Chancellor takes on Europe to highlight economic success

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Indy Politics

Gordon Brown will claim that the British economy is outperforming those of its European Union counterparts today when he delivers his pre-Budget report.

Gordon Brown will claim that the British economy is outperforming those of its European Union counterparts today when he delivers his pre-Budget report.

The Chancellor, who has angered pro-Europeans by criticising the economic performance of other EU countries, will defend the higher-than- expected borrowing levels in Britain this year by trumpeting the "underlying strength" of the economy when historical and international comparisons are made.

Some City analysts are predicting he will revise the £33bn borrowing figure for 2004-05 he predicted in his March Budget to about £40bn. But a defiant Mr Brown is expected to tell the Commons that debt as a proportion of UK income is about 35 per cent - down from 44 per cent in 1997 - compared with 45 per cent in France, 55 per cent in Germany and 94 per cent in Italy. The deficit is lower than that of France, Germany, America and Japan, he will say.

The Chancellor, who will point out that Britain is enjoying its longest-ever period of sustained economic growth, will defy City forecasts that he will break his own "golden rule" that borrowing should not exceed public investment over the economic cycle.

Yesterday, Europhiles renewed their criticism of what they regard as Mr Brown's repeated attacks on the EU, which they fear are undermining the prospects of a "yes'' vote in the referendum on the proposed EU constitution. They are alarmed by his plans to outline a "patriotic vision" in today's statement in which he will declare that the next decade can be "a British decade".

Sir Stephen Wall, a former foreign affairs adviser, said Mr Brown was not a Eurosceptic but warned there was "no future for Britain" other than as a key player inside the EU and that it could not secure reforms in Europe by "standing on the sidelines and carping about it".

He added: "The Government has every right to pat itself on the back for the success of the British economy, but there is no point in saying that we are doing wonderfully compared with everybody else."

Sir Stephen said: "If he [Mr Brown] were Prime Minister, he would have exactly the same interest as Tony Blair in wanting Britain to be a successful leading member of the EU. That can only happen if we co-operate with our partners." Neil Kinnock, the former European Commissioner, admitted Mr Brown had presided over a successful economy, but added: "The reality also is that we have a substantial balance of payments deficit and the remainder of the major EU economies don't - they have substantial surpluses. They too have stability. They have a productivity record that still is significantly better than ours." Douglas Alexander, a Foreign Office minister and a Brown ally, denied making a "patriotic case" meant being anti-European. He said: "There is a very strong pro-European case that can be made which says that we in Britain are achieving tremendous levels of success - whether on inflation, employment, levels of growth."

The Government will publish four major documents alongside the pre-Budget report. One will address the global challenges and opportunities facing Britain over the next decade, saying five million EU and US jobs could be outsourced to Asia. The other reports will look at the state of the public finances and set out a national skills strategy and 10-year plan to boost child-care provision.