The clock was ticking down to a midnight deadline for France to tell its EU partners what it intends to do about its swollen budget deficit if it wants to escape the threat of fines.

The deadline loomed after EU member states on June 3 gave France three months to come up with measures to get its deficit below a euro-zone limit of 3.0 per cent of gross domestic product (GDP).

But France has unveiled a tax-cutting budget for 2004 that projects its deficit to stand next year at 3.6 per cent of GDP, against a forecast 4.0 per cent this year.

And with no indication that Paris intends to reverse course, the European Commission is under pressure to force France in line with the euro area's Stability and Growth Pact.

The 1997 pact was designed to enforce budget discipline on the members of the common currency. But ironically Germany, which insisted on the deficit ceiling in the first place, has breached the pact along with France.

But while Germany, and Portugal, have embarked on tough deficit-battling measures to comply with the rules, France insists that its priority must be growth rather than belt-tightening.

Finance ministers from the 12 euro nations are due to meet for what looks likely to be a stormy session of monthly talks in Luxembourg on Monday evening, with the EU's full Economy and Finance (Ecofin) council convening on Tuesday.

Austrian Finance Minister Karl-Heinz Grasser said he was "absolutely certain" that the European Commission would recommend further action against France when the EU's executive arm meets on Wednesday.

In an interview with the Financial Times, Grasser said: "What France is doing is simply a provocation towards all the other euro zone countries.

"I see no opportunity for a compromise," he said.