STRUGGLING Spain and Portugal will not be punished for breaking official budget rules, the European Commission (EC) has confirmed amid concerns of rising euroscepticism within the bloc.
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The two states failed to keep their budget deficits below three per cent last year, risking the wrath of Brussels policymakers.
After escaping stinging fines earlier this year, it was feared the two countries could have EU funds frozen as an alternative penalty.
Both governments are heavily reliant on EU aid and withholding support would have been a painful punishment to endure.
Yet the commission decided to show mercy and let both Spain and Portugal off the hook for their misdemeanours.
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It's thought the policymakers want to avoid provoking any further backlash against Brussels.
But commission vice president Valdis Dombrovskis insisted it was not imposing penalties because the two governments were now doing enough to correct their budgets.
He said: "The event that required a proposal by the Commission to suspend parts of the European Structural and Investment Funds is no longer present and there will be no such proposal."
The stance is in contrast to the European Council's economic and finance group, which earlier this year said both Spain and Portugal's responses to deficit targets had been insufficient.
Portugal's deadline for correcting the deficit had already been extended by two years to 2015 when it recorded a deficit of 4.4 per cent.
Spain also had its deadline for making changes extended but the deficit still amounted to 5.1 per cent in 2015.
In further evidence the commission is now trying to appease member states, it has signalled that it will move away from austerity measures and towards 'looser' fiscal policies.
It comes amid growing anger in Italy and Greece over strict rules from the EU.
The change of direction is part of renewed efforts to boost the bloc's ailing economy.
The European Central Bank has been long been calling for politicians to play a stronger role in trying to boost Europe's sluggish economy, as its monetary efforts to revive growth hit a wall.
In a statement the EC said: "The Commission considers that there is a case for a significantly more positive fiscal stance for the euro area."
http://www.express.co.uk/finance/city/733494/EU-Spain-and-Portugal-LET-OFF-shocking-budget-deficits
