Spanish MPs have overwhelmingly backed moves to put a so-called ‘golden rule’ on budgetary stability
into the constitution.
Ruling Socialists and opposition conservatives supported the deficit cap. With November’s election widely expected to bring a change in power, the move should reassure investors.
“The markets would like to see something which makes fiscal policy less dependent on the political majority of the day,” said Daniel Gros, Director of the Centre for European Policy Studies.
“And therefore it is useful to have something like this in the constitution because it means that there is no longer this constant daily watching over what is going on in the fiscal policy. It gives the investors some reason to think that, over time, things will become better.”
But many see the move as a sign the markets are dictating public policy and street demonstrations have seen calls for a referendum. People are already suffering the effects of austerity measures in debt-burdened Spain.
With the reform still needing approval by the upper house or Senate, trade unions have called a major protest in Madrid on September 6.