Brown faces blushes over EU borrowing rules

The European Commission will next week open a chink in the armour of Britain’s ‘iron chancellor’ Gordon Brown over his failure to keep borrowing under control.

Brussels is expected to call for the start of excessive deficit proceedings against the UK for failing to keep public borrowing below 3 per cent of GDP.

Brussels estimates that UK borrowing reached 3.2 per cent of GDP in 2004 and 2005, and is likely to reach 3.6 per cent in the current financial year, which ends in March.

The commission had ignored Britain’s earlier deficits on the grounds that they were considered temporary, but it is now expected to call on Brown to bring borrowing back below 3 per cent by 2007.

Censure by the commission would be highly embarrassing for the chancellor, who has frequently contrasted Britain’s impressive economic growth with the flagging performance of the eurozone.

Although Britain is not part of the eurogroup, it is still bound by the rules of the stability and growth pact.

However, financial sanctions cannot be imposed, and Brown is likely to be spared the embarrassment of advice from Brussels on how to bring borrowing levels down.

The UK Treasury argues that Brussels’ estimates are worse than Brown’s own, and calculated in a different way.

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