Alistair Darling, the chancellor, faces criticism from Brussels after the European Commission forecast the UK would breach European Union rules on budget discipline this year and next, and threatened formal censure.

In its latest six-monthly economic forecasts, Brussels said the UK’s budget deficit would rise to 3.3 per cent of gross domestic product in 2008 and 2009, breaching the 3 per cent limit set under the EU’s stability and growth pact.

Joaquín Almunia, EU commissioner for economic and monetary affairs, said he would launch a report in June to begin an “excessive deficit procedure” against the UK – under which, if the UK did not reduce its deficit, the EU could set out demands to raise taxes or cut spending. ... Read full article