Brown in the Brussels sin bin

GORDON Brown today faced the humiliation of a formal reprimand from Brussels for breaking Europe's budget rules last year.

The European Commission said it would ' prepare a report' on why borrowing as a proportion of gross domestic product rose above the 3% ceiling stipulated by the European Union's Stability and Growth Pact.

The public finances deficit rose to 3.2% in 2003 - the first time the ceiling has been breached since Kenneth Clarke was Chancellor in 1996.

But Britain is expected to leave the Commission's 'sin bin' this year, with the deficit set to fall to 2.8% of GDP and 2.6% in 2005. Britain is bound by the pact's rules, even though it is not a member of the euro.

Europe's worsening public finances were exposed as the commission said half the eurozone's 12 members were expected to break the rules in 2004, France and Germany for the third year running.

The commission lifted its 2004 growth forecast for Britain from 2.8% to 3%, but lowered the 2005 forecast from 2.9% to 2.8%.