BRUSSELS (MNI) – The UK’s emergency budget outlines cuts will be
challenging to implement but will strengthen confidence in the country’s
economy, the European Commission said on Tuesday.
The European Commission — as the EU’s executive arm — advises the
27 member states on how quickly they should trim their budget deficits.
Its rules stipulate that no budget deficit should be more than 3% of
annual GDP. The UK’s current budget deficit of around 11% is the highest
in the Group of 20 leading world economies.
“The current economic circumstances call for a decisive fiscal
consolidation, while not suffocating the nascent economic recovery,”
European Commissioner for Economic and Monetary Affairs, Olli Rehn said.
“The budgetary targets presented by the UK Government are in line
with this strategy”, he added.
The UK government on June 22 outlined plans to cut its budget
deficit that rely on deep spending reductions, and projects the deficit
to fall to 2.3% of GDP by 2014/15.
The European Commission said that timeline was in line with its
recommendation.
“Around three quarters of the overall reduction in the headline
deficit is planned to take place through expenditure reduction,” it
said.
“Implementing the planned spending cuts — including a 25%
reduction in departmental budgets in real terms on average over a
four-year period — will be challenging,” it said.
But it concluded that “provided [the cuts] are implemented as
planned, the measures announced will strengthen confidence in the UK’s
commitment to putting its public finances back on a sustainable path.”
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
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