EU Commission Seeks Sanction on Spain, Portugal

Spain and Portugal were hit by a European Union move to fine them for breaching budget deficit limits in an unprecedented step to enforce rules designed to avert another debt crisis, writes www.bloomberg.com.

European finance ministers must now decide whether to back the proposal by the European Commission. Should the recommendation be approved, the commission would have 20 days to propose fines that could reach as high as 0.2 percent of gross domestic product, and a suspension of some regional funds. The penalties could be reduced or canceled for “exceptional” circumstances.

“The two countries have veered off track in the correction of their excessive deficits and have not met their budgetary targets,” Valdis Dombrovskis, a commission vice-president, told reporters in Brussels. “Reducing the high deficit and debt levels is a pre-condition for sustainable economic growth in both countries.”

The EU is weighing the need to enforce budget rules against a backdrop of wider calls to rally support for the bloc following the U.K.’s decision last month to leave. Spain’s Acting Economy Minister Luis de Guindos has been adamant that sanctions would be unreasonable as the government is working to fix its economy after the financial crisis — an argument countered by proponents of austerity.

Source: www.bloomberg.com