EC delays penalty decision on Spain and Portugal on breaking budget rules

The European Commission has delayed announcement of a penalty decision against Spain and Portugal for breaking budget rules during handling campaign for Britain to leave the European Union. Brussels said the postponement of possible action, which could include fines, was due to the general election in Spain on June 26, three days after the referendum on Britain’s EU membership.

The prime minister has been buoyed by recent polls suggesting that the remain campaign is pulling ahead in the referendum battle, but is keen that potential punishments for countries breaking EU fiscal rules, along with decisions on other potentially toxic topics such as Greece’s debt and migration, should be delayed for just over a month, reports said.

The inability of Spain’s caretaker government to take budget decisions ahead of the election justified putting off a decision until early July, EC president, Moscovici told a news conference in Brussels.

Eurozone countries, led by Germany, are insisting that enforcement action be at the earliest. However, in theory, the commission could fine the two countries up to 0.2 pct of their GDP for breaking the rules.

Carsten Brzeski, an economist at ING, said the decision on Spain made technical sense, since a new government in Madrid would be needed to implement any possible recommendations from the commission.

However, the EC President, Moscovici believes that this is not the correct time, both economically and politically to announce the penalty enforcement. The inability of Spain’s caretaker government to take budget decisions ahead of the election justified putting off a decision until early July, he stated.