A legal panel of fiscal advisors from the European Commission has accused the Brussels executive of failing to properly follow EU law by forgiving Spain for its high deficit earlier this year. The panel stated that Spain was shown undue leniency and should have been deemed to have an excessive deficit alongside countries like France, Italy, and Romania. The decision not to take legal action against Spain was deemed as not strictly in accordance with the rules, according to the European Fiscal Board.
The excessive deficit procedure, designed to correct budget imbalances, was said to be based on clear and well-documented facts regarding Spain’s deficit exceeding the threshold set out in the EU treaty. However, the Commission reasoned that a formal warning would not serve a useful purpose as Spain was expected to cut its deficit anyway. The EU rules requiring countries to keep deficits under 3% and debt under 60% of GDP were put on hold during the pandemic, but are now being reintroduced with countries like France facing challenges in balancing their budgets.
Countries like Belgium, France, Italy, and others have been criticized for failing to balance their books, with negotiations ongoing with Brussels on returning to fiscal balance. The European Commission has stated that it will continue monitoring budgetary developments in Spain and re-assess the situation based on data observed in the autumn. This situation highlights the challenges faced by EU member states in adhering to fiscal discipline and the intricacies of EU laws related to deficits and debt levels.
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