Balanced budget 'golden rule' rare in Europe
Spain's senate gave final approval to a "golden rule" in its constitution Wednesday to keep future budget deficits to a strict limit.
It is only the second country to do so after Germany, Europe's paymaster, adopted a similar reform in 2009.
Here is a summary of the major eurozone economies that either have or plan similar measures:
- GERMANY: The government adopted a debt correction programme in 2009 requiring that from January 2016, the government must not run an annual budget deficit of more than 0.35 percent of gross domestic product -- compared with the current EU limit of 3.0 percent. The limit can only be breached in exceptional circumstances, such as natural disasters or a major economic crisis.
- SPAIN: Spain's senate overwhelmingly on Wednesday gave final approval to reform the constitution and cap future budget deficits with similar exceptions to Germany. There is now a 15-day period in which either house of parliament can force a referendum if they garner 10-percent backing. An accompanying law to be enacted by June 30 next year would set the actual limit for the structural deficit at 0.4 percent of annual gross domestic product from 2020.
- FRANCE: A proposed budget limit must go to a vote in the full parliament where it needs a 60 percent majority to pass. But the opposition Socialists have said they will vote against it.
- ITALY: In July, Finance Minister Giulio Tremonti expressed the hope of a constitutional change but no formal proposal has been submitted.
- BRITAIN: There are no formal provisions on the budget deficit but former premier and finance minister Gordon Brown set the aim of balancing the finances over a 10-year period during 1997-2007. His self-imposed 'golden rule' was abandoned during the global financial crisis when the public finances collapsed.
- SWITZERLAND: Debt levels have been regulated for the past 10 years, forcing the government to match revenues to spending. Temporary exceptions are allowed at times of crisis.
- PORTUGAL: The government has talked of opening a debate on limiting the budget deficit but there has been little progress.
- IRELAND: No "golden rule" in the constitution.
- GREECE: No "golden rule" in the constitution.
- NETHERLANDS: The finance ministry says it could adopt an adminstrative ruling on the budget but it has no intention of altering the constitution.
- BELGIUM: No "golden rule" in the constitution.
- POLAND: The constitution states since 1997 that the budget must be balanced and that total accumulated debt must not exceed 60 percent of GDP, in line with the EU limit.
© 2011 AFP