Members of the Eurozone are required to keep budget deficits at no more than 3% of GDP. The government of Spain has been out of alignment with that policy since 2009, and the European Union (EU) is likely to impose sanctions against the Spanish if the country doesn’t produce a satisfactory plan for bringing its public finances under control, according to an exclusive report from Reuters.
Spain is just one of 23 of the EU’s 27 members that have failed to meet the 3% goal. But in Spain’s case, the country’s tenuous financial situation has compounded the problem. The government estimated that the 2011 deficit would be about 8%, but that figure is expected to be too low.
The EU could fine Spain as much as 0.1% of its expected GDP for failing to cut the deficit to 3% or less. Fining a country that has no money for having no money makes little sense, so that’s probably what will happen.
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