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.