The French economy will grow by 3.3% in 2001, Finance Minister Laurent Fabius predicted on Wednesday.

The announcement was made ahead of the scheduled unveiling later in the day of France's budget for next year.

"Our aim is 3.3% growth to support the fight for jobs," Mr Fabius said, though government sources added the budget was based on a relatively wide 3.0-3.6% growth range because of uncertainties about oil prices and the euro.

Surging oil prices are proving a thorn in the side for the prime minister, Lionel Jospin, who recently promised tax cuts worth more than 18m euros ($15m) but is now fighting increased inflationary pressures in the economy and sliding personal popularity in opinion polls.

Tax cut deepened

Government sources on Wednesday said a cut in petrol tax planned for January would now be brought forward to the beginning of October and be more generous at 20 centimes (about 2 pence or 3 cents) a litre from a previously promised 12-13 centimes.

The measure - expected to be formally confirmed in the budget announcement - will cost the government about 3bn francs this year.

The median 3.3% growth estimate is based on average oil prices through 2001 of $26 a barrel, the sources said, although prices currently stand at more than $34 a barrel.

It also assumes that the euro would be worth $0.95 - its average value over the past eight months - although the European single currency slipped close to $0.84 on London markets earlier on Wednesday.

Downwards revision

The government revised downwards its growth forecast for this year, to 3.4%, from the 3.6% it had predicted several months ago.

Mr Fabius' forecasts are marginally more conservative than those of the International Monetary Fund, which on Wednesday said it expected the French economy to expand by 3.5% this year and in 2001.

The IMF predicted inflation at 1.1% in both years while the government nudged up its own inflation forecast for 2001 to 1.2%.

Public debt would amount to 57.2% of gross domestic product in 2001 against 60% in 1998, the government added.