EU to take legal action against Britain over deficit

(BRUSSELS) - EU Economic and Monetary Affairs Commissioner Joaquin Almunia said Monday he would launch legal action against Britain after forecasting that its public deficit would break EU rules in 2008.

"We will launch again a report to start an excessive deficit procedure," Almunia told journalists. "I intend to present this report for the adoption of the college (of EU commissioners) on June 11."

Earlier the commission forecast that the British public deficit was set to swell from 2.7 percent of output last year to 3.3 percent in 2008 and 2009, breaching an EU limit of 3.0 percent.

Under the EU legal action, Britain would have to commit to plan to wrestle its deficit back down to the 3.0 percent limit.

Although London would face pressure from other EU countries to stick to the plan, Britain does not face the prospect of fines if it does not, as countries using the euro do when they find themselves in the same situation.

In October, Britain's EU partners dropped previous disciplinary deficit action against London after concluding that the British government had reined in its fiscal shortfall within the European limit after breaching it in 2005.