European Commission officials last night praised Gordon Brown's plans for the running of public finances.

"We welcome this recognition of the strength of the UK public finances, but our fiscal rules - balancing the current budget, borrowing for investment, and debt on a sustainable path - are for the medium term, not just one or two years," the Treasury said last night.

The move has been interpreted as an attempt to smooth tensions between the chancellor and the commission, which have dented Britain's prospects of joining the single currency.