THE EU is deciding whether or not impose sanctions on Spain following its failure to meet deficit targets.
EU commissioners met today to discuss taking action against acting Prime Minister Mariano Rajoy’s government, which has breached the country’s budget for the fourth year in a row.
Despite the potential sanctions, Rajoy announced on Wednesday that he is considering further tax cuts if re-elected.
The EU reprisals could also see the return of ‘toxic’ EU inspectors in Madrid.
The decision comes at an awkward time given the political instability in Spain following its failure to form a government since its hung parliament in December.
June will see the country’s second election in six months, with polls suggesting a similar result to the deadlock in December.
EU commissioner´s may postpone a decision so as not to interfere with the upcoming fresh elections.
Madrid analyst at Analistas Financieros Internacionales said: “The commission has to find the balance between enforcing the rules while avoiding jumping into the middle of the election campaign.”
While the EU has already relaxed Spain´s targets three times since 2009, to do so again may undermine the credibility of their rules.
Luckily for Spain, the EU may be cautious given that several other countries have also received warnings.
France, Italy and Portugal have all missed deficit and debt targets, but to date no country has been sanctioned, signalling a reluctance from EU commissioners to cross the sanction threshold.
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