EU Warns Spain: The PSOE-Podemos Alliance Could Lead to Deficit "Non-Compliance"

The European Commission warns about the "risk of default" in debt payment with the arrival of progressive party Podemos to the Pedro Sánchez's administration. Last week Sánchez signed a preliminary coalition agreement with Podemos' leader Pablo Iglesias. The vice-president of the Commission, Valdis Dombrovskis, stated during a press conference that Spain's budget plan was presented "under a hypothesis in which there would be no political changes", and that the new government pact could compromise the budget's stability.

" Spain is one of the countries with the highest level of debt, so it is important that it continues to reduce its budget deficit", warned the representative of the European Commission, who already sent a message to Sánchez two weeks ago because his budget plan quadruples the maximum expenditure set by Brussels, something that implies a "significant risk" for compliance with the deficit.

Pedro Sánchez and Pablo Iglesias Announce a Coalition Government for Spain

Asked about the agreement between Sánchez and Iglesias, the vice-president of the Commission recognizes that Spain has not sent a complete budget due to the political situation and has asked the Government to send him an updated one as soon as he takes it to Congress. "Spain, being a high-risk country, we have asked a draft budget in accordance with the treaties," he explained.

Dombroviskis refused to make a statement on the political side of the alliance but insisted on calling for stability from the Sánchez administration. "We hope that these countries that are in an unstable political situation will regain stability and can present a complete and updated budget proposal, which is what we expect in the case of Spain".

In the assessment published on Wednesday by Brussels on Spain's draft budget, the structural deviation "will move away" from the medium-term objectives set for the country and will not comply with the rule that requires public debt to be progressively reduced each year to 60% of GDP.

"Member States with high levels of debt - such as Belgium, France, Italy and Spain - should take advantage of low interest expenditures to reduce their debt. It should be their priority," said Vice-President Dombrovskis.