Brussels flexes its muscles
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The EU, frequently criticized for being too weak, appears to be finding its feet when it comes to economic policy. After pushing Greece to make vicious spending cuts, it is has now trained its sights on the UK – warning the country is not doing enough to slash its budget deficit.
The EU has come in for harsh criticism over its handling of the financial crisis in the last two years.
Last year the International Monetary Fund slammed EU attempts to find a coordinated response to the global downturn as "far from optimal", while Belgian Foreign Minister Karel De Gucht admitted: "The crisis has exposed Europe's weakness”.
Yet if the EU’s recent actions are anything to go by, it appears it has taken the criticism on the chin and decided to get tough with those not playing by its financial rules.
A report leaked last night revealed that the European Commission is demanding that the UK take tougher measures to cut its budget deficit – the highest in the EU at 13% of GDP.
The report says current budget plans mean the UK will not meet its target of slashing the deficit to the 3% allowed under EU guidelines by 2014-15.
The British government – particularly wary of criticism in the face of an imminent general election - immediately rejected the claims, warning that the spending cuts wanted by Brussels were “too aggressive” and would cause “irreparable damage” to the UK’s hopes of financial recovery.
Analysts say the fact that the EU has dared to challenge a key member’s economic policy at a politically sensitive time shows that it is no longer going to let such lapses slide, the way it did in the past.
Meanwhile, yesterday and today EU finance ministers were debating what to do about Greece. The EU has already stood firm, pushing Athens into taking extremely unpopular austerity measures to try to avert financial meltdown, before knuckling down this week to agree a possible bailout plan.
Although the details of how a bailout would work are still hazy, ministers made it clear that any aid would come with strings firmly attached – an indication that the EU intends to keep a much closer eye on the finances of its member states from now on.
