Brussels, 04/07/2016 (Agence Europe) - On Monday 4 July, there was a lot of speculation doing the rounds about the nature of the decision to be made by the European Commission on Tuesday 5 July, regarding the budgetary situations of Spain and Portugal (see EUROPE 11585).
Meeting on Monday, the heads of cabinet of the Commissioners decided to reserve the discussion for the political level at the meeting of the College of Commissioners, in Strasbourg on Tuesday 5 July. The President of the European institution, Jean-Claude Juncker, hopes to “have a debate at the College on the issue, so as to reach a consensus on the decisions to be made subsequently”, said a source close to the dossier. The aim is to come to a decision quickly, in line with the Commission's commitment to return to this dossier in early July, “but in such a way as to ensure that the consequences of this decision will be implemented in several stages”, the source added.
According to Reuters, the Commission is expected to make a recommendation to the Council, which will meet on Tuesday 12 July, to grant Madrid and Lisbon an extra three weeks to take effective measures to reduce their excessive deficits. This decision will constitute a compromise between countries such as Germany and the Netherlands, which are in favour of strict compliance with the budgetary rules as a matter of credibility, and other countries, such as Italy, which oppose the idea of Europe sanctioning states which are unquestionably making budgetary efforts.
In 2015, public deficit stood at -4.4% of GDP in Portugal and -5.1% in Spain. Lisbon was supposed to bring its deficit back below the 3% of GDP market in 2015 and Madrid in 2016.
In mid-May, the Commission suggested that Spain and Portugal be given an extra year to bring their deficits back within the limits of the Stability and Growth Pact, making it 2016 for Lisbon in 2017 for Madrid (see EUROPE 11575). However, it did not make this suggestion in the context of the excessive deficit procedure, preferring instead to await the outcome of the general elections in Spain before taking position.
According to a parliamentary source, the Commission may well take the next step in the excessive deficit procedure open for both countries, but recommending that the member states opt for a somewhat token financial penalty.
The reform of the Pact makes it possible to sanction Eurozone countries in an excessive deficit situation and not making the required efforts up to 0.2% of GDP. The member states may reject any such recommendation by the Commission by qualified majority. (Original version in French by Mathieu Bion)