PM’s debt plans ‘not ambitious enough’
Government plans to deal with Britain’s ballooning debt are not ambitious enough and need to be “significantly reinforced”, according to a European Commission report.
In a blow to Gordon Brown's economic strategy, the Commission is warning the UK may not cut its deficit in line with EU rules by a deadline of 2015.
Its economic health report, due out tomorrow, also questions Treasury forecasts for the UK's economic growth over the coming years, saying they could be optimistic if the global economy fails to grow as strongly as expected.
The warnings come ahead of the Government's critical pre-general election Budget next week, and figures out later this week that will show whether this year's UK deficit will be worse than the £178bn forecast last year.
The Government has pledged to halve this over four years, but not set out in detail how the reduction will be achieved. It is likely to be the biggest electoral battleground over the coming weeks.
The European Commission’s report states: “The fiscal strategy in the convergence programme is not sufficiently ambitious and needs to be significantly reinforced.
“A credible timeframe for restoring public finances to a sustainable position requires additional fiscal tightening measures beyond those currently planned.”
The report will be published once it has been endorsed by a meeting of the Commissioners tomorrow.
A senior EU official said last night: “The message from the Commission will be that the UK needs to get its house in order.”
Shadow chancellor George Osborne seized on the Commission's verdict to attack Government policy. “This is a heavy blow for Gordon Brown's credibility. The Conservatives have been arguing that we need to reduce our record budget deficit more quickly in order to support the recovery.’’
A Treasury spokesman said the Government has set out a plan to halve the deficit in four years — the sharpest deficit reduction plan in the G7, backed by legislation.
In December, Mr Darling said the economy was on course to record growth of between 1% to 1.5% in 2010/11, before surging ahead to 3.5% the year after.