Tuesday, 29 April 2008

Darling in the Doo

Brussels has inflicted a double embarrassment on Alistair Darling, the Chancellor, after challenging his economic forecasts as "too rosy" and starting disciplinary action against Britain for allowing its finances to slide too deep into the red.

Darling's Budget predicted that Britain's economy would rebound strongly next year, after a "lacklustre 2008", but the bods in Belgium seem to disagree. They cut their forecast for UK growth this year from 2.2% to 1.7%, barely in line with the bottom of the Treasury forecast of 1.75 to 2.25%.

The Commission have also challenged Darling's claims that the economy will enjoy a resurgence next year, as it cut its forecast for 2009 to 1.6%. This is sharply lower than its previous November projection of 2.5% growth and far below Darling's hopes for GDP to expand by 2.25 to 2.75%.

Brussels also said that it expected that British employment growth would slow “to almost zero”, while the unemployment rate was tipped to increase slightly over the next two years.

Brussels coupled its questioning of the Chancellor's economic forecasts with an attack on his financial management as well, singling Britain out as one of the bad boys of Europe.

The Commission said that the Treasury was set to borrow 3.3% of national income (GDP) in the present 2008-09 financial year and the next, twice breaching the 3.0% ceiling prescribed under the Maastricht Treaty. The average deficit for the 27 European Union nations this year is, by contrast, set to be only 1.2 per cent of GDP.

Full story here: Times

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