Saturday

22nd Sep 2018

EU delays decision on Spain and Portugal debt

  • Moscovici: the commission will apply rules "in an intelligent way" (Photo: EU Council)

The European Commission on Tuesday (5 July) postponed its decision on whether to open procedures against Spain and Portugal for excessive deficit.

The college of commissioners had a "first discussion" and will "adopt the necessary decisions very soon," finance commissioner Pierre Moscovici told journalists after the college meeting.

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He gave no hint on what decision would be taken, but he said that the commission would "act within the rules of the [stability] pact, which have to be respected."

"It's a matter of credibility," he said.

He added that "these rules are also intelligent and they demand to be applied in an intelligent way. That is the very spirit with which we'll take our decision very soon."

The commission in May gave Portugal and Spain one more year to reduce their deficit under three percent of GDP, until the end of 2016 and 2017, respectively.

It also said it would "come back to the situation of these two member states in early July."

The decision at the time was explained by the fact that Spain has no government after inconclusive elections in December and that it was better to wait until a new vote on 26 July.

Portugal's case was different, because a left-wing government has been in place since November 2015. It was nevertheless linked to the Spanish case to ensure the same treatment to both countries.

The commission has been under pressure to open the procedure against Madrid and Lisbon, especially from German officials like finance minister Wolfgang Schaeuble or Bundesbank president Jens Weidmann.

A procedure could then lead to sanctions.

But EU leaders at a summit last week were said to be wary of sanctions, out of worry that they would destabilise the two countries.

Since May, the situation has not really changed in Spain. The ruling centre-right Popular Party 'PP) came first in the election but no government is expected before early August or more even the end of summer.

"It's a difficult decision for the commission," a n EU source told EUobserver, adding that the college was already divided when it decided to postpone its decision in May.

The commission is now expected to take its decision on Thursday by a written procedure, so EU finance ministers can discuss it at their next meeting on 12 July.

"An earlier proposal would have allowed for a more thorough assessment," the Slovak presidency of the EU council said.

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