Hei polish moron also britain is going to breach eu deficit 3% rule

*ROTFL*
UK on course to break golden rule on budget
By Chris Giles
Published: October 24 2003 22:00 | Last Updated: October 24 2003 22:00


Gordon Brown, the chancellor, is on course to break his cherished "golden
rule" on government borrowing as rising public expenditure and disappointing
tax receipts have led to a marked deterioration in public finances.


The UK is also set to join France and Germany in breaching the Maastricht
criterion on deficits.

A Financial Times analysis shows that unless there is a sudden unexpected
improvement in the public finances, the chancellor will have to prune his
spending plans or raise taxes to ensure these rules were met.

Any failure to adhere to the golden rule would be a blow to Mr Brown's
reputation for prudence. His rule is that the government must not borrow
more than it invests over the economic cycle. It has been the cornerstone of
his budgetary policy for the past six years.

Carl Emmerson, of the Institute for Fiscal Studies, said: "This time last
year no one thought it was possible that the golden rule would be broken in
this economic cycle. That is no longer true."

Treasury officials last night accepted there had been a rapid deterioration
in the government's margin of error over the rule.

They said the government would "meet the fiscal rules" because the current
deficit was likely to grow more slowly next year. Faster economic growth, an
absence of one-off factors such as expenditure on the Iraq war, and rapid
public investment growth, which does not count for the golden rule, would
ensure the rules were not broken.

But a survey of 27 independent economic forecasts published by the Treasury
this week shows that two-thirds of those polled believed public finances
would deteriorate or, at best, remain the same.

The Financial Times analysis shows that even if public finances do not
deteriorate, the government will begin to breach its own definition of the
golden rule by the end of next year.

If Mr Brown fails to abide by the rule, he would be required under the Code
for Fiscal Stability - the law he introduced to oversee public finances - to
explain himself before parliament.

The deterioration in the public finances is nearly entirely caused by rapid
growth in expenditure and a shortfall in taxes, not by a shortfall in
economic growth. Official figures yesterday showed the economy grew by a
healthy 0.6 per cent in the third quarter, leaving it on course to meet the
Treasury's forecast. Government expenditure has risen by 10 per cent in the
first six months of the financial year compared with the same period last
lear. Tax receipts are up only 6 per cent.

Mr Brown's problems could be compounded by his failure to meet the European
Union's Maastricht criterion. This rule - which applies to countries outside
the euro - defines acceptable deficits as less than 3 per cent of gross
domestic product. Figures published on Friday showed the UK ran a budget
deficit of 2.9 per cent in the past 12 months.

If the UK breached the limit Mr Brown would have to explain the poor
performance to other finance ministers - an uncomfortable scenario for a man
who has often sought to persuade his continental counterparts of the
superiority of the UK economy.

The chancellor boasted in last year's pre-Budget report that he would meet
the EU rules easily. "I can confirm that this year and each year in our
forecast period we are well within the Maastricht criteria," he said.

The showdown in Brussels could come in February, when finance ministers
gather to discuss the annual stability and convergence programmes each EU
country must submit to the European Commission.