On Tuesday 9 August, the Council of the EU confirmed that it was to cancel the financial penalties faced by Spain and Portugal for failing to respect their budgetary commitments between 2013 and 2015.
In so doing, the member states adopted the proposal not to fine the two Iberian countries tabled by the European Commission at the end of July (see EUROPE 11602).
Additionally, new trajectories have been laid down to allow Madrid and Lisbon to bring their government deficits back below the 3% of GDP mark. Spain, where negotiations on forming a government are struggling to conclude, gets an extra two years – in other words, until the end of 2018 – to come into line with the Maastricht criteria. Portugal has been given one extra year – or until the end of 2016 – to do likewise. Both countries have been called upon to take the necessary measures to correct their respective excessive deficits.
The president-in-exercise of the European Council, Peter Kazimír, acknowledged the same day on Twitter that there was no appetite among the member states to reverse the Commission's proposals on the sanctions and new budgetary trajectories. In order to impose fines on the two countries, most of the eurozone countries (with the exception of Spain and Portugal) would have had to take position in favour of these measures, in line with the revised Stability Pact.
ESI funds. Having failed to take effective measures to comply with the European budgetary rules (see EUROPE 11592), Spain and Portugal are also exposed to a freezing of the structural and investment funds (ESI funds) under the principle of 'macro-economic conditionality' that has been brought into European legislation (Regulation 1303/2013). The European Parliament has called for structured dialogue on this point, an initiative that suspends the procedure at this stage. The conference of the presidents of the political groups of the EU are expected to take position on this issue on Thursday 8 September. (Original version in French by Mathieu Bion)