Jean-Claude Trichet hinted he might like to see tougher penalties

The rules state that budget deficits must stay under 3% of gross domestic product, a measure of economic growth.

Mr Trichet made it clear at a committee of the European Parliament that he does not want the rules weakened further.

EU finance ministers are divided on the issue and will debate the rules in emergency meetings on Sunday.

'Stability and cohesion'

France and Germany have both broken the rules and exceeded the deficit limit for three years in a row. Neither has had penalties imposed on them as a result.

Germany hopes to exclude its reunification costs from the calculation and France wants to leave out research and development costs to make it easier for it to meet the budget rule.

The credibility of the excessive deficit procedure..needs to be fully preserved Jean-Claude Trichet, European Central Bank president

In testimony to the economic and monetary affairs committee on Monday, Mr Trichet said he was expecting moderate growth in the eurozone in 2005 and 2006.

He also indicated that he would like to see the penalties against countries which break the rules strengthened.

"The credibility of the excessive deficit procedure as a means to deter and correct excessive deficits needs to be fully preserved," Mr Trichet said.

"This is necessary to anchor expectations of fiscal soundness which is fundamental, not only for macro-economic stability and cohesion in the euro area, but also for enhancing confidence and fostering growth prospects," he added.