This follows the report adopted in June under Article 104(3) of the Treaty and the opinion of the Economic and Financial Committee on that report.

The issue is expected to be decided upon by the ECOFIN Council of 8 July.

“Having carefully examined the United Kingdom’s economic and budgetary prospects, the Commission considers that the breach of the reference value planned by the UK authorities for 2008/09 qualifies as an excessive deficit. We expect the UK authorities to adopt the measures necessary to correct the situation at the latest by 2009/10,” commented Economic and Monetary Affairs Commissioner Joaquín Almunia.

In June the Commission adopted a report under Article 104(3) of the EU Treaty following the notification, in March, by the United Kingdom, of a planned deficit of 3.2% of GDP in the present financial year and the Commission's own economic forecasts of 28 April that put the likely deficit at 3.3%.

According to the EC, the announcement by the UK government on 13 May that the personal income tax will be reduced in 2008/09 is set to result in even higher deficit and debt ratios if all other things remain equal.

Looking forward, the Commission expects the deficit ratio in 2009/10 to remain above 3%, with the weak economic context feeding through into slower revenue growth.

In the Commission's view there are no special circumstances suggesting a longer deadline would be appropriate.

The Council's recommendation to the UK should also require a structural fiscal improvement of at least 0.5% of GDP on the basis of the Commission's spring forecast.

The opinion takes into account the June report and the subsequent opinion of the Economic and Financial Committee on that same report.