Saturday, January 07, 2006

Nemesis

After years of being lectured by Mr Gordon "Prudence" Brown on how to run their economies, the "colleagues" are about to wreak a delicious revenge.

This is according to Reuters, which reports that it has obtained a has obtained a copy of a draft recommendation from the commission, telling Britain next week it is not doing enough to control its budget deficit

The recommendation is due to be cleared by a full meeting of the commission on Wednesday and expected to be discussed by the EU's 25 finance ministers on 24 January, when they are expected to endorse the commission's view by a qualified majority and giving him six months to spell out how he will cut the deficit.

"The United Kingdom 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 commission's draft states, noting that, unless Britain changes its fiscal policy, "the overall government deficit would rise from 3.2 percent of GDP in 2004-2005 to 3.4 percent in 2005-2006 before falling again to 3.2 percent in 2006-2007".

Although Britain is not a member of the eurozone, it is still obliged to try to avoid deficits that exceed a limit in the Growth and Stability Pact of 3 percent of GDP. However, unlike eurozone members, Britain does not face the threat of financial sanctions, so the action is purely symbolic.

Nevertheless, it is certainly enough, says The Guardian to "raise the chancellor's hackles", as the commission is setting the Treasury a deadline of just 15 months to bring the deficit under control.

But the ultimate ignominy is that Britain, formerly hailed by the commission as a model of sustained growth and sound finances, is now being placed in the same camp as France and Germany, with the deficit expected to breach the 3 percent limit for four years in a row.

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