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Last Updated: Thursday, 13 October 2005, 08:28 GMT 09:28 UK
Brown urges EU economic shake-up
UK Chancellor Gordon Brown
Brown makes a point during recent EU finance ministers' meeting
Gordon Brown says the European Union must make fundamental economic changes to face up to the era of globalisation.

He pointed to China and India's rise and said Europe was falling behind in skills, growth and enterprise.

The EU's initial goal of securing peace had been achieved and it should now focus on creating prosperity, he said.

The chancellor dismissed fears over the UK economy's prospects, saying it would continue to grow and that his spending plans were "affordable".

During an interview on BBC Radio 4's Today programme he declined to explicitly rule out possible tax rises.

That came despite the Organisation for Economic Co-operation and Development (OECD) warning on Wednesday that Mr Brown would have to raise taxes, cut public spending or borrow more as economic growth slows.

The OECD downgraded its forecast for UK growth in 2005 from 2.5% to 1.7%, below the Budget prediction of 3%-3.5%.

Major regret

Asked about that report, and other surveys showing a slowdown in consumer spending, Mr Brown said: "Our spending programmes are affordable, they have been costed, they have been set out in detail... we will be able to afford what we have set out to do in the years right through to 2008."

Pressed on whether he could rule out tax rises before 2008, Mr Brown said: "I think at the last election, even the Conservative Party said they could make no absolute promises about these issues.

"The last person who did so was John Major, and he regretted it.

"But what I can say to you ... is that our public spending plans that we have set out are perfectly affordable. And actually we have got lower deficits and lower debt ratios than Japan, America, France and Germany. And I think our public finances are in a better position than these countries."

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