Spain's Prime Minister Jose Maria Aznar said European Union budget rules should not be loosened even in the current tough economic climate, according to an interview in German weekly newspaper Die Zeit.
The European Union needs to take steps to boost its flagging economy and higher growth can only be achieved if governments keep their budgets balanced, in accordance with the Stability and Growth Pact, Mr Aznar was quoted as saying today.
"That is why the stability pact is so important and must not be interfered with," Mr Aznar said. He added that because Spain had kept its public finances in order it had more fiscal breathing space in an economic downturn.
"That's why in the last seven years we've shown above-average growth on an EU comparison and we were able to cut taxes," Mr Aznar said. The pact obliges euro zone members to keep their budget deficits below a ceiling of three per cent of gross domestic product and to aim for balanced books in the medium term.
In 2002, Spain ran a deficit of 0.1 per cent of GDP, according to data published on Monday by Eurostat. Germany, Europe's largest economy, racked up a 3.6 per cent deficit, while France showed a deficit of 3.1 per cent, Eurostat said.
Mr Aznar added Europe could "only dream of" the economic growth achieved by the US in the last decade.