Moscovici Says Spain Needs New Government Before Tackling Budget

  • EU Commission due to issue guidance on Spanish budget Tuesday
  • Guindos says growth will allow Spain to meet EU targets

Spain needs to resolve its domestic political gridlock before it can answer European Union concerns about its budget, Economic Affairs Commissioner Pierre Moscovici said.

The commission has held firm on Spain’s targets while waiting for revised draft budget plans. Moscovici said the EU hasn’t changed its views since October, when it said the nation was at risk of breaching deficit rules in 2016 and its spending plans should be revised.

“We delivered our opinion a long time ago, and we will have to address the issues,” Moscovici said in a Tuesday interview in Brussels.

All the same, he recognized that Spain won’t be able to take action to get its budget deficit back on track until party leaders have worked out who can forge a majority from the inconclusive result of December’s general election.

“We need, for that, to have a government which has some time in front of it,” Moscovici added. “We need to wait for a political solution.”

Spain has struggled to form a new administration since Acting Prime Minister Mariano Rajoy lost a third of his lawmakers in December’s ballot. Socialist leader Pedro Sanchez has twice failed to form a government, while Rajoy and the anti-austerity group Podemos continue their blocks on the legislature.

Moscovici said it was premature to speculate about whether Spain would face sanctions for not meeting its targets. “There are first political decisions to be taken in Spain,” he said.

The EU commission is slated to weigh in on national budgets later Tuesday after meetings in Strasbourg, France. Spanish Finance Minister Luis de Guindos said at a press conference in Brussels that economic expansion could bring the deficit down and the commission would accept there are limits to how much can be done on the budget at the moment.

“An acting government can’t take additional measures,” de Guindos said. “The government can do what it can do as an acting government and I don’t think that Brussels will ask it to go further.”

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