EMU: COMMISSION CALLS FOR UK TO MAKE BUDGETARY ADJUSTMENTS BY 2007.

The Commission argues that since the budget deficit was already 3.2% in the previous tax year and is expected to remain above 3% for the current year and in 2006/07, it cannot be considered temporary, in spite of recent budgetary measures announced by the United Kingdom. Economic and Monetary Affairs Commissioner Joaquin Almunia's department feels that while the deficit is close to the reference value, it does not result from a severe economic downturn or any unusual event, as defined by the Stability and Growth Pact (on the contrary, growth has been much more sustained in the United Kingdom than in the euro-zone over recent years). London therefore has no excuse to justify this budgetary discrepancy.

Mr Almunia explains that "although the UK budgetary position is less worrying than that of others in the EU, in particular as far as its debt position is concerned, the Commission recommends that the UK deficit be declared excessive and the UK asked to correct the situation".

London has also been given a deadline: it should comply with the terms of the Stability Pact by the end...