18th July 2016

Portugal and Spain to be punished for budget deficits

On 12 July, EU finance ministers adopted a decision stating that Portugal and Spain failed to take sufficient action to bring their deficits closer to their respective targets. This will almost certainly trigger sanctions, which could be up to 0.2% of their GDPs, plus possible blocking of EU funds. Following the Council´s decision, the EC has up to 20 days to come up with sanctions. Both countries have 10 days to try to persuade the EC to be soft on them. The maximum sanction is €2 billion for Spain and €360 million for Portugal. Excessive deficits are not rare in the EU, but sanctions, although provided for in the Treaties, were never actually used. Following the Greek debt crisis, the rules were strengthened. As always, the Commission proposes the sanctions. But they are automatically approved in the Council, unless a qualified majority of members is opposed – which is extremely difficult to achieve in such sensitive cases.

For more, click here and here.

Members of the American Chamber of Commerce in the Czech Republic