Brussels has moved to end a stand-off with Spain and Portugal over their persistent failure to hit EU budget targets, proposing that neither country be fined for breaching fiscal guidelines.
In a step that defuses months of tension, the European Commission moved on Wednesday to cancel the penalties, despite earlier rulings that Lisbon and Madrid had failed to take effective action to reduce their budget deficits. It would have been the first time a fine was levied.
The issue had dragged on since May, when the commission postponed decisions because of the Spanish election. Although fiscal hawks warned that the credibility of the eurozone’s post-crisis rule book was at stake, Spain and Portugal argued against any punishment because economic growth is set to slow in Europe as a result of uncertainty over Brexit.
After the commission showed leniency to France recently, critics suggested the EU executive arm was making an example of weaker member states, Financial Times reports.