Germany welcomes Spain's balanced budget amendment

24th August 2011, Comments 0 comments

Germany on Wednesday welcomed a move by Spain to introduce a new constitutional rule on balanced budgets as a positive example for other debt-stricken eurozone countries.

Government spokesman Steffen Seibert told reporters at a regular briefing that the reform marked a "very welcome and very significant step" toward more fiscal discipline.

Spain's Socialist government announced Tuesday that it had agreed with the opposition conservative Popular Party on the constitutional reform so as to reassure nervous financial markets.

The amendment would cover both the annual budget deficit and accumulated debt.

French President Nicolas Sarkozy and German Chancellor Angela Merkel earlier this month called on eurozone countries to adopt a 'golden rule' from 2012 requiring governments to balance their budgets.

Germany, Europe's strongest economy and the eurozone's paymaster, has already adopted a balanced budget law, and said this week it is on course to balance its accounts by 2014. Sarkozy plans a similar provision for France.

Massive budget deficits, far above the EU ceiling of 3.0 percent of gross domestic product, have left eurozone states with a debt overhang which they are now struggling to control and pay down.

Spain is seeking to slash the public deficit to 6.0 percent of GDP by the end of the year from 9.2 percent in 2010. It aims to reach the EU target of 3.0 percent by 2013.

© 2011 AFP

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