EU: Britain taking effective action in cutting deficit

19:15, July 07, 2010      

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The European Commission has given a positive assessment of the austerity measures taken by Britain to cut its massive deficit.

"The current economic circumstances call for a decisive fiscal consolidation, while not suffocating the nascent economic recovery. The budgetary targets presented by the British government are in line with this strategy," said European Union (EU) Economic and Monetary Affairs Commissioner Olli Rehn said in a statement on Wednesday.

EU finance ministers recommended in December 2009 that Britain should start consolidation in the fiscal year 2010/11 and outline a consolidation strategy that would correct the excessive deficit by 2014/15.

The new British government announced significant new fiscal tightening in June, which would reduce the structural deficit by an additional 0.5 percent of gross domestic product (GDP) in 2010/11 and by 2.25 percent of GDP by 2014/15.

As a result, it was projected that Britain's headline deficit to fall to 2.3 percent of GDP by 2014/15, which was in line with the EU's recommendation.

It was estimated that the British government would run a deficit of more than 12 percent of GDP this year, much higher than the 3 percent ceiling allowed by EU rules.

Source: Xinhua


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