EU finance ministers are heading for a showdown between countries that have made painful budget cuts and spendthrifts such as France which, it is argued, are jeopardising the euro.
The monthly meeting of economy and finance ministers (ECOFIN) will take place tomorrow in Luxembourg after a rocky few days that have exposed serious divisions in the 15-nation European Union over budget policy.
With the war drums beating against Iraq and European stock markets plumbing six-year lows, the economic backdrop to this ECOFIN gathering is murkier than most.
France will be in the sights of many in the 12-strong euro group after unveiling a draft budget for 2003 that puts the stress on reinvigorating dismal growth levels rather than balancing the books.
"It's very clear that the focus will be on France and, to some extent, the other countries which are approaching the excessive deficit level," an EU diplomat said.
The European Commission has been forced to push back a deadline for balanced finances among the euro nations by two years to 2006, with France, Germany, Italy and Portugal all almost certain to miss the original date.
The four are running public deficits close to the maximum of 3 per cent of gross domestic product allowed by the euro zone's Stability and Growth Pact, which was agreed in 1997 in a bid to give the currency solid fundamentals.
But while the other three nations are trying to get their deficits down, France is projecting no improvement in this year's projected shortfall of 2.6 per cent of GDP, and could miss the new deadline of 2006 altogether.
Economic and Monetary Affairs Commissioner Mr Pedro Solbes wants euro participants to cut their deficits by at least 0.5 per cent of GDP a year. - (AFP)
