Finance ministers from the European Union (EU) agreed Tuesday to lift a caution against Britain to cut its deficit.

The decision was taken because Britain has brought its deficit below three percent of gross domestic product (GDP), a threshold recommended by the EU to maintain fiscal stability, the ministers, who opened a two-day meeting here Monday, said in a statement.

According to data provided by Eurostat, in the fiscal year 2006/07, Britain's government deficit decreased to 2.7 percent of GDP, due to an improvement in the structural balance, which was below both the three percent threshold and the 2.8 percent projection set by Britain in December 2005.

The European Commission projected the deficit to be further reduced to 2.6 percent and 2.4 percent in the current and next fiscal year respectively.

Britain came under EU scrutiny for its excessive deficit in September 2005 after it run a general government deficit as high as 3.2 percent of GDP in the fiscal year 2004/05, which was subsequently revised up to 3.4 percent.

In a decision adopted in January 2006, the EU issued a formal warning to Britain, urging London to bring the situation of its excessive government deficit to an end by 2006/2007 at the latest.