[Press Review] Excessive deficits: the Commission chooses flexibility with Spain, Portugal and Italy – Touteleurope.eu

Budget

As with France last year, the Commission decided yesterday not to sanction Spain, Portugal and Italy for their departures from the stability Pact. A political choice to reward the efforts already made by these countries and not to hinder the still fragile recovery of growth. If Germany should show its displeasure, columnists and economists argue the choice of the EU executive

One more year for Madrid and Lisbon

“ Budget:. L EU postpones decision on sanction against Madrid and Lisbon “headlines Libération (with AFP). In fact, Spain has “ posted a public deficit of 5.1% above the target given by 4.2 % “, and Portugal carried his own deficit to 4.4% “ while the target was to return to below 3 % .” The European Commission despite any preferred not to impose a financial penalty on those two countries. A fine of up to 0.2% of GDP is nevertheless expected by EU rules.

“ In addition to the Iberian Peninsula “, continuing Les Echos, “ the Italian boot has also benefited from the leniency of Brussels . ” If the country is well under the fateful 3% public deficit, debt level (133% of GDP) increasing concern the Commission. In this context, “ binding fiscal path ” imposed on it by the EU, said the business daily. The recent decision of Matteo Renzi away from it was therefore not retoquée.

Of course, “ this is not a blank check for the executive to these three countries but additional time , “writes La Tribune. Spain and Portugal are invited to “ take the necessary structural measures ” and “ devote all unexpected revenues to reduce the deficit and debt .” The question of possible sanctions will be reviewed in July, while Madrid and Lisbon now have one more year to accommodate previous commitments. The Italian situation, it must be reviewed in November.

“Not the right time”

“ This is not a good time economically and politically “to take sanctions, confirmed Pierre Moscovici, European Commissioner for economic Affairs [La Croix, with AFP].

In the case of Spain, the Commission preferred to wait for the verdict of the legislative elections of 26 June, with the country in political deadlock since last December. “ There will be elections, we do not have before us a government capable of taking the necessary steps ,” explained Mr. Moscovici. A decision that satisfies the conservative daily El Mundo, which sees it as a victory of the Spanish Finance Minister Luis de Guindos, who would “ showed teeth .”

With for Portugal, “ it was difficult to punish a government for the mistakes of his predecessor ,” said a member of the Commission quoted by Les Echos.

As for Italy, Brussels has chosen to give credit to the reforms initiated by the government and do not conflict while “ Matteo Renzi is in trouble before the municipal elections June “[Tribune]. Italian Prime Minister, offensive vis-à-vis Brussels for several weeks, has also said moderately satisfied with this respite, meaning he would have wanted “ get more flexibility ” [Frankfurter Allgemeine Zeitung].

France, it was not in the viewfinder of the European Commission this year, the country has until 2017 to return to below the 3% deficit. However, as indicated by Le Figaro, Brussels “ does not exclude a French skid .” Questioned by France TV Info, Pierre Moscovici recalled that the French commitment should “ be required “, and that the EU executive expected from France that the labor market “ be reformed “and continue to” remove all barriers that impede or resulted in limited competitiveness . ”

Towards the end of the threat of sanctions?

Obviously, this flexibility from the European Commission is not neutral politically and will not fail be seen as a new breach in the stability Pact. “ Eurozone Stability Pact failures “, and titrate Les Echos. While the Italian newspaper Il Sole 24 Ore talks about a “ new contract for the Stability Pact ” and the Spanish daily El Pais believes that the Commission decision means that “ the German version of the stability Pact [is] obsolete . “

A fact that should not make everyone happy in Germany. Die Welt writes indeed a “ historic day ” was missed, at which “ Brussels would have proved she was closely following the criteria of stability of the euro “. MEP Markus Ferber, member of the CSU, the Bavarian branch of the CDU party Angela Merkel said it is “ unacceptable that the Commission has yielded to pressure Madrid and Lisbon “. He added that “ opens when the referee constantly a substantive debate on the advantages and disadvantages of the regulatory framework, it is sometimes wise to seek another arbitrator .”

A thinly veiled reference to the proposal by Jens Weidmann, Bundesbank president, and Wolfgang Schäuble, German finance minister, to create an independent body to take over the role of budgetary surveillance on the Commission [ the Financial Times].

However, the Commission Jean-Claude Juncker, himself a favor not to burden the Member States in excessive deficit should be able to count on the support of a majority of economists. This is certainly the view of the Dutch bank ING, which considers that “ Today’s decision is good, many countries in the euro area to still fight to boost growth and fight against unemployment “[Liberation].

Same story on the side of Gregory Claeys, an economist at Bruegel, a center of political and economic analysis based in Brussels, that it would indeed be “ absurd to apply the same criteria – a maximum deficit of 3% of GDP – in a recession as in boom times to evaluate a budget . ” The latter going so far as to plead for an end to sanctions threats “ not credible” and can even “have dire political consequences if implemented ” [The Time ].