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European Commission Threatens to Fine Spain for Budget Deficit!
Mere months after the inception of more stringent fiscal requirements, the European Commission is threatening to impose strict fines on Spain for a “grave breach of budget limits.” It was only recently that the European Union ruled that it would give the central authority more control over each individual county’s budgets. Despite this decision, Spain deviated from the fiscal standards. The European Commission goal is set at 3% of GDP. Originally, Spain had been targeting a 4.4% deficit, but over the past few weeks had changed their target to 5.8% of GDP.
Talking to reporters during a visit to Vienna, Mr Barroso said the Commission had not yet seen Spain’s 2012 budget and needed more information about the “slippage” Madrid had in 2011 so he could not comment in detail.
But he added: “I have no doubts that the government will honor its commitments with respect to the stability and growth pact.”
Prime Minister Mariano Rajoy insisted he was acting within EU guidelines because the plan was still to hit the European Union public deficit goal of 3pc of gross domestic product in 2013.
This initial infringement on the new fiscal standards will be the true test for the European Union on whether they will legitimately try to salvage any part of the EU from fiscal disaster. If the EU is not hard enough on Spain, it will show every other country in Europe that it is business as usual and that large deficits and accumulation of debt is fine. This will result in the Europe going down the drain even faster than they already are.
