Magazine article Public Finance

Ministers Reject EU Calls for Faster Action on UK Deficit

Magazine article Public Finance

Ministers Reject EU Calls for Faster Action on UK Deficit

Article excerpt

The government has rejected calls from the European Commission for a swifter crackdown on the UK deficit, amid speculation that better than expected benefit claimant figures could give the chancellor some Budget Day leeway.

In a March 17 report on the UK economy, the EC urged the government to 'strengthen the pace' of action to tackle the deficit to ensure it is 'brought below 3% of gross domestic product by 2014/15'.

But Chief Secretary to the Treasury Liam Byrne responded: 'We think that is the wrong judgement. Our judgement is that we should halve the deficit over four years, reducing the deficit to just 4.4% by 2014/15. To go further than this would entail taking out over £25bn extra by 2014/15."

The EC report was issued as new unemployment figures offered the government some relief ahead of the March 24 Budget. They showed that the number of people receiving Jobseeker's Allowance fell by 32,300 to 1.59 million between January and February, the largest monthly fall since November 1997. The lower than expected figures came despite a 54,000 fall in the number of people in employment, as the numbers classed as economically inactive -mainly students - rose.

A reduced claimant count helps the Treasury as it eases pressure on the social security budget. …

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