'Creative accounting' masks EU budget deficit problems.

Byline: Allister Heath

Jun. 26--European Union (EU) countries have engaged in more than 70 instances of creative accounting over the past 10 years to cut their reported budget deficits, a study warns this weekend, ahead of the UK presidency of the EU, which begins on Friday.

The worst culprits have been Italy, Greece and Portugal, according to research by stockbroker Charles Stanley Sutherlands. Stuart Thomson, author of the report, warned that Italy especially had run out of tricks and warned that default risks were not being priced into the markets properly.

Thomson said: "International investors should avoid Italian government bonds. We also …