Good afternoon everybody,
The Commission has today come back to the fiscal situations in Spain and Portugal.
As you know, on 12 July, the European Union finance ministers confirmed that Spain and Portugal did not take effective action to correct their excessive budget deficits.
In response to this, the Commission has to propose a new budget adjustment path for Spain and Portugal, setting a new deadline for correcting the excessive deficit and requiring further measures.
Second, within 20 days, the Commission has to make a proposal on the amount of fines to Spain and Portugal for not reaching their budgetary targets. The law says that that fine can be reduced or even cancelled in light of exceptional circumstances that a country faces or else on the basis of its reasoned request.
Third, the Commission is obliged to propose a suspension of a part of the commitments of European Structural and Investment Funds, after consultations with the European Parliament.
So today the Commission is putting forward two proposals for the decision of EU finance ministers.
First, on fines:
To define the fines we looked at several factors. First, Spain and Portugal made substantial efforts over the past six, seven years. Both countries consolidated substantially their public finances and undertook ambitious structural reforms. And we see that these reforms work. They bring about recovery, economic growth and job creation.
Second, both countries face profound social challenges. Although jobs are being created, the unemployment levels - especially youth unemployment - are still too high. Far too many people face social hardship and do not feel the recovery sufficiently.
However, we also see that recently both countries lessened their budgetary efforts and therefore missed their budgetary targets.
Taking into account past efforts of Spain and Portugal, the current challenging environment and arguments laid out in the reasoned requests, the College agreed today to propose a cancellation of the fines for both countries. Pierre will explain the thinking behind this decision further.
But the point is first and foremost about the future.
Spain and Portugal still face profound challenges. The two countries need to bring their budget policies back on track and strengthen their structural reform efforts.
Spain and Portugal have reiterated their commitment to do so in their reasoned requests. We are now looking forward to concrete measures and their effective implementation in line with the obligations from the Stability and Growth Pact and under the macroeconomic imbalances procedure.
We also proposed new adjustment paths and deadlines for Spain and Portugal to correct their excessive deficit. We believe these paths are realistic and both countries will be able to succeed in reaching them.
Then, the decision we have not taken today but that we need to see in the context of these decisions is about the suspension of commitments of the European Structural and Investment Funds.
We will take the formal decision after consulting with the European Parliament, as is foreseen, but it is clear that the European Commission will come with a rigorous proposal as regards the suspension, and both countries will need to make the necessary fiscal effort in line with new adjustment paths - to be confirmed by the Council - in order to lift the suspension of the commitments later.
We believe that this is an important instrument to ensure that countries have an additional incentive to comply with new adjustment paths we are proposing now.
It is important to stress that undertaking commitments on fiscal and economic policies means undertaking responsibility for their implementation.
It is especially crucial in an Economic and Monetary Union, in which our economies are so closely linked. So it is in the interest of individual countries, the euro area and European Union as a whole that what we all live up to our commitments and responsibilities.
The Commission is tabling a proposal now.
Next, it is for the EU finance ministers to decide.
I now pass my floor to Pierre who will explain the Commission's proposals in more detail.