The UK government will tomorrow be dealt a severe blow by the European Commission which will make public its grave concerns about UK finances, the UK budget deficit and the UK government's attempts to repair the country’s balance sheet. As with many investors and experts, the European Commission is concerned about a lack of credible planning to address financial issues in the UK at a time when investment markets are crying out for further information.

Indeed only today we saw a suggestion from a member of the MPC that the UK could see a reduction in GDP for at least one quarter in 2010. If this were to extend to 2 months in succession then technically we will be back in recession and the alarm bells would begin to sound in the UK and around the world. At a time when Gordon Brown must be willing his EU counterparts and worldwide allies to step forward in support of his fiscal policies it would appear he has been left to his own devices and hung out to dry.

The comments from the European Commission, detailed in a draft report issued today, will play into the hands of George Osborne and the Conservative party at a time when their lead in the polls is under enormous pressure. Is David Cameron’s luck about to change?

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