EU States Support Cancellation of Budget Fines for Spain and Portugal: Sources, by Reuters

BRUSSELS (Reuters) – European Union member states are unlikely to challenge the EU executive’s decision to cancel fines against Spain and Portugal for exceeding their deficit limits, according to two EU officials. This decision comes despite criticisms from the head of euro zone finance ministers, who expressed concerns over such leniency.

Under EU regulations, the Council of EU countries had ten days to reject the European Commission’s decision, an option that Eurogroup President Jeroen Dijsselbloem hinted at earlier this week. However, a meeting on Friday did not yield the necessary majority to block the Commission’s action, which means the automatic waiver will take effect on August 8, when the ten-day acceptance period expires.

Spain and Portugal faced potential fines of up to 0.2 percent of their gross domestic product (GDP) for not adhering to EU fiscal rules that mandate deficits be kept below 3 percent of GDP. Nevertheless, the European Commission opted to waive the fines, likely motivated by concerns over rising euroskepticism within the bloc. While this decision may undermine EU budgetary discipline, it is also viewed as a measure to foster growth in the euro zone’s fragile economies.

Following the summer recess, the European Commission will determine whether to temporarily suspend EU funds to Spain and Portugal for the upcoming year.