France denied today it had made a deal with Germany to request changes to the European Union's budget stability pact.
But it warned an economic slowdown would hit budget balances in both countries this year.
A French official said French Finance Minister Mr Laurent Fabius and his German counterpart, Mr Hans Eichel, scheduled to meet in Berlin on August 31st, would note the economic slowdown would hurt government accounts but that a rise in spending was out of the question.
"The economic slowdown will have a negative impact on budget targets, but spending targets will be maintained in both countries," he said.
The French denial of a budget deal followed comments by Mr Eichel and a report in Handelsblattnewspaper yesterday indicating official unease in Paris and Berlin about the EU's system for setting budget deficit goals.
France and Germany, like other euro zone nations, are struggling to hit 2001 budget targets due to weaker-than-expected growth, which has sapped tax revenues.
Handelsblatt, citing French government sources, said Mr Eichel and Mr Fabius wanted emphasis in the stability pact placed on new criteria - spending goals, with separate treatment of investment and consumption spending.