BRUSSELS—The European Commission will say next week that Spain and Portugal didn't take sufficient measures in 2015 to bring their budget deficits within European Union rules, triggering a process which could eventually lead to financial sanctions.

But the commission, the EU's executive arm, will likely propose later this summer that the two countries receive a symbolic fine of zero, or close to it, according to two EU officials.

That would be a sign that while it acknowledges they have failed to stick to the bloc's rules, it is not willing to substantially penalize them at a time of economic instability in the region, further worsened by the U.K.'s vote to leave the bloc.

A move to impose zero fines could offer some relief to Lisbon and Madrid, but it may also raise concerns in other European capitals, including Berlin and Amsterdam. They have long argued that countries should be punished for not following the rules that call for budget deficits not to exceed 3% of gross domestic product and that no government should receive special treatment.

"We cannot have double standards in Europe," Slovak Finance Minister Peter Kazimir told reporters in Bratislava on Thursday, when asked about possible sanctions for the two countries.

The decision on the amount of the fines will be taken at a later stage, after EU finance ministers endorse the commission's view at a meeting later this month. The commission is also likely to propose that some of the EU funding for the countries for next year is temporarily blocked, until they commit to new measures, the officials said.

At a summit of EU leaders in Brussels earlier this week, the Portuguese and Spanish leaders spoke against sanctions for their countries, cautioning that they wouldn't be good for the economy, particularly at a time of turmoil in the markets following the U.K.'s vote to leave the EU, according to three diplomats with knowledge of the discussion.

Italian Prime Minister Matteo Renzi, a frequent critic of EU rules he says are too rigid, supported his Iberian counterparts saying the EU should use common sense and not sanction the two countries now, the diplomats said.

Some EU officials also say it would be counterproductive to fine Portugal at a time when the country's sovereign debt is under pressure from markets, and its access to the European Central Bank's bond-buying program, which has kept bond yields low and relatively stable, hinges on its investment-grade rating by Canadian firm, DBRS Ltd.

Portuguese politicians from both the left and the right have united against the sanctions. Prime Minister Antó nio Costa said it would be "ridiculous" to sanction Portugal over missing a budget target by 0.2 percentage points of GDP and at a time when Europe is struggling with much bigger issues, including Brexit, terrorism and the migrant crisis.

One of his allies in parliament, the Left Bloc, even said a referendum on Portugal's EU membership should be called if sanctions were imposed.

In Madrid, parties are negotiating to form a government after a second round of elections again proved inconclusive. But each of Spain's four major political parties agree that Brussels should loosen the time frame for the country to meet its deficit targets, in a sign of likely clashes ahead with Brussels over further fiscal belt-tightening.

The commission said already in May that the two Iberian countries, should take more measures to reduce their budget deficits in 2016 and 2017, and gave them an extra year to get their deficits within 3% of GDP. The deadline for Portugal is now 2016 and for Spain 2017.

The commission can impose fines of up to 0.2% of gross domestic product on eurozone countries that repeatedly ignore recommendations to fix their budget problems. Any sanction for countries in breach of the EU's budget rules would ultimately have to be signed off by the bloc's finance ministers.

The EU hasn't fined a country for breaching its fiscal rules since the creation of the euro.

Spain has struggled to meet its budget deficit targets over the past few years despite robust economic growth. Last year, with the economy expanding 3.2%, Spain reported a budget gap of 5.1% of GDP. The commission had set a target of 4.2%.

Portugal has sharply cut its budget deficit from close to 10% of GDP in 2010 to 4.4% last year, but that still exceeded the bloc's limit.

Excluding a capital injection into a failed lender in December and smaller one-time items, Portugal's 2015 deficit would have been slightly over the 3% limit, the commission has said.

Patricia Kowsmann in Lisbon and Laurence Norman in Bratislava contributed to this article

Write to Viktoria Dendrinou at viktoria.dendrinou@wsj.com and Valentina Pop at valentina.pop@wsj.com

(END) Dow Jones Newswires

July 01, 2016 10:55 ET (14:55 GMT)