Ballooning UK deficit now projected to breach Maastricht 3% limit and set obstacle to Euro

7.00.00pm BST (GMT +0100) Thu 24th Jul 2003

Commenting on the Treasury's survey of independent forecasters' projection that UK public borrowing would be £33.7 billion in 2002-3 rather than the £24 billion projected in the April budget, Chris Huhne MEP, economic spokesman of the European Liberal Democrats, said:

"The projected figure for borrowing represents 3.2 per cent of the Treasury's forecast for the economy, instead of 2.3 per cent projected in April. If growth is slower than Gordon Brown hoped, the overshoot would be even greater. The Treasury could miss the Maastricht Treaty's 3 per cent limit by a substantial margin."

"This would put another obstacle in the way of British membership. Whatever the Chancellor's assessment of the euro, the euro-area's assessment of the UK's public finances could be negative as the entry criteria are set in the treaty. Countries can break the 3 per cent limit once they have joined, but no country has yet been accepted if it is breaking the limit".