Brussels to rap Spain’s knuckles over imbalances

The European Commission on Wednesday is for the third year in a row due to admonish Spain for economic imbalances such as high unemployment and public and private debt, but is not expected to open sanction proceedings against the government, which has embarked on a series of reform drives to address the issues.

At just under 26 percent, Spain’s jobless rate is well over double that of the European Union and second only to Greece. Public debt levels are set to exceed a record 100 percent of GDP.

The report to be issued by Brussels is part of its excessive imbalances proceedings against EU members. If Spain fails to adequately address its shortcomings, the Commission in theory can impose sanctions of 0.1 percent of GDP. However, the EC is expected to limit itself to further examining the impact of reforms to labor legislation and the government’s overhaul of the state pension system.

The labor reform made it cheaper and easier for companies to sack workers, while the latest pension reform introduces demographic factors to ensure the sustainability of the system.

In the report card Brussels issued for Spain for last year, the country was given a fail mark in six out of 11 indicators of risk identified by the Commission.

Over the past few months, Spain has enjoyed an improvement in some of the indicators, for example the current account balance, which was in surplus in the first seven months of this year after posting a deficit a year earlier.

Apart from Spain, the other EU member countries that will be examined for excessive imbalances include Slovenia, Belgium, Bulgaria, Denmark, France, Italy, Hungary, Malta, Estonia and Sweden.

As advanced by EL PAÍS last weekend and confirmed by the EU commissioner for economic and monetary affairs, Olli Rehn, Brussels is also considering adding Germany to the list because of what is deemed as an excessive current account surplus.