Brussels, 19/07/2016 (Agence Europe) - On Wednesday 20 July, the European Commission will discuss the budgetary situation in Spain and Portugal before proposing, in a week's time, financial sanctions against the two countries for failing to comply with their budgetary trajectories between 2013 and 2015.
The College of Commissioners will hold an “initial discussion this week to take stock of the situation and assess the nature of the sanctions” and, on this basis, will potentially make “a decision next week”, a European source said.
Under the revised Stability and Growth Pact (Regulation 1173/2011), three types of sanction are possible: building a deposit (of a maximum of 0.2% of GDP), which may or may not bear interest, to be ultimately recovered by the State in question, or a fine of the same amount. The Commission may make a recommendation to the Council to reduce the level of the sanctions by invoking exceptional economic circumstances, such as the “unemployment rate”, the same source explained. The Ecofin Council then has ten days following the Commission's proposal to oppose these sanctions, by qualified majority of Eurozone countries with the exception of Spain and Portugal. Additionally, a freezing of the European structural funds is possible.
Following the decision of the Council opening the door to financial sanctions against them (EUROPE 11592), Madrid and Lisbon have been pleading their cases to try to have these reduced. According to the Iberian press, Portugal is currently taking fiscal measures and Spain, which has had no government since the end of December 2015, is planning to increase corporate tax. In Madrid, it is hoped that high levels of growth and the resulting increased revenue will help to reduce the budgetary efforts required.
“The situation in Europe would be worse if we did not have these rules. Their deterrent nature has worked”, said Sylvie Goulard (ALDE, France), one of the architects of the reform of the Stability Pact that tightened up the budgetary surveillance of the Eurozone countries. (Original version in French by Mathieu Bion)