Unions warn of action if deficit cap written into Constitution

United Left calls for referendum as opposition mounts to budget cap rule

Spain's leading unions, CCOO and UGT, on Thursday threatened protest action against a proposed amendment to the Constitution to include a cap on the public deficit. In a joint statement, the two organizations said the move limits the government's room for maneuver during different stages of the economic cycle and puts the benefits afforded by the welfare state at risk.

"This implies writing into the Constitution one of the insignias of the conservative and neoliberal policies that produced the global crisis," the statement said.

Prime Minister José Luis Rodríguez Zapatero on Monday proposed enshrining the obligation to maintain fiscal discipline in the Constitution, and fast-track negotiations are currently underway with the opposition Popular Party to agree a draft of the proposed amendment for consideration by Congress next week and approval at the start of next month.

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The unions said it was unacceptable that a constitutional reform of such magnitude be carried out in less than two weeks and demanded a referendum on the issue, a move which would require the support of 10 percent of deputies or senators in parliament.

There has also been opposition to the proposed amendments among the ranks of the ruling Socialists. Party stalwarts such as Josep Borrell, Juan Fernando López Aguilar and Tomás Gómez have come out against the move, which Zapatero described as the "least demanding" at his disposal to ward off further attacks on Spanish sovereign debt in the markets.

Other groups such as the left-wing United Left (IU) and the center-right Catalan nationalist CiU coalition have also criticized the move. "With this measure we are witnessing the burial of the welfare state," IU leader Cayo Lara said Thursday. Lara called on parties opposed to the move to seek a referendum on it, while IU congressional spokesman Gaspar Llamazares urged Socialist deputies to vote on the amendment "according to their conscience."

Alfredo Pérez Rubalcaba, the Socialist candidate for prime minister in the general elections slated for November 20, is trying to negotiate a compromise with the PP that would appease some of the concerns about the proposed deficit cap, party sources said Thursday.

The compromise consists of allowing for a certain degree of "flexibility" by omitting a specific figure for the deficit ceiling in the constitutional amendment, with this to be included in a separate organic law. The PP wants a simple zero-deficit rule.

As explained by Economy Minister Elena Salgado on Wednesday the deficit rules would follow those of the existing Budget Stability Law in allowing for small deficits during downturns in the economic cycle or moments of crisis.

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