EU abandons budget fines against Spain

EU abandons budget fines against Spain

EU abandons budget fines against Spain BRUSSELS: The European Com­mission on Wednesday backed away from slapping fines on Spain and Portugal for running high deficits, avoiding what would have been a landmark move to impose tough budget rules.

Under bloc regulations, the EU executive could have imposed fines of up to 0.2 per cent of national gross domestic product (GDP) against Madrid and Lisbon — but instead showed clemency amid growing anti-Brussels sentiment highlighted by Britain’s Brexit vote.

“Sanctions, even symbolic ones, would not have been understood by the public,” the EU’s economic affairs commissioner, Pierre Moscovici, said at a news briefing. “It is not the best approach at a time when doubts are widespread about Europe,” he added.

The EU has to date not dared to use its full powers against eurozone overspenders for fear of triggering a populist backlash and given the opposition of chronic offenders such as France and Italy.

Triggering the sanctions process has long been the desire of Germany, which was instrumental in giving Brussels the extra powers needed to enforce strict budget discipline.

The issue is especially sensitive for France, which is in danger of missing the EU’s budget deficit limit of 3pc of annual GDP next year.

‘GOOD NEWS’: Portuguese Foreign Minister Augusto Santos Silva welcomed the “very good news for Portugal and for Europe.” The commission “has assumed its role as the guardian of the European ideal and spirit,” Silva said in Lisbon.

A more muted Mariano Rajoy, Spain’s acting prime minister, said he was “satisfied” by the decision. Spain has been without a fully-functioning government after two rounds of elections failed to give any party an absolute parliamentary majority.


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