Do the Nordic Countries Live Up to Their Reputation for Fiscal Prudence?
// Nordic Insight - Genesta’s editorial platform for independent perspectives on real estate.
KEY INSIGHTS
- Data confirms Nordic fiscal strength versus global peers.
- Debt ratios are low and declining, supported by solid growth.
- US and UK face worsening fiscal dynamics, not the Nordics
As public debt and fiscal credibility come under renewed scrutiny, Nordic Insight has examined how the Nordic countries compare globally. The data shows a clear pattern: despite some regional variation, the Nordics stand out with stronger debt dynamics and more sustainable public finances than most major economies. But how clear is this advantage?
As the fiscal challenges facing some of the larger economies in Europe and the US continue to grow, this question becomes increasingly significant. While there are variations across the Nordic region—Finland being the clear outlier—the overarching answer is clear: yes, the Nordics offer a safe haven from some of the fiscal problems and debt burdens experienced elsewhere.
The region's relatively low government debt levels facilitate budget flexibility, and overall, their debt-to-GDP ratios continue to decline. The Nordics are caught in a positive fiscal feedback loop, supported by robust economic growth, reasonably balanced budgets, and decreasing government debt burdens.
Sweden, the region’s largest economy, has seen its debt-to-GDP ratio fall to 33.0% in 2024 from 44.5% in 2015. In contrast, the US experienced an increase in debt-to-GDP from 105.4% to 122.3% during the same period. A few years ago, Riksgälden, the Swedish National Debt Office, warned that the prolonged lack of new government debt issuance could reduce liquidity in the bond market—simply because investors had grown unaccustomed to buying Swedish debt. Compared to the fiscal and debt challenges faced elsewhere, this is relatively benign.
In contrast, the United States and parts of Europe face more challenging fiscal trajectories, with rising budget deficits and increasing debt-to-GDP ratios. Markets are growing somewhat concerned that the US may be entering a self-reinforcing negative spiral—one that could prove difficult to reverse. Not only is the US debt-to-GDP ratio at 120.9% (June 2025), but its fiscal deficit is 5.9% of GDP (in fiscal year 2025), indicating that debt levels are rising at considerable pace.
The below graph illustrates government balances and debt-to-GDP ratios in 2024[1].
The table below illustrates how debt-to-GDP ratios have developed over time[2].
The Nordics clearly exhibit lower debt levels and more sustainable trajectories compared to many other major economies. Both Finland and Norway have seen debt increase; however, Norway’s sovereign wealth fund, currently (Q3 2025) valued at 1,743 billion euros, significantly outweighs its liabilities.
Regionally, the Nordics also demonstrate healthier government expenditure levels compared to other European and global economies[3].
The prudent fiscal policies and stability of the Nordics stands out in the data. Another strong performer is the Netherlands, while Germany has also performed admirably. The weakest performers are the UK and the US.
For further insight, we recommend Oxfords Economics’ risk ranking, where government finances are a key factor. In a global ranking—where the first place signifies the country with the lowest risk—the positions of Denmark, Norway, Sweden, and Finland are 2nd, 6th, 7th, and 20th, respectively (out of 164 countries).