RPT-Czech lower house gives prelim approval to 2011 budget

                                
 (Repeats story published late on Wednesday)
                                
 * Central deficit target CZK 135 billion
                                
 * Overall fiscal deficit to drop to 4.6 pct/GDP from 5.3 pct
                                
 * Approval seen in December, unions may strike
                                
 
                                
 PRAGUE, Oct 27 (Reuters) - The Czech lower house approved
the government's draft 2011 budget, which outlines public
spending cuts to reduce the overall fiscal deficit to 4.6
percent of GDP, in the first of three readings on Wednesday.
                                
 The budget would bring the deficit down from an estimated
5.3 percent of GDP this year. Public sector unions have
threatened to strike over a plan to cut the overall public
sector wage bill by 10 percent next year and increase wage
flexibility, but Prime Minister Petr Necas said the cuts were
necessary.
                                
 "The public sector has to breathe along with the Czech
economy, it is not an island which can live independently of
what is going on in the economy," Necas told lower house
lawmakers before debate on the budget began.
                                
 The government needs to push through several austerity bills
which the budget assumes will take effect in January. It has
asked for a fast-track process on the bills to give more time to
override an expected Senate veto.
                                
 The 2011 budget would cut the overall public sector gap to
135 billion crowns ($7.66 billion) through spending cuts in
government departments and wages, lower subsidies to savers and
reduced tax breaks.
                                
 A final vote is expected in December in the lower house
where the three-party ruling coalition led by Necas holds a
commanding 118 of 200 seats.
                                
 The house voted 109 to 70 to support the budget in the first
reading. The draft will go to committees for a second reading
before returning to lawmakers for a final vote.
                                
 The first vote locked in overall revenue of 1,044 billion
crowns and spending of 1,179 billion. Individual chapters may be
changed.
                                
 The Senate can return bills to the lower house within 30
days, which would delay -- but not stop -- the government's key
austerity bills from coming into law as set in the 2011 budget.
                                
The Czech Republic's public debt at 37.5 percent of GDP this
year is about half the EU average and investors see the country
as a safer bet than some euro zone countries including Italy,
but the debt load has begun to rise fast.
                                
 Necas's Civic Democrats with the conservative party TOP09
and the centrist Public Affairs party won a May election with
the strongest majority for any government since the Czechs split
from neighbouring Slovakia in 1993. 
                                
 The three parties' have pledged to bring the budget deficit
below 3 percent of GDP in line with European Union rules by
2013.
 (Reporting by Roman Gazdik, writing by Jason Hovet; Editing by
Susan Fenton)