Alistair Darling and the Labour government have failed to announce a âsufficiently ambitiousâ plan to cut the budget deficit, the European Commission is poised to conclude on Wednesday, according to a draft document leaked on Monday.
The Commission has no option but to rap Britain over the knuckles because Brussels recommended in December that the government increase the planned speed of deficit reduction. But the chancellor paid no attention to the advice in his pre-Budget report a week later.
No consequences can flow from any findings by the Commission on the deficit because Britain is not a member of the single currency. But they will be embarrassing and give the Conservatives more ammunition in their argument that the deficit needs to be reduced faster.
The draft statement concludes, âthe fiscal strategy in the [UK] convergence programme is not sufficiently ambitious and needs to be significantly reinforcedâ, according to Reuters news agency. âA credible timeframe for restoring public finances to a sustainable position requires additional fiscal tightening measures.â
In its December recommendations, the Commission, backed by European finance ministers, said Britain should reduce the deficit by 1.75 per cent of national income a year from 2011-12 to bring borrowing below 3 per cent of national income by 2014-15. Mr Darlingâs pre-Budget report fell short with projected borrowing, on European definitions, of 4.6 per cent of national income in 2014-15.
The Treasury will not be surprised by the findings nor is likely to act on them. It has studiously ignored recommendations from Brussels on the deficit since the middle of 2008.
It stuck on Monday night to the governmentâs weaker aim of halving the deficit over four years. âThe chancellor has taken a judgment on the appropriate pace of adjustment in 2010-11 and beyond,â it said.
Both sides of the political debate tried to seize on different bits of the Commissionâs findings to support their arguments.
The Treasury added: âAs the chancellor has made clear, to withdraw support earlier and at the wrong pace risks wrecking the recovery â a judgment supported by the Commission.ââ
George Osborne, shadow chancellor, said the findings were âa heavy blow for Gordon Brownâs credibilityâ.
He added: âThe Conservatives have been arguing that we need to reduce our record budget deficit more quickly in order to support the recovery.
âOur argument is backed by credit rating agencies, business leaders, international investors and now the European Commission.â
It is impossible to know how far apart the parties are in their plans for the deficit because the Tories refuse to say how much faster they would cut borrowing if they won power.
http://www.ft.com/cms/s/0/68f96172-308b-11df-a24b-00144feabdc0.html
After Greece, now UK in the crossfire ?
The Commission has no option but to rap Britain over the knuckles because Brussels recommended in December that the government increase the planned speed of deficit reduction. But the chancellor paid no attention to the advice in his pre-Budget report a week later.
No consequences can flow from any findings by the Commission on the deficit because Britain is not a member of the single currency. But they will be embarrassing and give the Conservatives more ammunition in their argument that the deficit needs to be reduced faster.
The draft statement concludes, âthe fiscal strategy in the [UK] convergence programme is not sufficiently ambitious and needs to be significantly reinforcedâ, according to Reuters news agency. âA credible timeframe for restoring public finances to a sustainable position requires additional fiscal tightening measures.â
In its December recommendations, the Commission, backed by European finance ministers, said Britain should reduce the deficit by 1.75 per cent of national income a year from 2011-12 to bring borrowing below 3 per cent of national income by 2014-15. Mr Darlingâs pre-Budget report fell short with projected borrowing, on European definitions, of 4.6 per cent of national income in 2014-15.
The Treasury will not be surprised by the findings nor is likely to act on them. It has studiously ignored recommendations from Brussels on the deficit since the middle of 2008.
It stuck on Monday night to the governmentâs weaker aim of halving the deficit over four years. âThe chancellor has taken a judgment on the appropriate pace of adjustment in 2010-11 and beyond,â it said.
Both sides of the political debate tried to seize on different bits of the Commissionâs findings to support their arguments.
The Treasury added: âAs the chancellor has made clear, to withdraw support earlier and at the wrong pace risks wrecking the recovery â a judgment supported by the Commission.ââ
George Osborne, shadow chancellor, said the findings were âa heavy blow for Gordon Brownâs credibilityâ.
He added: âThe Conservatives have been arguing that we need to reduce our record budget deficit more quickly in order to support the recovery.
âOur argument is backed by credit rating agencies, business leaders, international investors and now the European Commission.â
It is impossible to know how far apart the parties are in their plans for the deficit because the Tories refuse to say how much faster they would cut borrowing if they won power.
http://www.ft.com/cms/s/0/68f96172-308b-11df-a24b-00144feabdc0.html
After Greece, now UK in the crossfire ?
