Tuesday

22nd Oct 2019

EU Commission faces infighting on Spanish budget

  • EU Finance commissioner Pierre Moscovici said Spain's draft budget did not comply with the Commission's demands. (Photo: EU Council)

The evaluation of Spain's 2016 budget is proving to be an embarrassment for the European Commission, after finance commissioner Pierre Moscovici appeared to be rebuked by EU executive president Jean-Claude Juncker.

On Monday (5 October), at a Eurogroup press conference, Moscovici said the Commission planned "to formally adopt its opinion tomorrow afternoon, based on an ad hoc forecast carried out in September specifically for Spain".

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Spain presented its budget on 31 July and sent it to the Commission earlier than required, so that it could be approved before the parliament stops working ahead of the 20 December general election.

Moscovici said the forecast "confirm[ed] risk of non-compliance with the stability pact in both in 2015 and 2016". 

Spain, he said, would miss its fiscal targets by 0.3 percent in 2015 and 0.7 percent in 2016.

In addition, Spain's "planned effort, fiscally, would fall short of the Council recommendations", with a deficit at 4.5 percent of GDP in 2015 and 3.5 percent in 2016, instead of the 4.2 percent and 2.8 percent targets.

Moscovici added that the Commission would "invite authorities to strictly execute the 2015 budget and take necessary measures to ensure that in 2016, it [would] be compliant with the stability pact".

He also said the Commission would ask Spain "to submit an updated draft budgetary plan shortly after a new government has taken office, taking into account the Commission's opinion", especially as the draft budget did not include full data for the regional governments.

'More time needed'

On Tuesday, however, the Commission college meeting did not issue any opinion on the Spanish budget and the Commission's vice-president for the euro, Valdis Dombrovskis, said that "more time is needed for deliberations.”

"The decision will adopted in the near future," Commission spokesman Margaritis Schinas told reporters on Wednesday.

Commission president Jean-Claude Juncker "felt that more time was needed for this", he explained, adding that the Commission "is a collegial body that takes its decisions in respect to the principle of collegiality.

According to the Commission's spokesman, Moscovici only "raised the parameters of the discussion".

The Commission's opinion, prepared by Moscovici's cabinet, expressed concerns over Spain's progress in reforms and debt level, according to Spanish daily El Pais. It also pointed out that the Spanish government and the Commission based their evaluation on different growth forecasts.

Election

El Pais also reported that Moscovici, who is often considered as being too soft on France, especially in Germany, was accused by Germany's finance minister Wolfgang Schaeuble of being too tough with Spain.

Schaeuble's criticism, as well as apparent divisions inside the Commission college, could be explained by the upcoming Spanish election.

Moscovici is a social-democrat, while Dombrovskis, Juncker and Schaeuble are from the same centre-right EPP party as Spain's prime minister Mariano Rajoy.

Rajoy is basing his re-election bid on the economic results of his austerity policies and structural reforms. And in Brussels, his policies have often been presented as a poster child for the benefits of budgetary discipline.

Unemployment rates are in decline, and while they differ on exact figures, both the Commission and the Spanish government expect the Spanish economy to grow by more than 3 percent this year.

According to the latest opinion poll, published on Monday by TNS and Antena 3 television, Rajoy's Popular Party (PP) comes first in voting intention, with 27 percent, compared to the 44 percent it obtained in the 2011 election.

Spain faces fine over false statistics

Spain became the first casualty of beefed up EU rules on statistics after the European Commission recommended the country be fined €19 million for misreporting of deficit data by the region of Valencia.

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