Economy Minister Francis Mer has pledged to curb public debt

The Commission will now draw up a list of recommendations for bringing France's public finances under control.

The recommendations will be discussed by EU finance ministers when they hold their next monthly meeting on 4 November.

France could in theory be fined billions of euros for breaching the rules, designed to ensure the stability of Europe's single currency.

But that is unlikely to happen.

Off the hook?

DEFICIT FORECASTS 2003: 4% of GDP 2004: 3.6% 2005: 2.9% Source: French Government

It will be up to finance ministers from the rest of Europe to decide precisely what action should be taken.

And they are likely to give France a sympathetic hearing when they rule in November.

Germany, itself in breach of the rules, has argued alongside Britain that tough economic conditions mean that euro stability rules have to be interpreted flexibly.

Some smaller countries - especially those which have rigorously kept their deficits under control - would like to see the rules and the fines enforced.

But France says it is now close to recession and punitive measures from Brussels would only make that situation worse.

France had been given until 3 October to take action to bring its projected budget deficit for 2004 back under the EU limit of 3% of gross domestic product (GDP).

The country, the eurozone's second biggest economy, has already exceeded the 3% threshold for 2002 and 2003.