Hiking taxes and levying fines in a severe depression is of course sheer idiocy, nonetheless, Brussels issued a new warning to Spain for serious imbalance risks, threatening Spain with fines of 0.1% of GDP.
Via Mish-modified Google translate from El Economista.
The European Commission launched a new warning to the country for "serious risks" to economic imbalances. Spain needs to submit a corrective action plan to Brussels on the 26th of this month. Brussels wants Spain to raise the VAT (limit use of a reduced rate for some items), raise fuel taxes, and continue labor reforms.Amazing Arrogance and Idiocy
If Brussels considers Spain's reforms insufficient, it will consider taking sanctions in late May, according to sources. The excessive imbalances procedure provides for fines of up to 0.1% of GDP (1 billion euros in the case of Spain) for countries that do not follow the recommendations of EU economic policy.
The preliminary report published last November, Spain exceeded the maximum thresholds in 6 of the 11 indicators used to detect economic risks Brussels. Only Ireland, Portugal and Cyprus, all rescued countries, have many risk indicators such as Spain, while Greece exceeds the thresholds in 5 cases.
What worries the EU executive of Spain is the continued rise in unemployment, the average rate in the past three years is now at 19.9% (versus 10% threshold considered healthy).
The other indicators in which Spain exceeds the risk threshold are loss of export market share (-7.6% vs. 6%), private debt (218% of GDP, compared to a limit of 160% ), public debt (69% versus 60%) and the net international investment position (-91.7% of GDP, compared to up to 35%).
Brussels is supposedly concerned about rising Spanish unemployment. Yet the nannycrats in Brussels demand actions from Spain guaranteed to make unemployment worse. This is amazing arrogance as well as amazing idiocy.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
