Extending Spain’s deficit time frame is illegal, according to European Council lawyers

Brussels (CNA).- Giving Spain a one-year extension to reduce its public deficit while leaving the decision to fine the country until after the elections on the 26^th of June has been deemed illegal, according to lawyers of the European Council. This decision has been made after current Spanish President, Mariano Rajoy, sent a letter to the European Commission President Jean-Claude Juncker asking for a year’s extension to meet the deficit target that Spain missed in 2015. The presidency of the Economic and Financial Affairs Council (Ecofin), faced with Germany’s complaints of having saved Mariano Rajoy from a sanction during the Spanish electoral campaign, has commissioned a legal report to the Council. Indeed, this Friday newspapers such as ‘El País’ and ‘Cinco Días’ revealed that lawyers had questioned the legality of the formula used by the European Commission. According to the regulations, an extension of a year more cannot be offered to Spain without having already launched a procedure for excessive deficit, which would end in a fine.

It is, at the moment, “a non-binding assessment”, which however, in practice, leaves the extension reached by the government of the Spanish Conservative People’s Party (PP) suspended. The Ministers of Economy and Finance of the EU will not be able to approve this extra year until the European Commission decides whether or not it is punishable by a fine of up to 2 billion euros due to breach of the public deficit target. On the 18^th of May Brussels decided to leave the decision on the punishment until after the Spanish elections, meaning that until then there can be no extension.

The lawyers of the institution, presided over by Donald Tusk, accuse Jean-Claude Juncker of having “invented” a formula to avoid jeopardising the June 26^th elections for the Spanish PP. But this trap “creates a legal inconsistency”, because according to the rules of the Stability Pact, the decision on the fine must be taken “before or simultaneously” to the decision about whether to give an extra year’s margin to Spain, until 2017, to regain fiscal stability and allow the deficit to fall below the 3% target.

Spain’s executive don’t expect the fine to happen

The current Spanish Vice President, Soraya Sáenz de Santamaría, claimed Friday that there is “no doubt” that the European Commission won’t fine the Spanish executive for the excessive deficit of 2015, despite the EU having issued a report that ‘de facto’ rejects granting a one-year extension to comply. According to the Vice President, the legal services of the European Council which issued the report only expressed “some doubt over mere procedure” and that they “do not call into question neither the path nor the aspects of the fine”.

Despite the warning from Brussels about the deficit, Sáenz de Santamaría insisted that the tax cuts are a tool to “create jobs and stimulate growth” and said that the government has launched.