EU finance ministers say Spain and Portugal have broken the bloc’s budget rules and have not done enough to reduce their deficits.
That was the decision taken at a meeting in Brussels, endorsing a European Commission view that Madrid and Lisbon were out of line.
“Logically when there are circumstances in which the rules do not seem to fit with what has to be delivered – namely to establish positive incentives for a country to reduce the public deficit at the right pace – we should modify the rules and that is what will happen now,” said Luis de Guindos, Spain’s finance minister.
Both governments could face an unprecedented fine for flouting the rules, which say a country’s budget deficit can be no higher than 3 percent of GDP.
Mário Centeno, Portuguese Finance Minister, told euronews: “We will go back to outline our whole strategy to the European Commission, so to underline the results we are getting, and explain how these results can fulfill our goals and commitments in the future”.
Whatever the final decision, both could have to make fresh spending cuts.
Portugal and Spain may now invoke ‘exceptional economic circumstances’ to avoid a fine that can go up to 0.2 percent of GDP, reports euronews’ Isabel Marques da Silva.
But even if they are spared a fine, the European Commission will set new deadlines to adjust their public expenditures.
Our correspondent adds that his may require new austerity measures.