Financial safety

EU to give Spain, Portugal three more weeks to escape deficit sanctions: official

The European Commission on Tuesday will give Spain and Portugal three more weeks to take steps to correct their excessive deficits and avoid fiscal sanctions, an official familiar with the EU deliberations told Reuters.

The move would represent a temporary compromise between fiscal hawks, led by Germany, and champions of budget flexibility who are pushing for more leeway in times of lackluster growth, high unemployment and growing support for anti-EU parties.

Italian Prime Minister Matteo Renzi last week openly urged not to fine Portugal and Spain, while Germany's central bank Jens Weidmann over the weekend called instead for not relaxing EU fiscal rules, even as Britain's 23 June vote to leave the Union may hit the bloc's overall growth in coming years.

At a meeting on Tuesday in Strasbourg, the EU executive will say that the two countries did not take effective action to remedy their excessive deficits but will still avoid proposing sanctions, the official said.