Consumer spending is at a five-year low

"In the past six months ... the environment has changed, and of course that figure is no longer attainable," Finance Minister Francis Mer said in a television interview.

The admission came as the French government's statistics bureau INSEE reported that the economy grew by only 0.2% in the last three months of last year, and by only 1.2% in the whole of 2002.

The figure was the lowest since 1996.

French consumer confidence fell in January to its worst level in five years, as unemployment increased and talk of war added to the uncertainty.

The European Commission said earlier this week that its growth forecast of 1.8% for the euro zone for 2003 was overoptimistic.

War concerns

Mr Mer said the French government would at the end of next month release a new estimate for 2003 economic growth.

His comments came ahead of a G7 meeting in Paris, which will consider economic measures to insulate economies from any fallout if there is a war on Iraq.

Mr Mer said the budget deficit limit of 3% required by the Stability and Growth Pact, which underpins the euro, might be adapted if there was a war.

He said there was provision for the deficit limits to be relaxed in exceptional circumstances.

But on Thursday the European Commission said the only deductible expense from the deficit was the cost of sending troops to war.

France and Germany, which both oppose military action against Iraq, are having trouble staying within financial limits set down in the pact.