The European Union's executive has refrained from calling for heavy fines against Spain and Portugal over budgetary breaches and sought instead to set "new fiscal paths" for the two countries.

The EU Commission could have called on member states to sanction the two nations — which would have been a first — for overspending on their budgets over the past years. Instead, it said there were attenuating circumstances. Fines could have gone as high as 0.2 percent of each country's annual GDP and EU funding could have been blocked from the start of next year.

Yet after years of failing to meet the EU's rule to keep deficits below 3 percent of GDP, the Commission is recommending new measures that the two nations should adopt to finally get in line.