EU finance ministers this morning disciplined Germany for breaking the bloc's budget deficit limits and officially warned France it risked doing the same.
The ministers handed the Berlin government a strict to-do list to rein in its budget shortfall and also had harsh words for Italy and Greece.
An EU diplomat said the ministers approved an official warning for France that its budget deficit risked breaking an EU limit of 3 per cent of gross domestic product (GDP), with Paris abstaining.
The ministers scolded Germany - the bloc's biggest economy is struggling to avoid falling into recession - and said it must push through labour market reforms - opposed by many allies of the left-leaning government such as trade unions - to boost growth.
"The Council considers that there is a non-negligible risk that the German budget deficit in 2003 may again exceed the 3 per cent of GDP reference value," the ministers said in a statement.
"The Council stresses again that the German economy, despite its large size, remains highly vulnerable to external shocks and unable to generate an endogenous and durable growth process," they said.