LONDON—Even before the winner of today's general election is announced in the U.K., officials in Europe are warning about the need for the new government to tackle the country's spiraling debt.
In what has been portrayed as a damning indictment of the previous Labour government's finances, the European Commission's (EC) spring economic forecast put the U.K.'s deficit as the highest out of its 27 regional members—even greater than that of Greece, which has a deficit of 9.3 per cent of GDP.
The EC forecast put the U.K. debt this calendar year as 12.2 percent of GDP—worse than the figures released by Finance Minister Alistair Darling.
There is widespread concern over Britain's finances in Europe, which are in their worst state since the second world war.
Markets fear that if the country is faced with a hung parliament, the government will lack the strength to push through wide-ranging cuts to public services.
“The first thing for the new government to do is to agree on a convincing, ambitious, program of fiscal consolidation in order to start to reduce the very high deficit and stabilize the high debt level of the U.K.,” said European economic and Monetary Affairs Commissioner Olli Rehn.
“That's by far the first and foremost challenge of the new government. I trust whatever the color of the government, I hope it will take this measure.”
According to the EC's forecasts, the U.K.'s deficit is expected to fall from 12.2 percent of GDP this year, to 11.5 percent in 2010-2011 and 9.5 percent in 2011-2012.
That is far less optimistic than the figures predicted by Darling when delivering the budget in March. The Treasury forecast that the deficit would fall from 11.2 percent in 2010-2011 to 8.6 per cent in 2011-2012.
In a statement on Wednesday, a day before the general election, shadow Finance Minister George Osborne said that the forecasts were a “damning indictment of Gordon Brown’s economic record.”
“He has left this country with the largest budget deficit in Europe—larger even than Greece—and projections for future growth well below his own forecasts,” he said.
“If any more evidence was required of the need for change to get our economy back on track, this is surely it.
“Only by voting Conservative tomorrow will you get a new government that starts dealing with our debts and getting our economy moving on Friday,” he said.