A flurry of stories in the international press suggesting Portugal along with Spain faces stiff EU sanctions for failing to make deficit targets has prompted a high-profile grilling of PM António Costa on evening television and endless controversy in the nation’s press.
Pressure on the Socialist government that pledged to turn the page on austerity has never been more intense, explains negocios online – with INE statistics institute revealing this morning that far from reducing, the nation’s tax burden has actually increased (yet again) and is now pegged at a whopping 34.5% of GDP.
What a lot of the noise is masking is that Plan B – the raft of additional measures that the government assured it was not preparing – is now not only prepared and ready for implementation, it may have to be actioned as soon as this year.
Last night, SIC television news made much of its interview of the prime minister, even setting aside time to discuss whether or not he had ‘lied’ about the economic situation.
To be fair to Costa, the rather hesitant man chosen to answer those questions did not want to admit that Costa had lied once.
But where the stories leave Portugal and its state budget that Opposition parties have been calling ‘pure fairytale’ for months will only come clear at a meeting of EU finance chiefs in Brussels next Wednesday.
Costa has vowed that he will be going the distance to make sure the threat of sanctions is consigned to the wastepaper basket.
“They would simply not be fair”, he told his interviewer last night. “Everyone knows what the Portuguese people have been through in the last four years”.
International sources like International Business News, Russia Today, European Online Magazine and EuroActiv website however all claim sanctions are on their way, whatever Costa might think he has up his sleeve.
“Data is very clear”, EU sources have said, “neither Madrid nor Lisbon have made the structural efforts required to cut their deficit below the mandatory 3% of GDP”.
The decision, expected to be ‘ratified’ on May 18, would have to go before the Ecofin Council before the European Commission decides “how to enforce it and the size of the potential fine”.
According to EU rules, the fine could be up to 0.2% of GDP, writes EuroActiv.com
Negocios online explains that sanctions “could involve a fine of 360 million euros”, or possibly more feasible, much-needed funds promised in 2017 might simply never get paid.
“One thing is certain”, explains the financial news service, the country and its Socialist alliance will be under “strong pressure” for the rest of the year to show it is committed to reducing the country’s ‘excessive deficit’.
EuroActiv.com stresses that the issue threatens much more than Portugal and Spain.
These would be “the first sanctions to be imposed under fiscal rules”, says the news service, and they would be implemented “against the backdrop of the most difficult period since the EU was founded more than six decades ago”.
“The UK’s membership referendum on June 23, the refugee crisis, the unraveling of Schengen, the terrorist threat, the sluggish economic recovery, the rise of populist forces and tensions with Russia all threaten the European project, warned the news service – and as such European Commission president Jean-Claude Juncker has warned that the political consequences of any sanctions need to be “factored in”.