Possible sanctions to Spain for breaching the deficit and Brexit’s impact: bad times for investors and taxpayers

Possible sanctions to Spain for breaching the deficit and Brexit’s impact: bad times for investors and taxpayers

The fine to Spain and Brexit’s consequences are uncertainty factors in the international market and they warn investors and taxpayers.

Spain could be sanctioned by the European Commission for having breached the public deficit objective, as it has been reminded by Gunther Oettinger, Economy’s European Commissioner. Previously, the EC’s vice president, Valdis Dombrovkis, had pointed out that he was expecting for a quick decision for that matter.

In fact, it is possible that sanctions could be imposed to Spain finally (and also Portugal) in the next European Council in Strasbourg (France). This topic is creating a controversy between EU countries, with two opposite sites: those alleging to be strict before deficit breaches and those betting for a certain flexibility to not to hamper the weak European growth.

In this regard, while Germany was in favour of sanctions, in Italy, its PM Renzi pointed out in late June yet that it was “absurd” for him not to use the “common sense” and not to “relax” the EU’s tax laws on this topic. However, the German strong position has started to crack lately, thus are starting to be heard in Berlin some dissenting voices even in the coalition government itself.

In such a way, in late June the German’s Minister of Economy, Sigmar Gabriel (SPD), had asked for the “European budgetary rules” to be “more favourable to the growth”, following Reuters.

Thus, is envisaged that in the Strasbourg’s European Council will be extended to Spain three weeks more to take deficit correction steps and to avoid the European sanctions; sanctions that need to be effective a Member State’s qualified majority and it implies various practical challenges still to be known, because, although these sanctions are foreseen in the EU’s laws, they have never been applied yet.

In the year 2015, Spain breached its committed four-point-two percent public deficit goal, placing it in 5.1%. The decision on this probable penalty to Spain is framed within the Brexit’s current and future consequences in the financial markets. Investors and taxpayers will have to pay attention because great changes are coming.

If you have some doubts on the impacts that could affect your investments, savings or tax duties this uncertainty framework please do not hesitate to contact us for a complimentary review at clerk@delcantochambers.com

Del Canto Chambers’ Newsroom

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