BRUSSELS -- EU finance ministers are heading for a showdown between countries that have made painful budget cuts and spendthrifts such as France who, it is argued, are jeopardizing the euro.

The monthly meeting of Economy and Finance Ministers (ECOFIN) will convene on Tuesday in Luxembourg after a rocky few days that have exposed serious divisions in the 15-nation European Union over budget policy.

With the war drums beating against Iraq and European stock markets plumbing six-year lows, the economic backdrop to this ECOFIN gathering is murkier than most.

France will be in the sights of many in the 12-strong euro group after unveiling a draft budget for 2003 that puts the stress on reinvigorating dismal growth levels rather than balancing the books.

"It's very clear that the focus will be on France and, to some extent, the other countries which are approaching the excessive deficit level," an EU diplomat said.

The European Commission has been forced to push back a deadline for balanced finances among the euro nations by two years to 2006, with France, Germany, Italy and Portugal all almost certain to miss the original date, AFP reported.

The four are running public deficits close to the maximum of three percent of gross domestic product allowed by the euro zone's stability and growth pact, which was agreed in 1997 in a bid to give the currency solid fundamentals.

But while the other three nations are trying to get their deficits down, France is projecting no improvement in this year's projected shortfall of 2.6 percent of GDP, and could miss the new deadline of 2006 altogether.

To some in the EU, France is thumbing its nose at Brussels and at the whole drive to redress persistent deficits which observers say undermine the euro's credibility.

French Finance Minister Francis Mer's remarks in Luxembourg will thus be closely followed by his colleagues, with the potential for sparks to fly at a separate meeting of the euro participants on Monday night.

For critics such as Belgium, the Netherlands, Spain and Sweden, the EU risks telling the world that it has lost budgetary discipline at the first sign of trouble.

Spanish Prime Minister Jose Maria Aznar on Friday warned that failure to respect the stability pact would be a "grave mistake".

Germany, the driving force behind the stability pact, argues that the tougher global environment has thrown economic growth forecasts out of kilter.

Tuesday's gathering will look at one proposal intended to show the EU can get its financial house in order.

Economic and Monetary Affairs Commissioner Pedro Solbes wants euro participants to cut their deficits by at least 0.5 percent of GDP a year.

That has not gone down well with one of the three EU nations outside the euro, Britain, where the budget dispute has been music to the ears of opponents to the single currency.

"I don't think the British public want the European Commission to cut five billion pounds (eight billion euros) a year from spending, as is implied by these proposals," British Finance Minister Gordon Brown told ****The Guardian**** newspaper last Monday.

The paper said his remarks are "bound to be interpreted as signaling waning enthusiasm for the single currency" in Britain.

The finance ministers will return to another row which has pitted the EU against Switzerland over Swiss refusals to exchange information on EU nationals' savings accounts.

EU countries complain they lose millions of euros in income tax revenues because of citizens hiding earnings in secret Swiss Bank accounts, and are demanding a deal with Bern "well before the end of the year".

Otherwise, separate talks over Swiss membership of the EU's border-free Schengen agreement and an accord on free trade in services could be scuppered.

"You can call that a threat. You can also call it a simple statement of facts," a Danish EU presidency official said.