Sarkozy zal verdeeldheid veroorzaken in Raad Financiële en Economische zaken (en)

French president Nicolas Sarkozy is set to cause strong divisions among eurozone finance ministers this evening (9 July) when he appears at one of their regular monthly meetings to tell them that France will be two years late to balance its budget.

Mr Sarkozy's announcement that Paris is to delay a commitment to reduce his country's budget deficit to 2012 has raised concerns among other single currency states that the eurozone's rules - known as the stability and growth pact - will be weakened

The French move comes just a few short months after euro finance ministers in April agreed to balance the books by 2010 - France's previous government had also signed up to the commitment.

Mr Sarkozy's plan is part of an overall "fiscal shock" for the French economy that he announced soon after coming into power.

It includes tax cuts running to billions of euro with an aide to French prime minister Francois Fillon earlier this month saying that the Sarkozy plan would likely see the country's budget deficit run to 2.5 percent of GDP in 2008.

This is perilously close to the 3 percent upper limit defined by the stability pact - the previous French government had promised to cut the budget deficit to 1.8 percent by next year.

Paris's budget plans are already causing divisions among the 12 other euro states. Portugal, as EU presidency, said Mr Sarkozy would face strong "peer pressure" while Germany's Peer Steinbrueck last week said there would be "a problem" if he goes ahead with his plans.

They fear it will set a bad example for other countries who may be tempted to do the same.

Commission anxiously watching

The European commission has also been anxiously watching from the sidelines.

EU monetary affairs commissioner Joaquin Almunia i has repeatedly stressed that EU member states must profit from the relatively positive economic climate in Europe to reduce their budget deficits, giving governments more leeway in the event of an economic downturn in the future.

Aside from the economic repercussions of the French decision, it is also seen as stepping into finance ministers' territory.

Mr Sarkozy's appearance tonight is the first time that a head of state will take part in such a gathering sparking concern that not only is French finance minister Christine Lagarde being undermined but also EU finance ministers' standing generally.

"The economy, growth, and full employment are subjects that are so important that heads of government and heads of state must deal with them directly," Mr Sarkozy told France's Journal du Dimanche in an interview.

Mr Sarkozy has also indicated that his foray into the economic brief is not a one-off act.

This evening he is also set to call for an EU summit on economic policy after the summer break.

His views on increased economic governance in the eurozone have already caused controversy, he has pushed for a higher profile for eurozone finance ministers to counter the weight of the European Central Bank.

This has been met with alarm in Germany which is adamant that the ECB should be kept independent of politics.