Darling criticised over economic forecast

The EU Commission has challenged Alistair Darling's economic forecast and claimed that his Budget prediction was too upbeat.

Brussels reduced its forecast for UK growth from 2.2 to 1.7 per cent for 2008 and to 1.6 per cent for 2009.

This year's predictions were just in line with the bottom of the Treasury forecast of 1.75 to 2.25 per cent.

The Commission also rebuked Britain for allowing its finances to slide too deep into the red.

The Treasury would breach the three per cent limit set by the Maastricht Treaty, borrowing 3.3 per cent of GDP in the 2008/09 financial year and the next, it said.

And it argued that growth would be affected by changes in the housing market and the financial sector, with employment growth set to slow "to almost zero".

European economics affairs commissioner Joaquín Almunia said that Brussels would use "excessive deficit procedures" to take disciplinary action against the UK.

"The message for the UK with these forecasts is very clear," he said. "We are preparing... to launch a report to start an excessive deficit procedure and intend to present that report for June 11."