Magazine article Public Finance

Treasury Awaits Euro Verdict on Budget Deficit

Magazine article Public Finance

Treasury Awaits Euro Verdict on Budget Deficit

Article excerpt

The Treasury is considering its response to last week's European Commission criticism that the UK's budget deficit is 'excessive'.

In a decision published on January 11, the commission stated that because the UK's deficit has been above 3% of gross domestic product since 2003/04, it could no longer be considered 'temporary' or due to an 'unusual event'.

A 3% UDP deficit is the cap set by the UK-signed European Union Stability and Growth Pact.

Invoking the EU's excessive deficit procedure, commissioner for economic and monetary affairs Joaquín Almunia said: 'The commission considers that the deficit is likely to remain above the 3% reference value in 2005/06 and 2006/07, in spite of recently announced fiscal measures.'

The Treasury and commission both agree that the UK's deficit was 3. …

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