Ecofin, the European Union finance ministers’ council, today decided that Spain and Portugal should be fined and sanctions imposed as both countries failed to achieve their 2015 budget deficit targets.
Both countries also were criticised for not having done enough to make cuts in government expenditure.
The Ecofin decision means that the European Commission has 20 days to decide how much the fines should be, a zero option is not out of the question and the countries’ finance ministers have ten days in which to submit their proposals and reasons that fines and sanctions should not be imposed.
Portugal missed its budget deficit target last year primarily due to the Banif fiasco which costs the unwilling and taxpayer further billions, with liabilities still open.
An additional problem would occur if Portugal or Spain suffered santions which cut either off from EU development spending, thus ensuring their economies were hampered further.
Portugal’s Finance Minister, Mário Centeno says his defence will be to re-explain the government's strategy and show the 2016 results to date, sticking to the government line that "there is no plan B."
"Let's go back to outlining our whole strategy to the European Commission, to show the results we are getting and how with these results we can meet our goals," said Centeno after the Ecofin meeting.
The minister said he had defended Portugal’s position at the meeting, claiming that a fine or sanctions would be unjustified as the country is making great efforts to comply.
Asked about whether the Portuguese government will have to introduce more measures to appease European Commission, Centeno replied that there will be no Plan B and that "the agreed budgetary implementation is being followed to the letter by the Government."
Comments
Cultural differences is a core subject of any decent MBA and general management courses and the discussion always features Hofstede's Cultural Comparison work. Particularly relevant here being the Power Distance (the perceived distance between the powerful and oiks) and Uncertainty Avoidance (attitudes by individuals and groups to risk).
The more religious might point to the priestly heirachy between a believer and his / her God embedded in the southern European Catholic Church's teaching and the notion embedded in the original Protestant (north European) thinking that a believer could deal directly with his / her God.
Questioning ones elders and 'betters', however criminal their behaviour or ignorant their understanding, being seen as more destablising to the community in southern Europe. In northern Europe being seen as a necessary trigger for change.
Perhaps a result of too many years believing the lies and deceptions of their corporate owned mainstream media.
If the Iberians cannot act in the same way as the northerners, we have a good reason to create a parallel EU. It looks as if Italy, one of the original members of the Six, is also suffering existentialist problems. Is it too late to build a two-tier EU?
If a deficit target of 4 or 5% had been mandated Portugal would have happily come in at 6 or 7%. And still huffed and puffed at the 'indignity'. North Europeans just cannot get a handle on this. In an alleged Union of countries that need to standardise their economies - it is so alien.