Portugal, Spain Risk EU Fines for Missing Deficit Targets:
Spain and Portugal face the risk of getting fined by the European Union for missing targets to get their finances in order. Portugal lashed back over the threat, saying it would worsen popular views of the EU only days after Britain voted to leave.
The EU's executive Commission said Thursday that Spain and Portugal had failed to take "effective action" to rein in their excessive deficits over the last two years. Madrid is likely to miss its goals in 2016 as well.
Spain's deficit stood at 5.1 percent of gross domestic product last year instead of the targeted 4.2 percent. Portugal's was 4.4 percent rather than 2.5 percent.
Commission Vice-President Valdis Dombrovskis said that "lately the two countries have veered off track in the correction of their excessive deficits and have not met their budgetary targets."
The Commission will present its assessment to EU finance ministers next Tuesday and await their recommendations.
Dombrovskis said the Commission could decide after that meeting whether to impose any sanctions and what action it thinks Portugal and Spain must take to correct the problem.
He also sought to calm fears of heavy fines against the two countries. Brussels has recently been lenient with France despite its budget woes.
"We certainly need to take into account that we are dealing with the aftermath of a financial and economic crisis. We need to take into account the effort done by both of the countries already," Dombrovskis said.
Portugal's government is furious that it might be fined and has warned that such a move could turn the Portuguese against the EU just days after British voters chose to leave the bloc.
Portuguese Prime Minister Antonio Costa said in a letter to the Commission, published Thursday, that sanctioning Portugal would be unfair because its budget deficit is on a downward trend. He also said it would be counterproductive because it would hurt efforts to get the economy back on its feet.
A fine, Costa added, would "risk fostering an anti-European mood" because years of austerity have already brought hardship for the Portuguese.
The Commission is tasked with supervising national budget plans.
Hinting at possible leniency, the EU's top economy official, Pierre Moscovici, said Europe's fiscal rule book — known as the Stability and Growth Pact — "must be applied in an intelligent way."