Wednesday, 11 June 2008 15:15 UK

BBC News

EU to act over UK budget deficit

 

The European Commission is to start disciplinary proceedings against the UK for breaching its economic rules.

It says Britain's budget deficit, the gap between its spending and its revenues, is growing too large.

 

The disciplinary proceedings are in effect a formal warning to curb borrowing, cut spending or both.

The Treasury said it did not agree with the commission's assessment and asserted that the UK's public finances were sound.

The UK cannot be fined as it is not in the eurozone, but the launch of proceedings is unlikely to reflect well on the UK government.

 

The European Commission watches the economies of all EU countries, whether they use the euro as a currency or not.

 

It says it foresees a situation when Britain's deficit is over 3% of its GDP, breaching the rules on economic management set down in Europe's Growth and Stability pact.

The UK is the only EU country to face such a censure this year but warnings have been issued to France and Germany in the past, backed with the threat of fines.

 

Graham Mather, president of the European Policy Forum and a former Conservative MEP, said: "At the moment it looks as though Gordon Brown is going to face an excruciating embarrassing period in which all these proceedings will be brought to bear on Britain.

"Our colleagues in other countries will be saying: 'Oh dear Gordon, what's gone wrong, why have you broken the rules, how can we help you get things back in line and get your budget deficit back under control'.

"It's not going to be a happy picture."

 

The Treasury has rejected the rebuke, saying its policies remain "prudent".

"The assessment does not take proper account of the UK's low debt - which remains well below the levels in other major EU nations and the euro area average - the economic cycle, nor the important role of investment in public services and infrastructure," the Treasury said in a statement.

 

It added: "The IMF said recently that 'the 2008 Budget judgment was appropriate, as was its commitment to fiscal tightening over the next few years'."

 

Any Comments on the way Brown's puppet Darling has run the economy as Chancellor? Or do you think it is none of EU's business?

 

 

It's easy to blame Darling, but at the end of the day, he's just inherited the huge budget deficit from "Pa Broon" in the first place.... Gordon was just better at hiding the facts... It's all very well to say to the EU that they're "sticking their nose in", but is the fact that there IS such a huge deficit be something we Brits should be happy with anyway....? I dont think so, so clearly somebody needs to step in and stop the rot, our own Govt seem incapable of doing so... The facts are, Brown and Darling have seriously mismanaged the economy in the past four or five years

 

I also can't help thinking that the incredibly costly war in Iraq has hardly helped the country's finances either..... -_- How many BILLIONS have we sunk into that absolute fukkin' disaster.....?

I also can't help thinking that the incredibly costly war in Iraq has hardly helped the country's finances either..... -_- How many BILLIONS have we sunk into that absolute fukkin' disaster.....?

 

Up to the end of April 2007 = the war in Iraq & Afghanistan has cost the UK £7.4 BILLION. (© Bloomberg.com)