Gordon Brown Can't Avoid Europe

Tony Blair's troubles are not confined to overwhelming public skepticism regarding the war in Iraq. The strong economy that has buttressed his government since 1997 is showing cracks.

Indeed, until now, Europe's worries about public finance have centered on Germany, France, and Portugal. Britain seemed a paragon of fiscal prudence. In his forthcoming budget, however, Chancellor of the Exchequer Gordon Brown may need to admit that the UK risks breaching the Maastricht Treaty's deficit limits. Before Britain's next election, an even more worrying admission may be forced on Chancellor Brown: the need to raise taxes to meet his own fiscal rules.

Last November, Chancellor Brown forecast that the UK's budget deficit would rise to £24 billion in 2003/4, then fall to £19 billion by 2004/5-well below the Maastricht Treaty's ceiling of 3% of GDP. But the average forecast among analysts is a £27 billion deficit next year, and some observers project a deficit of £30 billion or more in 2004/05. This will press hard against the Maastricht ceiling.

To continue reading, please log in or enter your email address.

To read this article from our archive, please log in or register now. After entering your email, you'll have access to two free articles from our archive every month. For unlimited access to Project Syndicate, subscribe now.

required

By proceeding, you agree to our Terms of Service and Privacy Policy, which describes the personal data we collect and how we use it.

Log in

http://prosyn.org/tQxiOdQ;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.