BRUSSELS – The European Commission decided on Wednesday not to impose fines on Portugal and Spain over their budget defaults, sanctions that would have been the first of their kind in a Europe shaken by Britain's exit from the European Union.
” the college [des 28 commissaires européens] The Vice President of the European Commission responsible for the euro, Valdis Dombrovskis, announced during a press conference in Brussels that the European Union agreed today to cancel the fines imposed on the two countries.
“Even symbolic sanctions would not have allowed the past to be corrected and the people would not understand them.”European Commissioner for Economic Affairs Pierre Moscovici explained. Moscovici also said imposing fines was not the best approach at a time when Europe was in doubt after the Brexit vote.
In theory, fines could have reached a maximum of 0.2% of GDP for each of these two countries. The Commission's recommendation made on Wednesday must then be ratified by eurozone ministers.
In 2015, Spain's public deficit reached 5.1% of GDP, a figure well above the 3% ceiling set by the Stability Pact and the 4.2% targets set by the Commission. As for Portugal, it recorded a general deficit of 4.4% of GDP last year, while the target was to fall to less than 3%.
On Wednesday, the European executive gave Spain an additional two years to reduce its deficit to below 3%, until 2018. On May 18, it simply gave it until 2017 to achieve this goal. For this country – which has not yet formed a new government since the legislative elections on June 26 – the European Commission recommends the following budget path: a deficit of 4.6% of GDP in 2016, 3.1% in 2017, and 2.2% in 2018.
Regarding Portugal, the European Commission expects a deficit of 2.5% of GDP in 2016.
Spain and Portugal “They suffered severe economic and financial crises. They were able to restore financial stability through significant budget adjustments. They implemented structural reforms in order to gain competitiveness. These efforts should not be underestimated.”“, commented Mr. Dombrovskis.
“Indeed, these efforts are beginning to bear fruit. In both countries, growth is returning and thousands of new jobs have been created.He added.
In addition to these fines, the European Commission is obliged to propose a total or partial suspension of structural fund commitments, which could amount to 0.5% of GDP or up to 50% of 2017 commitments in these two countries. It intends to start a “structured dialogue” with the European Parliament on this issue, which concerns twelve funds in Portugal and about sixty in Spain.
