Spanish budget at risk of non-compliance for second year in row

With the Spanish general elections due on 20 December, the Spanish government requested an early assessment of its 2016 Draft Budgetary Plan (DBP) by the EU Commission (EC) - aiming for the Parliament to approve it before its dissolution. Note that the Commission will assess the budgets of other Member States by late November. 

Similar to the 2015 DBP round, the EC announced on 12 October that the Spanish budget is considered at risk of non-compliance and that Spain is at risk of not exiting the Excessive Deficit Procedure (EDP) in 2016 as planned. As a result, the EC has asked the Spanish government to take additional measures to comply with the rules and submit an updated budget as soon as possible after a new government is formed. 

If Spain fails to deliver - and in the absence of exceptional economic circumstances - the next phase should be a stepping up of the EDP, eventually leading to a fine of 0.2% of GDP, says Societe Generale.