The country-specific recommendations (CSRs) are based on detailed analyses of each country's situation and focus on realistic targets for the next 12-18 months to encourage growth, in line with the Europe 2020 strategy. However, they are not binding and cannot be used to determine tax policy.

The EC is particularly concerned about the overheated UK housing market, especially in London, and criticised the government’s help to buy scheme and distortions in property tax. However, recent government figures showed that less than 8% of total help to buy funding had been allocated to London purchases.

Other UK-specific recommendations include improving affordable childcare, improving the availability of and non-bank financing to SMEs; and improving skills of young people to meet employer needs.

Speaking at a press conference on the CSR recommendations, EC commissioner Algirdas Semeta emphasised that ‘taxation is pivotal in that process’.

He said the use of VAT as a primary tax raising measure in the EU is still ‘far from ideal’ and that VAT exemptions and reductions not only eat into the national intake, but also ‘create administrative nightmares for our businesses’. The UK is one of nine member states identified as having a particularly complicated system.

The UK was not singled out for excessive use of aggressive tax planning although 16 countries were flagged up for this. In addition, 12 member states, including Germany, France, Italy and Spain, were asked to do more to shift taxation away from labour to less distortive tax bases, namely environmental, property and consumption taxes.

The country-specific recommendations will be discussed by EU leaders and ministers in June and will be formally adopted by the EU's Council of Finance Ministers on 8 July.

More details are available at http://ec.europa.eu/europe2020/making-it-happen/country-specific-recommendations/index_en.htm.

The CSR for the UK is available at http://ec.europa.eu/europe2020/pdf/csr2014/csr2014_uk_en.pdf