Brown to EC: sod off

In a follow up to my post last Friday, Chancellor faces EU censure over deficit, Chancellor Brown has politely but firmly told the European Commission to sod off. The Financial Times reports Britain rejects EU demands to rein in its budget deficit:

Britain on Wednesday rejected demands from the European Commission to raise taxes or cut spending to rein in its “excessive” budget deficit, in a new setback for Brussels in its attempt to enforce budget discipline.

Gordon Brown, the British chancellor of the exchequer, rejected both the Commission’s forecasts and conclusions. “We make no apologies for investing in vital public services,” said a UK Treasury spokesman.

Some 12 countries out of 25 in the European Union are running deficits above the bloc’s limit – including France, Germany and Italy – in spite of pleas from Brussels and the European Central Bank for fiscal discipline.

Joaquin Almunia, EU monetary affairs commissioner, said he was “sure” Mr Brown would adjust his plans. “The UK has to comply with the rules,” he said. He wants Mr Brown to bring the UK deficit below the stability and growth pact’s 3 per cent of gross domestic product limit in the 2006-07 financial year.

Mr Almunia claimed Mr Brown’s spending plans implied Britain would break the stability and growth pact’s deficit ceiling for four successive years – starting in 2003-04 – unless corrective action was taken.

Peter Mandelson, the British trade commissioner, was said by aides to have watered down the language used in the Commission’s report to “ensure a fair text”. But Mr Brown, whose habit of lecturing others on economic management causes irritation in many European capitals, was in no mood to take advice himself.

The Treasury now forecasts borrowing falling to 3 per cent of GDP in 2005-06 and to 2.7 per cent in 2006-07, well below the stability pact’s limit and says there will be no change of policy.