Stability and Growth Pact: update on the fiscal situation of Spain and Portugal

Commission confirms that Spain and Portugal will not correct their excessive deficit by the recommended deadline and recommends to the Council to take decisions establishing the absence of effective action.

As announced in its Communication of 18 May , the Commission came back today to the fiscal situation of Spain and Portugal. The College of Commissioners confirmed that Portugal did not correct its excessive deficit by the deadline of 2015 and that Spain is unlikely to correct its excessive deficit by the 2016 deadline. These deadlines were set by the Council in 2013.

The College therefore adopted recommendations for Council decisions under Article 126(8) of the Treaty on the Functioning of the European Union (TFEU) establishing the absence of effective action by Spain and Portugal for the years 2014 and 2015.

Both Spain and Portugal will require new deadlines to correct their excessive deficits and the adoption of today's recommendations is the necessary legal step to do so. The Commission will propose a new fiscal adjustment path for each country at a subsequent stage.

Once the Council decides under Article 126(8), the Commission is legally obliged to present within 20 days a proposal for a fine. It must also propose a suspension of part of the commitments of EU i Structural and Investment Funds (ESIF). The maximum amounts of this fine and the partial suspension of funding commitments are set out in the relevant regulations and can be reduced if justified.

The recommendations to the Council adopted for Spain and Portugal complement the package of country-specific recommendations proposed by the Commission in May and take into account the latest information available.

These recommendations do not prejudge possible future decisions under Article 126 TFEU. EU finance ministers are expected to discuss these recommendations, while the Commission continues to monitor the implementation of the Stability and Growth Pact.