BANKRUPT Britain??

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Britain is in danger of going bust, warns EU

 

 

By James Chapman

Last updated at 8:27 AM on 15th October 2009

 

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Out of money? The EU warns that the UK economy is 'high risk'

 

Britian's economy was consigned to a list of those at 'high risk' yesterday because of the spiralling national debt.

The European Commission issued a humiliating warning that the worsening budget deficit poses 'serious concerns' that the country will be unable to meet future spending commitments, such as pensions.

The growing number of elderly people threatens to make debt unsustainable and has led to the UK economy being ranked alongside nations such as Latvia, Greece and Romania.

The warning plunged the Government into a furious row with Brussels, as Treasury officials said it called into question the EC's ability to carry out 'credible economic analysis'.

But the Conservatives seized on the assessment as vindication of their decision to set out a package of spending cuts aimed at restoring the public finances to balance.

 

Shadow Chief Secretary to the Treasury Philip Hammond said: 'This latest rebuke from the EU is further evidence of the extent of Gordon Brown's debt crisis, and shows why we need a clear and credible plan to start reducing Britain's deficit now.

'If we don't act, interest rates may rise, causing the recovery to falter and putting jobs at risk.'

 

 

 

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The EC's report said Britain was among the EU members projected to breach the bloc's deficit ceiling of three per cent of gross domestic product this year and next.

 

 

 

It is forecast to have the second-biggest budget deficit at 13.8 per cent, behind only Ireland, at 15 per cent-plus. Britain is expected to borrow an unprecedented £200billion this year.

Overall EU government deficits are expected to average 6 per cent of GDP in 2009 and around 7 per cent in 2010. The report said: 'Although the contribution of an ageing population is not amongst the most problematic, the UK's budgetary position poses severe risks to the sustainability of public finances.'

It added that plans such as those by the Conservatives to raise the retirement age 'merit wider consideration'.

But a Treasury spokesman said: 'This report has no basis in reality. It only shows what would happen if no government took action to reduce borrowing once the recession is over.

'This is precisely why the UK government has set out a clear plan to halve the deficit over the next four years.

 

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Read more: http://www.dailymail.co.uk/news/article-1220508/Britain-danger-going-bust-warns-EU.html#ixzz0TzvPVf9T