The European Commission failed to properly comply with EU law when it forgave Madrid for its high deficit earlier this year, a legal group of tax advisers has said.
According to a group of EU tax advisors, Spain has been subject to undue generosity for its high budget deficit and should have been sanctioned along with France, Italy and Romania at the beginning of the year.
The European Union returns to fiscal discipline this year after suspending its stability and growth pact, designed to avoid crises in the eurozone like that of Greece, but The Brussels Executive is already cutting expensesas stated on Wednesday by the European Fiscal Council.
The decision not to take legal action against Spain “does not strictly comply with current standards“, declared the President of the Council, Niels Thygesen, to the press today.
The excessive deficit procedure, the measure with which the EU can try to correct budget imbalances, “is based on observed facts”, and Spain’s deficit in 2023, which shot up 0.6 percentage points above the established threshold in the EU Treaty, “was well documented,” Thygesen said.
EU rules provide for an exception for low-debt countries facing a small or temporary breachbut the Commission “explicitly” stated that Spain did not meet this condition, according to a report by the Council, a group of four people created under EU law to advise on the fiscal framework.
A formal warning “would be of no use”
Since Madrid was expected to cut its deficit anyway, the Commission considered that a formal warning it would be of no usebut “such an element of judgment adds a new element of discretion not contained in the relevant legal provisions,” according to the Council report, suggesting inconsistencies in the treatment given by Brussels to the different countries.
EU laws requiring countries to keep deficits below 3% and debt below 60% of GDP were put on hold during the 2020 pandemic and the subsequent energy crisis, and its return was the subject of a heated dispute between Member States.
In June, under renewed rules allowing investment in strategic sectors such as defence, the Commission reprimanded Belgium, France, Italy, Hungary, Malta, Poland, Romania and Slovakia for not having balanced the accounts, a decision endorsed a month later by the Council of the EU, which represents the Member States.
These countries are now negotiating with Brussels How will they return to budget balance?although there are doubts about the credibility of some of those promises.
France faces a particular instabilityafter the June elections meant a surprising rise of the far right and they will mean that no party enjoys a majority; Its deficit was already one of the highest in the eurozone.
On Monday, new Prime Minister Michel Barnier said he would reduce the deficit until reaching 3% in 2029, which would be achieved with a mix of spending cuts and new taxes on big businesses and the rich.
A Commission spokesperson told Euronews that, in June, it had considered Spain’s excessive deficit to be “temporary“.
“The Commission will continue to monitor budgetary developments in Spain and will reassess the situation based on the data that we see in the fall and our fall forecasts,” the spokesperson added.
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