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EU report calls for more action in reducing UK budget deficit

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by Kay Mitchell

A report due to be released later this week by the European Commission is expected reveal the Government’s plans for reducing the budget deficit are not ambitious enough.

A draft document, which has been seen by the Reuters news agency, warns Britain is not on target to trim its deficit in accordance with EU rules of below 3% of economic output by 2014-15.

The rules say deficits must be below 3% of GDP, but the UK’s is expected to reach £178 billion – 12.6% of GDP.

However, the report also states that other EU countries are in a similar situation.

The Government has outlined plans to reduce the UK’s deficit from 12.1% of GDP in 2010-11 to 4.7% in 2014-15 – falling short of EU regulations.

However, in the build-up to next week’s Pre-Budget Report, Chancellor Alistair Darling has warned that the economic recovery is still too fragile warned that cutting the deficit too quickly could pose a threat to the recovery.

In the meantime, the report also queries the Treasury’s forecasts for the UK’s economic growth.

According to an EU spokesperson: “The message from the Commission will be that the UK needs to get its house in order.”

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News posted: March 16, 2010

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