European Union finance ministers are expected to look at ways of easing the strict budgetary rules that bind euro-zone governments when they meet in Copenhagen on Friday.
A more flexible approach to the Stability and Growth Pact, which limits budget deficits to 3 per cent of GDP, would give the Minister for Finance, Mr McCreevy, greater room for manoeuvre in Government spending.
A spokesman for Mr McCreevy said last night that he was unaware of any consultations about the pact between euro-zone ministers in recent weeks.
Other EU sources agreed that such consultations have not taken place but suggested that contacts between ministers are likely in advance of Friday's meeting.
Under the terms of the pact, countries that run deficits above 3 per cent can be sanctioned, and all governments are committed to balancing their budgets or bringing them close to balance by 2004.
Italy has proposed a radical change to the pact that would exclude public investment from the calculation of budget deficits. Such a move could require treaty change and would certainly involve a substantial change to regulations covering the euro. The proposal is likely to find little support among finance ministers, not least because of the difficulty of defining public investment.
Mr McCreevy said in July that he opposed changing the rules of the pact but that there was room for greater flexibility in how the Commission evaluates deficits below the 3 per cent limit. The Monetary Affairs Commissioner, Mr Pedro Solbes, has announced plans to introduce guidelines on evaluating such deficits to take account of cyclical factors and investment in infrastructure.
Germany, France and Italy favour postponing the 2004 deadline for balanced budgets to 2006 or 2007, partly because current economic conditions make it unlikely that all member-states will meet the original deadline.
Such a change has been opposed by smaller countries, notably Belgium, Luxembourg and the Netherlands. They fear that it could undermine confidence in the currency.
The larger countries may argue that, with economic growth and tax revenues low, sticking to the 2004 target could depress the European economy disastrously.
Postponing the deadline would allow Mr McCreevy to borrow more over the next two years in the hope that an economic upturn will allow him to restore the budget to balance later.
