Britain must bring its excessive deficit within the European limits, according to recommendations set for release this Wednesday. The monetary authorities in Brussels give London till the 2006-07 financial year to show credible and sustainable results.
This is a pursuit of moves Brussels initiated last September — declaring Britain in breach of the European Union’s budget deficit limits.
Although Britain is not a member of the euro zone, it has to try to avoid deficits that exceed the Stability and Growth Pact’s limit of 3 percent of GDP.
Despite consistently breaking the budget deficit ceiling Britain has avoided the EU excessive deficit procedure.
Meanwhile, Italy has been congratulated for its stability programme, which Rome says is in line with the recommendations.
The 2005 deficit target is unchanged at 4.3% but for 2006 is an ambitious 3.5%, down from the 3.8% it was aiming for last September.
The public debt projection is raised to 108.5%, one of the highest ratios in the euro zone.
Britain’s deficit is hovering around 3.5%, its debt creeping above 40%.
After meeting Monetary Commissioner Joaquin Almunia, finance minister Giulio Tremonti said:
“It’s hard to run a tight budget policy in an election year.”