Commission Compassion

No Bite, Just a Little Bark

epa03479472 President of the Euro group, Luxembourg's Prime Minister Jean-Claude Juncker (R) and French Finance Minister Pierre Moscovici chat during the Euro Group finance ministers council at the EU headquarters in Brussels, Belgium, 20 November 2012. Greece awaited an expected eurozone finance ministers' decision on 31.5 billion euros (40.4 billion dollars) bailout money, amid disagreements on how to get the country's finances back in shape. EPA/OLIVIER HOSLET EPA/OLIVIER HOSLET +++(c) dpa - Bildfunk+++
Commission president, Jean-Claude Juncker, and economics commissioner, Pierre Moscovici, gave Spain and Portugal a reprieve.
  • Why it matters

    Why it matters

    The European Commission’s decision to postpone disciplinary action against Spain and Portugal for breaking E.U. budget rules could fuel criticism that the bloc’s fiscal regime is a toothless tiger.

  • Facts

    Facts

    • The European Commission on Wednesday said it won’t decide on disciplinary action against Spain and Portugal until after Spain’s June 26 election.
    • The Commission has never imposed a fine before, despite repeated budget breaches by member states over the years.
    • Italy was also given more budgetary leeway while fiscal paragon Germany was told to cut its current account surplus which amounted to a “macroeconomic imbalance.”
  • Audio

    Audio

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Spain and Portugal got away with it: The European Commission Wednesday decided to postpone a decision on disciplinary action against the two countries for running excessive budget deficits.

“We have concluded that this is not the right moment economically or politically to take this step,” Pierre Moscovici, the economic affairs commissioner, said.

The decision marks a U-turn after both Mr. Moscovici and Commission Vice President Valdis Dombrovskis had just a few days ago appeared determined to push ahead with proceedings against both countries which would have made financial penalties unavoidable for the first time in the 17-year history of Europe’s monetary union.

Any fine would likely have been symbolic, but the countries would have faced cuts in their access to E.U. structural funding for 2017.

The two countries owe their reprieve largely to Commission President Jean-Claude Juncker, who had pushed for a decision to be delayed until after the Spanish general election on June 26, said officials in Brussels.

The Commission plans to reexamine the issue in at the start of July. Spain and Portugal could use the postponement to avoid punishment once and for all. All they have to do is promise to undertake spending cuts and structural reforms. The Commission had on Tuesday already decided to give them more time to get their budgets back in order.

Portugal’s left-wing government has been told it must lower this year’s budget deficit below the ceiling of 3 percent of gross domestic product set by the Stability and Growth Pact, the 1997 accord designed to underpin the European single currency by enforcing fiscal discipline in the bloc.

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