Portugal

Around 4,000 retail customers of Banco Espirito Santo who lost their savings when the banking group collapsed in 2014 should get around 60 percent of their money back under a plan presented on Monday by the Portuguese government, Reuters reported. The retail investors have protested and taken legal action to try to get compensation for their losses since the government stepped in to rescue Banco Espirito Santo. This included an injection of 4.9 billion euros ($5.12 billion) into the healthy part of the bank now known as Novo Banco.

A Canadian rating agency has confirmed Portugal’s only investment-grade credit rating in a decision that ensures Lisbon will continue to benefit from the European Central Bank’s government bond-buying programme, the Financial Times reported. DBRS on Friday maintained the country’s BBB (low) rating with a “stable” outlook, despite earlier expressing concerns over low growth and high debt.

Portugal’s “anti-austerity” government has unveiled a draft budget for 2017 that seeks to raise pensions, reduce income tax and increase support for the poor without running foul of EU deficit rules, the Financial Times reported. António Costa, the prime minister whose minority Socialist government depends on the hard left for its survival, hopes the plan will lay to rest investor fears that Portugal could be at risk of needing a second bailout, an idea he dismisses as “nonsense”.

Portugal’s souring investment climate and weak economic growth are raising concern across Europe and beyond that the country, which required an international bailout five years ago, could choke again on a debt that is now nearly 130% of its gross domestic product.

Portugal’s fragile recovery is losing momentum, with growth held back by sluggish investment and weak exports as uncertainty and corporate debt weigh on the economy, the International Monetary Fund has warned. The consumption-based recovery of the past three years is running out of steam, the fiscal stance remains expansionary, the current account is weakening and the banking system is plagued by low profitability,” the fund said on Thursday in its latest report on Portugal’s progress since a 2011-14 bailout programme.

Eurozone governments set out new fiscal targets for Portugal and Spain as they backed the decision by the European Union’s executive not to fine them for missing deficit targets, The Wall Street Journal reported. The European Commission had recommended last month after protracted discussions that the two countries should not be fined. The commission acknowledged the difficult economic environment and the reform efforts of both countries, but the decision led some to warn the bloc’s fiscal rules were being dangerously undermined.

European Union officials, facing the rise of populist movements across the region, opted against hitting Spain and Portugal with sanctions on Wednesday for breaking the bloc’s rules on government spending, the International New York Times reported. The refusal to impose fines highlights how the 28-nation bloc is struggling with divergent strains of populist and anti-European forces across a region where one member state, Britain, has already voted to leave.

Eurozone finance ministers agreed on Monday (Jul 11) to officially declare Spain and Portugal in breach of the EU public spending rules, a key step to possibly imposing unprecedented penalties against members of the currency bloc, Channel News Asia reported on an Agence France-Presse story. The ministers took the rare step despite fears that too much austerity by Brussels will further stoke anti-EU populism after the Brexit vote.

The European Commission said Thursday that Spain and Portugal didn’t take sufficient measures to bring their 2015 budget deficits within European Union limits, triggering a process which could eventually lead to financial sanctions, The Wall Street Journal reported. Whether, and by how much, the two countries will eventually be fined is a decision the European Commission—the EU’s executive arm—will make later in the summer and after the bloc’s finance ministers endorse its opinion at a meeting next week.

Spain and Portugal are on course to become the first ever eurozone countries to be sanctioned for breaching EU fiscal rules, in a move set to inflame political tensions over how dogmatic Brussels should be in policing national budgets, the Financial Times reported. The European Commission on Tuesday concluded that the two countries had failed to take “effective action” to meet EU deficit rules, according to people briefed on the talks.