EU faults Britain over missed deficit targets
The European Commission said Britain, despite tough spending cuts, remained in breach of the 28-nation bloc’s deficit rules and gave it another two years, to 2016-17, to put its fiscal house in order.
“These recommendations are not about Brussels lecturing governments,” EU Commissioner for Economic Affairs Pierre Moscovici said.
“They are about encouraging national efforts to deliver the jobs and growth that we collectively need.”
European Union rules adopted since the 2008 global financial crisis give Brussels increased oversight powers to ensure member states meet the targets to avoid a repeat of the crash which brought the economy to its knees.
For the 19 eurozone countries, Brussels can impose fines and other sanctions. But while it cannot go so far for non-euro Britain, keeping the country under an Excessive Deficit Procedure may prove politically embarrassing for newly re-elected Prime Minister David Cameron.
Cameron fought the May 7 election on his stewardship of the economy, pushing through harsh spending cuts and promising more to come in order to put the public finances on the sound footing needed for sustainable economic growth.
He also promised voters a referendum on Britain’s EU membership by 2017, and the Commission’s report may be additional grist to the mill for anti-EU campaigners who resent what they see as interference by Brussels.
– Britain needs more savings –
“The excessive deficit procedures have to end some day,” Moscovici said.
The Commission said Britain’s budget deficit — the shortfall between revenue and spending — stood at 5.2 percent of annual economic output in the current 2014-15 financial year, still way above the EU limit of three percent.
The government should accordingly rein in spending further so as to hit a headline deficit figure of 4.1 percent in 2015-16 and 2.7 percent in 2016-17, it said.
The EU first put Britain under surveillance in 2008, giving it until 2009-10 to come into line with the rules.
But the global financial crisis put government finances everywhere under intense pressure and pushed the British deficit to 10.9 percent, with Brussels extending the deadline to 2014-15.
Many EU member states, including powerhouse Germany, have breached the bloc’s fiscal rules over the years, but there is a newfound determination in Brussels to enforce them in the aftermath of the 2008 crisis.
Croatia, Cyprus, France, Greece, Ireland, Portugal, Slovenia and Spain are currently on the EU’s EDP list alongside Britain.
The Commission said Wednesday it would strike Poland and Malta from the list after they had made progress, while proposing Finland be added as its public finances deteriorate.
The Commission’s findings will be submitted for approval to the European Council, which groups the leaders of the 28 member state
No comments yet