Portugal now has to correct its deficit this year and Spain has until 2018, as the Council demanded that both countries send it a report by 15 October with the consolidation measures to be taken this year.

The European Commission sent a recommendation on 27 July to the Council to cancel the sanctions to be applied to Portugal and Spain. Under European rules, the institution had 10 days to give its decision.

The deadline ended at midnight on Monday, and as there was no opposition by a qualified majority, the EC proposal was automatically adopted.

The Council maintains the recommendations made by the commission of a reduction of the deficit to 2.5% of Gross Domestic Product (GDP) in 2016, even though the Portuguese government expects the deficit to be only 2.2%.

The EU Council said that Portugal had to cut spending by 0.25% of GDP [about €450 million this year]. All the savings must be used to speed up the reduction in the deficit and the debt and Portugal must be ready to adopt more measures if the budget risks turn up".

Portugal has been under the Excessive Deficit Procedure since December 2009, when the council issued a recommendation calling for the deficit to be reduced by 2013. However, in the wake of the bailout and the deteriorating economic situation, in June 2013 the Council decided to prolong the period to correct the deficit until 2015.

In that year, Portugal had a budget deficit of 4.4% of GDP, higher than the 3% needed to end the Excessive Deficit Procedures.