EU warns Britain of deficit slippage, urges housing reforms
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(BRUSSELS) - The EU on Tuesday demanded that Britain ensures "no slippage" on planned deep budget cuts and urged a radical overhaul of its still-overheated housing market.
In an inaugural report card on EU members' finances and economic policies, Britain was told it had much to do to fit in with post-recession Europe's economic priorities.
"The UK appears to be at high risk with regard to the long-term sustainability of public finances," Brussels experts concluded, with the long-term cost of ageing above the EU average.
"Implementing the proposed fiscal consolidation remains a major challenge. Ensuring no slippage from published spending plans will be vital to re-establishing a sustainable fiscal position," it added.
The report was the first fruits of new demands for harmonised economic governance in Europe.
Under the agreement European Union nations -- including a reluctant Britain -- will submit budgets for Brussels oversight.
Britain plans to bring its budget deficit down to 6.2 percent of output by 2012-2013.
Britain's deficit for the 2010-2011 financial year came in at 10.0 percent of national output, down from 11.5 percent 12 months earlier, at just below 147 billion euros
But it remained the third-highest deficit in the EU after Ireland and Greece, and its cumulative national debt rose by almost 20 percent year-on-year to more than 1.2 trillion euros -- at 82.5 percent of GDP, almost double its level four years ago.
The European Commission's country recommendations -- released for all 27 EU members as well as the integrated, 17-state eurozone -- focused thereafter on calls for policy changes to make property ownership more affordable, and less risky for consumers and banks.
It warned that prices, despite sharp falls during the recession, "remain at historically high levels," slashing the number of transactions, stunting household consumption and hitting tax receipts with raised housing benefit payouts -- "contributing to the worsening of the UK fiscal position."
The EU called for comprehensive reform "with a view to alleviating problems of affordability and the need for state subsidy for housing. This should include reforms to the mortgage market, property taxation and the planning system."