BRUSSELS has warned Spain it could be refused financial support if it fails to get its budget deficit under control.
The European Commission will re-rule on whether or not to freeze funds for the country after consulting with the European Parliament later this month or in early October.
President Jean Claude Juncker is said to be in favour sanctions on Spain – the first of their kind – if its government fails to take effective measures to reduce the deficit in the second half of 2016 and in their draft budgets for 2017.
Spain has so far dodged fines after the deadline to meet their deficit target was extended by two years in 2012 and again in 2014.
The fine could cost Spain up to €2 billion and could see €1.3 billion worth of financial support frozen.
Commissioner of Economic Affairs Pierre Moscovici has said punishing Spain would be a mistake and could cause a backlash against the eurozone project, which is already on shaky ground following Brexit and the rise of far right and eurosceptic parties in Europe.
He warns of a ‘loss of support for the European project’ and reminded the Commission of the ‘exceptional efforts’ of Madrid during the last years of crisis in reducing public deficit and implementing structural measures.
He also said the punishment would bring a ‘risk of causing unnecessary divisions’ among European countries.