Finland, the world's happiest nation, faces a glum winter

There's an uneasy mood in Finland , the country that's ranked the world's happiest for nine consecutive years . A colder-than-usual winter is on the way and so is the toughest austerity budget in years.

With an election due in April, the argument is no longer how much to cut, but which services, benefits and pensions will face the biggest cuts.

Finland's debt and deficit levels are in their worst state since the 1990s, when a banking crash and the collapse of the Soviet Union — a key export partner — pushed the Nordic nation into its own Great Depression.

Last month, Finland's national statistical institution confirmed that the national debt had reached 90.3% of gross domestic product (GDP) in the second quarter. Before the pandemic, that figure was around 65%.

Trouble to the east is, again, part of the reason. Finland ramped up defense spending after joining NATO a year after Russia's full-scale invasion of Ukraine . Helsinki, which used to rely on Moscow for about a third of its energy, also faced much higher costs as it transitioned to other suppliers.

The Finnish government has spent more than it earns since the 2008/9 global financial crisis, partly due to an aging population and sluggish economic growth. Last month, the State Treasury projected the fiscal deficit would reach 4.2% of GDP in 2026.

Brussels has piled pressure on Helsinki to bring down the borrowing gap, as European Union rules require member states to stay below 3% of GDP. In January, the European Council opened an excessive deficit procedure and gave Finland until the end of 2028 to reach the desired target.

Prime Minister Petteri Orpo's government, which took office in June 2023, said it would aim to save about €9 billion ($10.1 billion) during this parliamentary term. But whoever wins the next election will have to cut much deeper, economists warn.