Brno - The Czech government's budget cuts approved by the Czech parliament at the end of 2010 will have to go through the legislative process again.
The Czech constitutional court accepted the appeal by the opposition Social Democratic Party, and ruled that the reform bill was approved unconstitutionally.
Last year, the center-right government prepared a law to cut CZK 23.5 billion (EUR 940 mil) in unemployment benefits, parental benefits, and other welfare benefits, in order to curb the budget deficit.
Read more: Hopping on austerity bandwagon: 2010 in Czech politics
However, according to the constitutional court, the democratic legislative process was not obeyed when the bill was approved. Nonetheless, the court stated that the bill will remain valid until 2012, which gives the goverenment enough time to re-approve it, this time in a truly constitutional fashion.
In November 2010, the government declared a so-called "legislative emeregency", a special mesure which enabled it to approve the bill very quickly, in a special meeting of the Lower Chamber of the parliament.
Importantly, the government lost its Senate majority in October 2010, but the "legislative emergency" enabled it to pass the bill through the upper chamber when it was still in its pre-election composition, which means dominated by the government parties.
Read more: Czech govt loses majority in Senate. Reforms in danger
However, the constitutional court ruled that this special measure can be used only in times of war, human rights violations, or significant economic damage.
"The conclusion about the existence of serious economic damage has to have a good reason," said a judge Eliška Wagnerová, adding that the government was not able to explain what specific danger the country was facing.
The government had warned the constitutional court that a negative verdict would make international agencies drop the Czech Republic's investment rating and would produce a negative reaction in the financial markets. The constitutional court in its statement dismissed this warning as "general and hypothetical risks, not based on any concrete data."
PM Nečas also stated that if the bill had not been approved by the end of 2010, the Czech Republic would have lost tens of billions CZK and its budget deficit would have increased.
The "emergency" approval of the bill was ruled unconstitutional by the majority of nine out of 15 judges.
The court ruled only on the form of the bill's approval, not on its content.
