EU urges London to tighten purse strings

Britain must do more to control its budget deficit, the European Commission will warn on Wednesday.
 
The EU executive’s draft recommendation says Britain should lower its deficit to below the EU ceiling of 3 per cent of GDP by the 2006-2007 fiscal year.

“The UK authorities should put an end to the present excessive deficit situation as soon as possible and by financial year 2006-2007 at the latest,” the EU executive’s draft states.

After being cleared at a full meeting of the commission on Wednesday, the proposal is expected to be discussed by the EU’s 25 finance ministers on January 24.

The warning will embarrass London, where the treasury has proudly compared domestic growth with the sluggish eurozone economy.
 
But UK finance minister Gordon Brown insists EU estimates are worse than his own only because they are calculated in a different way.

Unlike eurozone members, Britain does not face the threat of financial sanctions.

But all member states must comply with the excessive deficit requirements and Brown is bound by the rules of the stability and growth pact.
 
If EU finance ministers endorse the commission’s recommendation at their meeting later this month, they will give Britain six months to specify how it plans to implement cuts.

Britain broke the budget deficit ceiling in 2003-2004 financial year but avoided an EU warning because the shortfall was smaller and considered temporary.

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