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The European Council (EC) avoided what could have turned out a bitter feud by granting Spain and Portugal additional time to balance their budget. European council confirmed that it was cancelling sanctions on the two countries. The decision diffused months of tensions that was triggered by Brussels’ earlier ruling that despite warnings both Lisbon and Madrid have repeatedly failed to tackle the budget deficits. According to the rule, Euro member countries must abide by 3 percent deficit limit. Both Spain and Portugal have argued against the commission’s decision in May saying that the UK Brexit referendum would lead to lower growth and greater uncertainties. Another key point made by the two countries have been the case of France that was granted additional time.
Pierre Moscovici, EU economics commissioner, said, “I think we took the wisest decision in economic terms. Even a symbolic fine would not have been understood by people….…. A punitive approach would not be the right one at a time when people doubt in Europe.”
A recent survey by Pew Research Center shows that large sections of the European population want some of the law making powers to be returned home from Brussels.
Under this new ruling, Spain will have to bring down its current deficit of 4.6 percent under 3 percent by the end of 2018 and Portugal will have to bring down the deficit to 2.5 percent by the end of 2016.
