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Brussels meets to set tough EU spending rules

Treasury officials will be "surprised" if a euro ticking off follows Britain's multi-billion Budget spending spree.

Just a week after Gordon Brown's gamble, Brussels was on Wednesday preparing to set tough EU fiscal restraints on member states' expenditure.

In February the UK chancellor led a revolt of Europe's finance ministers against spending rules imposed by the European Commission.

And the memories of some commissioners will still be smarting as they meet to agree the Broad Economic Guidelines for member states' economic policies for 2002.

Just weeks before his five year Budget boost to the NHS of £34 billion, Brown brusquely dismissed a Brussels demand that he slash public spending by £10 billion.

"We are engaged in a very major task to turn around historic levels of under-investment in our country and we are not going to cut public spending and investment. That is why I took exception to the Commission's views on the United Kingdom," he said then.

It was a rebuff shortly to be followed by Brown's plan to increase UK government spending from £390 billion in 2002/03 to £471 billion in 2005.

Gus O'Donnell, the UK Treasury's macro-economic policy and international finance chief, told MPs on Tuesday he would be "surprised" if the Commission saw fit to give Britain a ticking off, despite predictions of a worsening budget deficit.

"The UK has one of the most fiscally sustainable positions in the whole of the EU," he told the Commons Treasury select committee.

Published: Wed, 24 Apr 2002 00:00:00 GMT+01