Excessive deficit procedure: Council finds that Portugal and Spain have not taken effective action

On 12 July 2016, the Council of European Union found that Portugal and Spain had not taken effective action in response to its recommendations on measures to correct their excessive deficits.

The Council's decisions will trigger sanctions based on article 126(8) of the Treaty on the Functioning of the European Union.

The European Commission had 20 days to recommend further Council decisions imposing fines. Those fines should amount to 0.2% of GDP, though Portugal and Spain could submit reasoned requests within 10 days for a reduction of the fines. The Council would then have 10 days to approve the fines.

Spain's acting Economy Minister Luis de Guindos suggested on the 12 July 2016 that he would propose an increase in corporate taxes to avoid a fine from the European Commission.

EUObserver, 12.07.16: EU to reprimand Spain and Portugal on budgets https://euobserver.com/economic/134311

ESO: Background information: Stability and Growth Pact: update on the fiscal situation of Spain and Portugal http://www.europeansources.info/record/stability-and-growth-pact-update-on-the-fiscal-situation-of-spain-and-portugal/

BBC News, 12.07.16: Spain and Portugal face first EU fines over deficit levels http://www.bbc.co.uk/news/world-europe-36777170

EurActiv, 12.07.16: Commission threatens Spain and Portugal with fines http://www.euractiv.com/section/euro-finance/news/commission-threatens-spain-and-portugal-with-fines/

Politico, 11.07.16: Economy rains on Portugal’s victory parade http://www.politico.eu/article/economy-rains-on-portugals-victory-parade-antonio-costa/

The Local.es, 13.07.16: Spain proposes tax hike to dodge EU deficit penalty http://www.thelocal.es/20160713/spain-proposes-tax-hike-to-dodge-eu-deficit-fine

Euro|Topics: Debates, July 2016: EU tough on deficit sinners Portugal and Spain http://www.eurotopics.net/en/161911/eu-tough-on-deficit-sinners-portugal-and-spain

Politico, 12.07.16: Spain, Portugal in line for penalties on budget deficits http://www.politico.eu/article/spain-portugal-in-line-for-penalties-on-budget-deficits/

EurActiv, 18.07.16: Spain and Portugal pledge new measures to avoid EU deficit fines http://www.euractiv.com/section/euro-finance/news/spain-and-portugal-pledge-new-measures-to-avoid-eu-deficit-fines/

EurActiv, 21.07.16: MEPs step in to ease sanctions over deficit rules http://www.euractiv.com/section/euro-finance/news/meps-step-in-to-ease-sanctions-over-deficit-rules/

The Local.es, 24.07.16: Suspend EU funds for Spain says European Commission http://www.thelocal.es/20160724/eu-should-suspend-funds-for-spain-portugal-european-commission

El País, 19.07.16: Spain rejects EU deficit reprisals, insisting economy will grow above 3% this year http://elpais.com/elpais/2016/07/18/inenglish/1468833881_669832.html

Politico, 27.07.16: In reversal, Juncker backs sanctions on Spain and Portugal http://www.politico.eu/article/whats-driving-the-decision-to-sanction-spain-and-portugal-juncker-commission-eu/

EurActiv, 27.07.16: Italy and Spain test EU’s ‘intelligent’ use of economic rules http://www.euractiv.com/section/euro-finance/news/italy-and-spain-test-eus-intelligent-use-of-economic-rules/

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