In light of Spain’s continuing economic problems, the Spanish government of Prime Minister José Luis Zapatero, along with its conservative opposition, has agreed to reform the Spanish constitution. The change will mean Spain’s budget deficit will be capped at 0.4% of GDP and will affect every level of Spanish administration. The budget cap, however, will not come into effect until 2020.
The government says the step was taken to get in line with Eurozone integration, although Germany is still the only country that has an official budget deficit cap.
Oddly though, although Spain’s debt is high at around 65% of its GDP, it’s nowhere near the debt levels of France, the UK, the US and Germany, which will probably see national debts of around 75% of their GDPs within the next few years. Yet Spain is still being villified by international economists for its economic policies. Strange that, eh?
Meanwhile, Prime Minister Zapatero is standing for re-election in the 2012 general election. This move might help him a little.