Excessive deficit procedure: Council agrees to zero fines and new deadlines for Portugal and Spain

	On 8 August 2016, the Council agreed not to impose fines on Portugal and Spain for their failure to take effective action to correct their excessive deficits.  It also stepped up the excessive deficit procedure for both countries, setting new correction deadlines and giving notice of measures to be taken.  On 12 July 2016, the Council found that neither country had taken effective action to reduce its deficit below 3% of GDP, the EU's reference value for government deficits. The Council's decisions triggered sanctions under the excessive deficit procedure, on the basis of article 126(8) of the Treaty on the Functioning of the European Union (TFEU). Fines of up to 0.2% of GDP could be imposed but, following reasoned requests from Portugal and Spain, the Commission proposed on 27 July 2016 to cancel the fines. The Council decided on 8 August not to reverse the Commission's proposal.  EU fiscal rules additionally require the Commission to propose a suspension of all or part of the EU's structural and investment fund commitments or payments for 2017. The Commission decided however to make the proposal at a later stage, following a structured dialogue with the European Parliament.  The new deadlines set by the Council are based on article 126(9) of the TFEU. Portugal is now required to correct its deficit by 2016 and Spain by 2018 at the latest. Effective action must be taken by 15 October 2016, and both countries must submit a report by that date.