Monday

11th Nov 2019

Spain to test beefed-up EU budget rules

  • Spanish youngsters burn the EU flag amid anti-austerity feelings centered on Brussels (Photo: tom.tziros)

Spain, the eurozone's fourth largest economy, is becoming the first major test of the EU's fresh new rules on budget discipline as it seeks flexibility from Brussels on its deficit targets.

Madrid on Monday (27 February) announced that last year's budget deficit was 8.51 percent of GDP, up from an initial estimate of 8.2 percent and well above the 6 percent target agreed with the European Commission last year.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

Spain, which is supposed to bring its deficit down to 4.4 percent this year and a rules-abiding 3 percent in 2013, has said it will try and negotiate a softer deal.

But the commission is indicating it will play hardball, with tougher fiscal discipline laws only in place since December after previous rules underpinning the euro were breached some 60 times.

"We need full information on the slippages of 2011 and the reasons for them. We also need full information on the draft budget and planned concrete measures for fiscal consolidation for 2012," EU economic affairs commissioner Olli Rehn said on Tuesday when asked by a Spanish deputy about the possibility of renegotiating the target.

He added that EU finance ministers last week "reaffirmed their commitment to stick to the rules of the stability and growth pact while ensuring long-term sustainability of public finances."

On the same issue, a European Commission spokesperson said: "We are not talking about giving any flexibility to the current rule ... We are not talking about giving more flexibility to any member state when it comes to fulfilling commitments."

The commission indicated that the eurozone's credibility in the eyes of the markets is at stake.

"We might think about the need to maintain the credibility of our response to the crisis," said the spokesperson, with any change to Spain's deficit targets having to be agreed by both the commission and the 16 other members of the single currency.

Aside from being the first serious test of the commission's enhanced budgetary surveillance powers - fellow euro country Belgium fell into line earlier this year when it was told to curb its spending - the Spanish situation highlights a wider debate about whether too harsh austerity measures risk worsening an already troubled economy.

Even within the commission, some voice concerns that the deficit-focused austerity measures are not helping bring down the record unemployment figures, particularly among young people.

Social policy commissioner Laszlo Andor, speaking alongside Olli Rehn in the European Parliament on Tuesday said "Spain has the worst statistics and is the greatest challenge for my portfolio."

He insisted that there was not "just one reason and solution" to the unemployment figures and that while labour market reforms "have to be part of the agenda," other measures such as improved learning opportunities and investments in the "social economy" also need to be put in place.

Spanish officials also warn that one-sided policies will not help.

"The fiscal consolidation effort, that is going to be large, has to simultaneously avoid additional and further damage to growth ... his discussion is going to happen not only for Spain, but for the rest of eurozone countries," economy minister Luis de Guindos told the The Wall Street Journal.

The commission, for its part says that "new solutions" are needed to "relaunch growth" pointing to opening up the internal market still further.

Growth will not come through "massive budget [spending]," said the spokesperson, nor from using solutions of the past where growth was based on public debt.

EU leaders meet on economy, Schengen and Serbia

EU leaders at a two-day EU summit on Thursday will look where each country stands in terms of public deficit, taxes and retirement ages. Schengen enlargement and Serbia are also on the agenda.

EU and China agree to defend 'gastronomic jewels'

Manchego cheese, Panjin rice and Polish vodka will all be protected under a new EU-China agreeement. But the two trading giants continue to struggle over other trade-related deals.

News in Brief

  1. EU's climate contribution exceeds €20bn annually
  2. EU-Singapore trade deal enters into force this month
  3. Commission will not probe Borrell over Catalan tweet
  4. Frontex gets its European border police force
  5. EU Parliament loses funding case against Farage-led party
  6. US will not impose car tariffs, says Juncker
  7. Merkel disagrees with Macron on Nato
  8. Migrants in Malta transferred after EU deal

Opinion

Why von der Leyen must put rights at core of business

Ursula von der Leyen's in-tray must include those European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies' abuse in palm oil, including child labour, land grabs, and deforestation.

Stakeholders' Highlights

  1. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  2. Nordic Council of MinistersBrussels welcomes Nordic culture
  3. UNESDAUNESDA appoints Nicholas Hodac as Director General
  4. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  5. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  6. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  7. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  8. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  9. Nordic Council of MinistersNo evidence that social media are harmful to young people
  10. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  11. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  12. Nordic Council of MinistersEducation gets refugees into work

Latest News

  1. New hearings for the von der Leyen commission This WEEK
  2. Bosnia wants explanation for Macron's 'time-bomb' remark
  3. MEPs slam Commission over common charger delay
  4. Erdogan: refugees will enter Europe unless EU does more
  5. Cleaning up both the EU and Western Balkans
  6. Can Sunday's election end Spain's endless deadlock?
  7. Up to 750 European children trapped in north-east Syria
  8. EU and China agree to defend 'gastronomic jewels'

Stakeholders' Highlights

  1. Counter BalanceSign the petition to help reform the EU’s Bank
  2. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  3. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  4. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  5. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  6. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  7. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  8. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  9. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  10. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  11. Nordic Council of MinistersNordic commitment to driving global gender equality
  12. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan

Join EUobserver

Support quality EU news

Join us