The European Union has criticized the UK and other European nations for overly optimistic growth assumptions and heavily bloated deficits.
EU rules mandate government deficits should be kept below 3% of GDP, but the UK's deficit is expected to hit 12.6% of GDP this year. The report also warned the UK was not on course to cut its deficit by the 2015 deadline.
However. the UK Chancellor Alistair Darling has defended the Government's approach to the ballooning deficit, arguing reducing public sector spending too quickly would risk harming the UK's emergence from recession.
Germany, France, Spain and Italy also came in for criticism, with warnings they were over-reliant on economic recovery to meet debt targets.
Spain was at the receiving end of particular opprobrium, with the report noting the country's forecast it would cut its deficit to 3% of GDP in 2013 from 11.4% in 2009 was based on "markedly" optimistic growth forecasts.
The report also attacked the pace of bank restructuring in Spain as being too slow and posing a threat to growth.
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