The finance ministers of the euro zone noted, as pointed out by the European Commission, which Spain and Portugal “did not take enough effective action to correct their excessive deficits”.
Brussels ( AFP ) .- the euro zone Tuesday activated the procedure to punish Spain and Portugal for breaching the rules of the fiscal deficit, a sanction which however could be zero for fear of stigmatizing Community policies and giving bellows the anti-European movements shortly after Brexit.
the finance ministers of the euro zone meeting in Brussels, noted, as pointed out by the European Commission, Spain and Portugal “took insufficient effective actions to ( …) correct their excessive deficits, “according to a statement.
This new stage in the process, opened last Thursday by the Commission, gives now 20 days Brussels to define the penalty and ten days in Madrid and Lisbon to present their arguments to avoid or reduce it.
“These fines can reach [a maximum of] 0.2% of GDP “, added the ministers in the release. In the case of Spain represents 2,200 million euros, based on the GDP 2015, while for Portugal amounts to 360 million euros.
” I am convinced that we will reach intelligent result “, said Minister of Slovak Finance, Peter Kazimir, whose country holds the EU presidency, said in the statement.
Spain failed to comply with the deficit targets in 2015, when the imbalance in public accounts reached 5.1% of GDP , well above the 3% established by the stability and growth pact and set by the Commission (4.2%).
in 2016 the deficit could be even worse, considering that six months ago, Spain is experiencing a political paralysis that forced the calling of new elections in June.
outgoing head of conservative government, Mariano Rajoy, which was strengthened in these second election but without an absolute majority, had driven an historic effort of austerity to reduce the deficit from 10.4% in 2012 to 5% last year.
Portugal had meanwhile in 2015 a deficit of 4.4% although it had set the goal of leaving in less than 3%.
a ‘nonsense’.
press conference at the end of the meeting in Brussels, Spanish Finance Minister Luis de Guindos, said that before the Commission will insist on the “turn” in Spain with economic restructuring, reforms and budget savings who has already made.
“it would be an important paradox that the European economy that has had the most intense shift in recent years, the growing and more jobs created (…) should be imposed a fine “Guindos said.
the minister said that Madrid would propose to reduce the deficit to 3% in 2017, increase corporate tax, a measure that will contribute, he said, some 6,000 million euros.
this measure will mean a “modification” of corporation tax for which the rate of this tax will increase for companies above a certain income threshold, he said.
However this measure should be adopted by the future government is formed in Spain after seven months of political deadlock since the elections in December that left a very fragmented and unable to invest a new executive conference.
from Lisbon, Portuguese Prime Minister Antonio Costa, felt it would be “unfair and counterproductive” to punish the country. “This whole process is a contradiction,” he said and assured that Portugal will leave this year the public deficit below 3% of GDP “without plan B or exceptional measures” .
the ‘Brexit’ influences.
This is the first time in the history of the single currency that a process of sanction is activated for failing to meet targets deficit.
But this new situation puts the euro zone and the European Commission at a crossroads where at stake is the credibility of its own rules, to respect them, expose them to criticism, in particular shortly after the vote in the UK to leave the European bloc.
“what is more important than the position of hawks such as Germany and the Netherlands is the political message of the whole process”, estimated Vincenzo Scarpetta, political analyst at the think tank Open Europe.
the EU should you do “balance between the credibility of its fiscal rules and avoid political criticism,” he added.
therefore, Scarpetta says that Spain and Portugal will be fined but the amount of the penalty is zero “or symbolic, in exchange for promises of new measures” a “symbolic gesture that will have no immediate impact.”
Gregory Claeys, economist at the Bruegel institute, estimated meanwhile that while tax rules are not perfect, “it is better for flexibility”.
“If governments accuse Brussels for the problems and Eurosceptics accuse the European Union of all evil “, he said.
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