UK Treasury Rejects Budget Criticism From European Commission

by Jason Gorringe, Tax-News.com, London

30 January 2003

A leaked European Commission convergence report, seen by Reuters, has warned UK Chancellor, Gordon Brown that if tax collection and economic growth fail to live up to expectations this year, he potentially risks breaching the 3% of GDP deficit ceiling to which all eurozone and aspiring eurozone countries are required to adhere.

According to the news service, the report - officially due for publication today - recommended that Britain should 'aim for a medium-term budgetary deficit small enough to ensure that the three percent ceiling is not breached in any year'.

However, the Treasury yesterday hit back at the suggestion that the Chancellor's revenue and growth forecasts are over-optimistic. Although declining to comment on a report which had not then officially been made public, a Treasury spokesman told Reuters that:

'It is hard to see why the report should be saying we are over-optimistic when the Commission's own forecasts are very similar to ours.'

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