The battle lines over the management of European economies hardened yesterday, as Finland spoke for a number of euro-zone countries by warning it "was essential to protect the stability pact," and that it would resist any attempt to loosen the rules that underpin the euro.
Italy and France, both struggling to control their deficits, have called for a more flexible interpretation of the pact, which imposes budgetary discipline on European Union members.
Sluggish economic growth and election promises of tax cuts have already put Italy and France in danger of breaching the pact's deficit limit of 3 per cent of GDP, while Germany is also close to that ceiling.
The issue is likely to flare up at this weekend's meeting of EU finance ministers in Copenhagen, but Finland launched a pre-emptive strike by insisting the rules should not be changed to help member states out of a budgetary hole.
Austria, Belgium, Denmark, Luxembourg, the Netherlands, Spain, Ireland and Sweden are also among those expected to oppose fundamental reforms to the pact, having already complied with the requirement to run a balanced budget.
Mr Sauli Niinisto, Finland's finance minister, said yesterday he was aware of pressure to relax the pact as Italy, France, Germany and Portugal all struggled with deficits.
"In this situation it is very essential to protect the stability pact," he said.
"Every now and then we encounter the view that the pact is too tight, but it now seems that it has been too loose . . . It gives a lot of room for mistakes because you don't get punished by market swings."
Mr Niinisto, a member of the Finnish conservative party, pointed to Portugal where, he said, rapid deterioration in public finances had not been countered by the weakening of its currency or rising interest rates, as it would have been in the past.
He also cited France as an example of a government that, when facing elections, sought to appeal to voters with spending promises and income-tax cuts, at the expense of bigger budget deficits.
Recent media reports suggested that France's 2003 deficit would remain at about 2.6 per cent. - (Financial Times Service)
