Economy

Spain and Portugal braced for EU deficit verdict on 12 July

The Slovak presidency of the EU expects the European Commission to recommend sanctions against Spain and Portugal for breaching EU budget deficit rules this week, in time for a decision at the upcoming Ecofin meeting of finance ministers on 12 July.

Spanish Prime Minister Mariano Rajoy believes that conservative nominee Francois Fillon will win the French election. [Consilium]

Jorge Valero Euractiv 05-07-2016 05:24 5 min. read Content type: Euractiv is part of the Trust Project
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Background

In 2013, Spain received three extra years to cut its deficit below the mandatory 3% of GDP of the pact.

Despite the fact that this was the third time Madrid had been granted leeway since 2009, the deficit reached 5.1% of GDP in 2015, higher than previously announced.

The European Commission's latest forecast predicts that the Spanish deficit will be 3.9% of GDP this year and 3.1% in 2017.

In April, the executive and the ECB concluded that the needed progress on fiscal consolidation in Spain "has come to a halt, with part of the structural adjustment implemented in earlier years being reversed".

Following the elections on 4 October, a three-party coalition led by the Socialist Party came to power in Portugal. The new government failed to submit its draft budget for 2016 by 15 October, as the EU’s fiscal rules said, and sent the draft proposal only on 22 January 2016.

After assessing the first draft, the Commission concluded that the budget was “in clear breach of the Stability and Growth Pact”, and requested more measures.

Portugal has been in the corrective arm of the Stability and Growth Pact since December 2009 and was asked to bring the deficit to below 3% of GDP by 2015. For 2016, the Council recommended that Portugal should make a structural effort of 0.6% of GDP. According to Portugal's national budget and the Commission's winter forecast, the general government deficit is expected to have been 4.2% in 2015.

Timeline

  • 5 July: Commission expected to recommend sanctions against Spain and Portugal for breaching the Stability and Growth pact (oral procedure)
  • 7 July: Alternative date for Commission decision on Spain and Portugal (written procedure).
  • 12 July: Ecofin Council
  • 11 October: Ecofin Council

Updated: 29-09-2024

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