BRUSSELS European Union finance ministers are likely to sharply criticize British budget plans aimed at pumping billions of pounds into hard-pressed public services, a monetary source said on Monday.

EU finance ministers are due to pass judgment on Britain's annual budgetary "convergence program" late on Monday and are likely to use harsher language than a commission opinion on the same program published last month, the source said.

The European commission said last month that Britain met all the fiscal tests for Economic and Monetary Union, but was concerned that on the basis of current plans its underlying budgetary position could deteriorate in 2003-2006.

But the monetary source said on Monday "The opinion on the convergence program has become harsher."

In London, Prime Minister Tony Blair's official spokesman said EU budgetary rules should not be interpreted too rigidly.

"The policies pursued by this government ... are absolutely right and affordable," he told reporters.

Chancellor of the Exchequer Gordon Brown is in Brussels delivering the same message. Treasury sources said he will call for a more "intelligent" interpretation of the EU's growth and stability rules.

All EU countries, whether in or out of the under the stability pact to attain the goal of having a budget in balance or in surplus "over the medium term".

After two years of spending restraint, Brown last year unveiled a program to pump billions of pounds into schools, hospitals, transport and policing.

Treasury figures show public spending will be more than 70 billion pounds higher in 2004/5 than now, creating a budget deficit of 1.1 percent of GDP. It is that concerns the commission.

Blair's spokesman dismissed the criticism, saying there was a "world of difference" between a commission opinion on a report released last year and breaking the rules of the stability pact.

The spokesman also said Britain would not rejoin the EU's exchange rate mechanism if it chose to enter the euro zone. "We don't believe we have to rejoin," he said.

The European Central Bank thinks otherwise.

Blair last week said he would make a judgment on Britain's readiness to join the euro within two years of the election.

Opposition conservatives leapt on the Brussels criticism of Brown's investment program. They are planning to spend eight billion pounds less over the next three years but give away the extra in tax cuts.

"We've been saying that for a long time. He has set out plans that involve government spending growing much more quickly than the economy is predicted to grow over the coming years," Conservative leader William Hague told reporters.

"That is why we have set out changes to public spending plans that amount to eight billion pounds less than the government would spend."

Blair will fight May's expected general election on his government's economic record and promised improvements to key services. The Tories will focus on tax cuts and their "save the pound" stance.

(Reuter)