Euro head: budget ‘golden rule’ in law, not constitution

Leading eurozone official and Luxembourg Prime Minister Jean-Claude Juncker said Wednesday he did not think his country should introduce into its constitution a “golden rule” requiring balanced budgets.

Juncker was one of 26 European Union leaders who agreed at a summit on Friday that such a rule should be written into the constitution or equivalent national law, with the Luxembourg-based European Court of Justice to verify the pledge.

“I don’t agree with writing it into the constitution,” Juncker told lawmakers, saying it went against “the philosophy” of Luxembourg’s constitution.

Instead, he said a “special law,” if passed by a large majority, would do the trick.

Luxembourg Socialist opposition leader Alex Bodry recently termed the “golden rule” the “rule for idiots.”

Meanwhile, Juncker said eurozone leaders should pump in the 80 billion euros ($104 billion) needed as guarantees for an incoming bailout fund, the 500-billion-euro European Stability Mechanism (ESM), in one go.

The new fund is to come into force in mid-2012 and run concurrently to the 440-billion European Financial Stability Facility (EFSF) already committed to Irish, Portuguese and Greek bailouts.

EU leaders previously agreed to put in their shares of the ESM’s capital in several installments over coming years.