1. Skip to content
  2. Skip to main menu
  3. Skip to more DW sites

No fines for overspending Spain, Portugal

July 27, 2016

The European Commission has decided not to recommend fines against Spain and Portugal for running high budget deficits. Brussels appeared afraid sanctions would "not have been understood by the public."

Pierre Moscovici
Image: Reuters/E. Vidal

The EU executive on Wednesday backed away from slapping fines on Spain and Portugal for not sticking to the bloc's deficit rules. The imposition of fines would have been a landmark move by the European Commission to make member countries adhere to budget regulations.

Brussels could have imposed fines of up to 0.2 percent of national gross domestic product against Madrid and Lisbon, but instead showed clemency amid growing anti-Brussels sentiment highlighted by the UK's Brexit vote.

"Sanctions, even symbolic ones, would not have been understood by the public," Economic Affairs Commissioner Pierre Moscovici, said at a news briefing.

Brussels losing its clout

"It's not the best approach at a time when doubts are widespread in Europe," he added. Spain and Portugal had been under the EU's excessive deficit procedure since 2009 because of recurrent fiscal holes.

Bailed-out Portugal sharply cut its budget deficit from little under 10 percent of GDP in 2010 to 4.4 percent last year, but that still overshot the EU's 3-percent ceiling with regard to fresh borrowing.

Spain experienced six years of recession and reported a deficit of 5.5 percent in 2015, way off the 4.2-percent target set by the Commission.

Instead of fines, Brussels still had the option to suspend EU structural funds to the two countries next year, if remedies to plug the budget holes were not provided in the near future, Moscovici warned.

hg/jd (AFP, Reuters)