A legal panel of fiscal advisors has recently criticized the European Commission for not properly following EU law when it forgave Madrid for its high deficit earlier this year. The panel has stated that the Commission did not adhere to the correct procedural steps required by EU law before granting the forgiveness.
EU rules mandate that member states must keep their budget deficits below 3% of their GDP. However, if a country is facing exceptional economic circumstances, the Commission can provide flexibility in enforcing this rule. In the case of Spain, the Commission forgave Madrid for its high deficit on the grounds of exceptional economic circumstances.
The legal panel of advisors has argued that the Commission did not provide a thorough justification for its decision to forgive Madrid’s high deficit. They believe that the Commission did not adequately assess whether the economic circumstances in Spain truly warranted such forgiveness. In addition, they claim that the Commission did not give proper notice to other member states and the European Parliament, as required by EU law.
Critics have raised concerns that if the Commission continues to ignore proper procedures and grant forgiveness for high deficits without sufficient justification, it could set a dangerous precedent for other member states. This could ultimately undermine the credibility of the EU’s fiscal rules and lead to increased budget deficits across the Eurozone.
The European Commission has yet to respond to the criticisms from the legal panel of fiscal advisors. However, this issue is likely to spark further debate and scrutiny over the enforcement of EU fiscal rules in the future.
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