UK Government Rejects Deficit Cut Calls

The daggers are out in the run-up to the Budget next week.  The deficit crisis is still on everyone’s mind, with the prediction that this year alone, Britain’s deficit will reach a whopping 12.5% of GDP, very close to that of ailing Greece.

Now, the European Commission is due to complain that the UK needs to take more drastic action to cut its deficit to the target rate of 3% of GDP within the next four years.  Currently, the Labour party’s plans to cut the problem would mean that it would reach somewhere near 4.7% by 2015, slightly outside of the EU rulebook – yet they argue that if Government spending is cut too rapidly, then the economy would suffer too much.

Not surprisingly, the news has put added pressure on to the pound – apparently the market is already looking for excuses to sell the currency and the European Commission’s complaint has provided the perfect reason.

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