Government rejects EU plan for faster deficit cut

Deciding on a 2014-15 deadline, the EU has set a target for all major European countries to reduce their deficit to below 3 pct of national output.

But Liam Byrne, reckons they're wrong, and Britain's target of 4.7 pct is high enough.

The difference of 1.7 pct however may increase if the Treasury's expectations on economic growth is weaker than expected.

"We think halving the deficit over four years is the right approach." he said.

"It's not reckless. It's not painless either."

"What we have done is set out the clearest plans of G7 to deliver on that goal" he said.

Tories have seized on the report to add further pressure on Labour, whose recent narrowing in the polls have widened back to nine-points.

Shadow Chancellor George Osbourne said:

"The Conservatives have been arguing that we need to reduce our record budget deficit more quickly to support the recovery. Our argument is backed by credit rating agencies, business leaders, international investors and now the European commission. That is why we need a change of government to restore confidence in our economy at home and abroad."

Whilst Ken Clarke, added:

"It's no good getting into this air of unreality: 'Oh, we can't do that' ... It is necessary to get rid of the structural deficit because if you don't do that interest rates will go up, we won't have economic recovery, you will have rising unemployment."