Finance Ministers Cave on Spain, Portugal

A seagull flies past the Spanish flag in front of the congress hall, venue of the Ibero-American Summit, in Cadiz, southern Spain November 15, 2012. Leaders meeting at the summit, which will take place from November 16 to 17, face a relationship that has changed profoundly in the past few years, with impoverished Spain and Portugal hoping that booming Latin America can help lift them out of economic crisis. REUTERS/Jon Nazca (SPAIN - Tags: POLITICS BUSINESS)
Finance ministers have agreed to take it easy on Spain and Portugal.
  • Why it matters

    Why it matters

    Critics argue failing to sanction Spain and Portugal turns E.U. deficit rules into a dead letter.

  • Facts


    • In July, the European Commission agreed to waive financial sanctions against Spain and Portugal for violating the bloc’s rules on budget deficits.
    • The E.U. finance ministers could overturn the commission’s decision, but they lack a sufficient majority to do so. Even Germany’s finance minister has opposed sanctions.
    • Though Spain and Portugal have dodged financial sanctions, Brussels could still withdraw their structural funds.
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The European Union’s finance ministers will not overturn a decision by Brussels to forgive Spain and Portugal for violating budget deficit rules, according to a document obtained by Handelsblatt.

In July, the European Commission, the E.U. executive body, waived financial sanctions against Madrid and Lisbon for failing to maintain budget deficits below 3 percent of GDP. Germany’s finance minister, surprisingly, agreed to back the leniency.

The E.U. finance ministers had until August 8 to either amend or reject the commission’s decision. Under a rules change, overturning a decision by the commission now requires a qualified majority of 16 out of 28 member states representing 65 percent of the European Union’s total population.

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