish economy has undergone several major changes and challenges in the 2020s, and the long-heralded growth has yet to materialise. The recovery was rapid after the COVID-19 pandemic, but in 2022, GDP growth slowed to a mere 0.8% as inflation, rising interest rates, and Russia's large-scale aggression against Ukraine weakened the economic outlook. As the economy went into recession, GDP contracted by 0.9% in 2023 and by 0.1% in 2024.
According to most forecasts, the Finnish economy is expected to resume growth: the latest projection by the Ministry of Finance forecasts GDP growth of 1% in 2025, 1.5% in 2026, and 1.7% in 2027. A significant slowdown in inflation and falling interest rates are boosting growth, even as continuing economic uncertainty is hampering growth. At the same time, investments are expected to grow more rapidly with the recovery of the construction sector, along with energy transition and defence projects estimated to provide a significant boost to investments in the period 2025–2027.
Both employment and unemployment figures in Finland were a source of concern during 2025 as unemployment reached record levels.
According to the Bank of Finland, Finland’s financial system has remained stable despite increasing international uncertainty.
SMEs are now significantly more optimistic about their growth prospects than at the start of 2025 compared to the same period last year. Low inflation, falling interest rates and successful severing of trade links with Russia turned negative expectations into optimism during 2024.
Despite improving growth prospects, SMEs expect to cut investments substantially in the short term. After years of uncertainty and weak economic growth, companies reducing their investments outnumber those expecting to increase them and this applies to all main sectors.
The business loan stock varied between about EUR 10 billion and almost EUR 15 billion in the period 2020–2024. Due to changes in the Bank of Finland’s statistical sources, the statistics compiled after 2020 are no longer comparable to earlier figures. New loans granted to SMEs peaked at EUR 14.7 billion in 2021 and were at their lowest levels in 2023 at EUR 10.6 billion. In 2024, new loans granted to SMEs totalled EUR 12.7 billion, which was about two billion euros more than in 2023. New loans accounted for between 53% and 56% of all loans granted to SMEs in the period 2020–2024.
The average interest paid by SMEs stood at 4.54% in 2024, compared with 3.87% in 2022 and 5.8% in 2023.The interest paid by large firms also reached record levels in 2023, at 4.89%. The interest on the loans granted in 2024 averaged 3.98%. In 2023 and 2025, interest rates were at the same level as after the financial crisis; the interest paid by SMEs was slightly higher. The credit spread between small and large business loans has narrowed in recent years as the peak occurred in 2022 at 1.1% and has decreased since then to 0.56% in 2024.
The structure of business financing is changing extremely slowly. Bank-centric financing is a common feature of SME financing which has remained a large share of total financing. Business financing was gradually becoming more diverse before the COVID-19 pandemic, but the trend has been reversed since then. It seems that entrepreneurs are largely dependent on the financial services offered by banks, while at the same time, traditional bank financing has become less accessible to enterprises and the situation is expected to become even more problematic.
Financing by public sector actors, such as Finnvera, Business Finland and ELY Centres, is still the most important alternative to bank loans. One enterprise in five planning to seek financing reported that they are seeking funding from Finnvera, and Finnvera’s guarantees are a requirement for bank financing for an increasing number of enterprises. Nearly one third of all enterprises seeking bank financing reported that Finnvera’s guarantees were a condition for funding. Finnvera’s guarantees are particularly important to strongly growth-oriented enterprises. About 75% of them reported that financing was conditional on guarantees. Guarantees are also important to small enterprises; 44% of all enterprises with 10–19 employees seeking bank financing reported that funding was conditional on Finnvera’s guarantees.
The average length of B2B payment delays has been on the increase for several years. In 2024, the average was 17 days. The previous peak (17 days) for payment delays was recorded in 2020, in the aftermath of the COVID-19 pandemic. After that, there was a marked improvement in the situation and payment delays decreased in 2021 and 2022, before increasing again in 2023. Payment periods are also significantly longer than before the year 2020.
The number of bankruptcies totalled 3 488 in 2024, which was the highest figure in the review period 2008–2024. Since 2021, the number of bankruptcies has increased for four successive years. The biggest rise was recorded in 2023 when bankruptcies increased by almost 25%. Since then, the rate of growth has slowed, reaching 5.2% in 2024. The number of bankruptcies continued to grow during the early months of 2025, with the total potentially expected to reach record levels.
Financing collected by Finnish start-ups decreased substantially in 2023, with start-ups collecting only half (EUR 896 million) of the amounts they accumulated in the record year of 2022. Unlike in other countries, financing quickly returned closer to record levels, totalling about EUR 1.4 billion in 2024 (EUR 1.7 billion in 2022). Financing by private venture capital (VC) investors has been on the decline since 2022, when it totalled EUR 1.15 billion. In 2023, investments by VC investors amounted to about EUR 980 million (-15%) and almost EUR 700 million in 2024 (-29%). As a whole, the financing of Finnish start-ups has significantly grown compared to ten years ago. The aim of the new investment strategy of Finnish Industry Investment Ltd (Tesi) for the period 2025–2029 is to significantly ease growth companies’ access to venture capital financing, especially where private financing has been less extensively available.