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Economy

ORIGINAL FRENCH ARTICLE: Règle d’or : claudiquant, Madrid s’incline à son tour

by Romain Silvi

The Golden Rule: Limping, Madrid Bows Down In Turn

Translated Saturday 27 August 2011, by Gene Zbikowski and reviewed by Henry Crapo

Socialist prime minister José Luis Zapatero announced a revision of the Constitution on August 22, with a view to guaranteeing Spain’s budgetary stability.

The leader of the conservative opposition was right in step and announced that his group would back writing the golden rule into the Spanish Constitution. The change is expected to be finalized before the legislative elections on November 20.

The Constitutional revision demanded of the 17 member countries of the euro zone by Berlin and Paris could be approved “immediately” according to the socialist head of government. The measure is expected to pass, given that the Popular Party, the main opposition group which is expected to win the early elections in November, has stated that it will approve it. This “golden rule” would concern “both the structural deficit and the debt,” Mr. Zapatero indicated, adding that “the path is laid out and I hope that the government formed following the elections at the end of the year will continue in the same direction.” A reminder: In Germany, the golden rule is already part of the Fundamental Law, the equivalent of the constitution, whereas in France it is still the subject of lively debate. In Spain, the revision must be approved by a three-fifths majority in both houses of parliament. Should they wish to, a minimum of one-tenth of the members of parliament can, in the following two weeks, demand that the measure be subject to a referendum. The president of Parliament, José Bono, pointed out on August 22 that the proposal must be tabled this week at the latest if it is to be adopted before the houses are dissolved in the run-up to the November 20 elections.

Although he is not running for re-election in November, the Spanish prime minister is attempting to hold together a country suffering from a 20% unemployment rate. He has announced a series of measures aimed at reassuring the country, notably by ensuring that the announced objective of reducing the budget deficit to 6% of GDP in 2011 (as against 9.2% in 2010) will be met. The battery of measures adopted by the government on August 19 includes lowering value-added tax on the purchase of new housing from 8% to 4% in order to kick-start a sector hard hit by the economic crisis. The monthly dole of 400 euros a month for unemployed people who no longer qualify for benefits is also expected to be prolonged by six months. This measure is also aimed at limiting the ruling party’s losses in the upcoming elections.


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