Budget 2017: EU finally takes Britain off list of countries with excessive budget deficits

EU unveils 'good news for Phil Hammond' minutes ahead of Budget speech

The European Commission has given a Budget Day boost to Philip Hammond, announcing that it will be taking the UK off the list of countries with too-large spending deficits.

Naming the Chancellor personally, Pierre Moscovici, the EU finance’s commissioner, told reporters in Brussels that the UK would be removed from the EU’s Excessive Deficit Procedure (EDP).

The economics chief said the UK had "durably" reduced its deficit, meaning it would no longer be subject to the potential fines and economic sanctions for having a higher deficit.

Britain’s austerity economy is one of the last countries to come off the list, which numbered 24 in 2011 after the financial crisis but has now dwindled to two with the UK’s belated departure.

“On what happens to be the day on which Phil Hammond presents his 2018 budget in the House of Commons, we have good news for him – we are recommending the closure of the Excessive Deficit Procedure for the UK because the country durably reduced its deficit from a peak of 10 per cent of GDP in 2009-2010 to 2.3 per cent in 2016-17 in line with he Council recommendation of 2015,” he said on Wednesday, hours ahead of the UK's Budget statement.

“This will reduce to two the member states to two the number of member states still in the corrective arm of the pact from 24 in the spring of 2011 and hopefully zero in 2018 which proves to those who have some doubts about the implementation of the pact that it works perfectly.”

The Excessive Deficit Procedure is part of the EU's Stability and Growth Pact, which countries signed with the aim of keeping their debt and deficit levels down.

When a countries is found to have breached the pact, an EDP is launched, meaning the member state must draw up plans on how to reduce its deficit and submit them to Brussels for scrutiny. Countries that do not comply can be subject to economic sanctions, such as fines.