Tuesday

18th Jun 2019

EU to reprimand Spain and Portugal on budgets

  • Portuguese finance minister Mario Centeno (l) wearing a scarf after his country's win in the Euro football championship and Spain's Luis de Guindos. Both men oppose sanctions for excessive deficit. (Photo: Council of the EU)

EU finance ministers will on Tuesday (12 July) officially say that Spain and Portugal violated EU budget rules by not doing enough to reduce their deficits.

The decision was announced after a meeting of eurozone finance ministers on Monday. It will be formally taken at a meeting of all EU finance ministers on Tuesday.

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

"Eurozone members will vote to support the European Commission's recommendations unanimously," Eurogroup president Jeroen Dijsselblomen said at a press conference.

Last Thursday, the commission said that "Portugal did not correct its excessive deficit by the deadline of 2015 and that Spain is unlikely to correct its excessive deficit by the 2016 deadline."

It recommended that ministers notify the two countries of the situation. It will then have 20 days to propose potential sanctions. In the meantime, Spain and Portugal will have 10 days to explain their position and to appeal for clemency.

Sanctions could be a fine up to 0.2 percent of a country's GDP and the suspension of commitments or payments from EU structural funds of up to 0.5 percent.

Dijsselbloem said that a decision should come "as soon as possible" in order to give "clarity and certainty".

EU finance commissioner Pierre Moscovici said: ”We are ready to work in a constructive manner to support [Spain and Portugal's] budget consolidation effort and structural reform without doing anything that would undermine growth and employment”.

He added that there would be a dialogue with the two countries.

A diplomatic source said that a "political solution" was needed. Other sources suggested that EU officials were talking with Spanish and Portuguese officials to ensure that the two countries make acceptable proposals on what to do next.

Dijsselbloem and Moscovici said that the rules would be applied "intelligently", which indicated that any fines will be zero or close to zero.

"It’s a possibility to have zero sanctions," Dijsselbloem indicated, echoing the commission's position last Thursday's.

Many in the EU are wary of destabilising the two countries amid the political tension of the Brexit vote and fears over the weakness of Italian banks.

'Sheer nonsense'

In that context, saying that Spain and Portugal did not follow the rules but avoiding real sanctions would be a compromise between countries that insist that rules must be enforced and countries that advocate more time to meet deficit targets.

On Monday, German finance minister Wolfgang Schaeuble repeated that "all agree that the rules must be applied".

But his French counterpart Michel Spain said that Portugal has made "enormous efforts" and did not "deserve excessive discipline". The Spanish minister, Luis de Guindos, also said that sanctions would be "sheer nonsense".

After the meeting, Portugal's Mario Centeno said that zero sanctions would be "a positive result".

Moscovici also said that the commission would suggest a "new budgetary trajectory" for Spain and Portugal. 


The two countries should be given one more year to reduce their deficit under the 3-percent of GDP threshold required by EU law. Portugal would have until the end of this year and Spain until the end of 2017.

EU delays decision on Spain and Portugal debt

The college of commissioners had a "first discussion" on whether to start a deficit procedure against Madrid and Lisbon. It said it will take a decision "very soon".

News in Brief

  1. Romanian ex-PM frontrunner to head new liberal group
  2. France, Germany and Spain in fighter jet deal
  3. Tusk grilled in Poland over role as PM
  4. Italy is 'most credible' US partner in EU, says Salvini
  5. EU blames Sudan junta for killings and rapes
  6. Report: EU may suspend Turkey customs union talks
  7. Swiss stock exchange could lose EU access in July
  8. Austria's Strache will not take up EU parliament seat

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Nordic Council of MinistersNo evidence that social media are harmful to young people
  2. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  3. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  4. Nordic Council of MinistersEducation gets refugees into work
  5. Counter BalanceSign the petition to help reform the EU’s Bank
  6. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  7. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  8. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  9. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  10. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  11. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  12. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody

Latest News

  1. Frontex transparency dispute goes to EU court
  2. Commission goes easy on scant national climate plans
  3. Macron and Mogherini decline to back US accusation on Iran
  4. EU summit must give effective answer on migration
  5. Spain's Garcia set to be next Socialist leader in parliament
  6. Erdogan mocks Macron amid EU sanctions threat
  7. The most dangerous pesticide you've never heard of
  8. 'Russian sources' targeted EU elections with disinformation

Join EUobserver

Support quality EU news

Join us