EU finance ministers are divided over how tough a stance to take against the Minister for Finance, Mr McCreevy, and Ireland's economic policies.

The Germans are maintaining their hardline stance against the Irish Budget but crucially the Spanish appear to be more conciliatory.

Speaking at the World Economic Forum in Davos, the German finance minister, Mr Hans Eichel, insisted Ireland must be reprimanded for breaching the EU's broad economic guidelines.

Finance ministers meet in Brussels on February 12th and top of the agenda is a formal censure for Ireland which the European Commission has already recommended.

Mr Eichel said Ireland must face up to its responsibilities. "There are common responsibilities and Ireland must face up to that. All of us have a responsibility to follow the rules and that is as true for Ireland as any other country."

Mr Eichel insisted that the fight against inflation lies with national governments and was not persuaded by the argument that Irish inflation has started to fall.

"In the middle of a boom no member state can be allowed to follow a policy that encourages inflation and overheating. Ireland has to face up to that fact."

His comments follow remarks from Nobel prize winning economist Mr Robert Mundell here who insisted that the censure is nothing to do with Irish economic polices and is simply about tax harmonisation.

Many EU states were angered by the complete block of any move towards harmonisation which both Ireland and the UK insisted on during the negotiations of the Nice Treaty at the end of last year.

The Danish prime minister, Mr Poul Nyrup Rasmussen, also criticised Ireland for the stance on taxes. He said there has to be a minimum rate of corporation tax and anything else is unfair competition between member states.

"We have to be able to finance the welfare state and the only way is through income resources and this must be based on fair mutual competition." He added that the minimum rate would have to be higher than Ireland's 12.5 per cent if standards of welfare were to be maintained.

This was roundly rejected by the former Irish EU Commissioner and chairman of Goldman Sachs, Mr Peter Sutherland, who made a spirited call for further majority voting in Europe, but insisted that taxes, corporate or not, should never fall into that category.

The French finance minister, Mr Laurent Fabius, refused to publicly state his position on Ireland, saying only that it would be examined. However, French journalists here say they are being told France will insist on a hard line being taken against Ireland.

But Mr McCreevy may receive some support from Spain, whose inflation rate is not much lower than Ireland's.

Asked about how he will vote at the meeting, the Spanish finance minister, Mr Rodrigo de Rato y Figaredo, pointed to Ireland's economic success and said low unemployment, large surpluses and low debt should be emulated by the other states.

He added that the most likely outcome will not be an unprecedented censure, but rather guidance to Ireland which Mr McCreevy will agree to take account of.

European sources say Mr Figaredo may be unwilling to argue strongly for Ireland as to do so would be to argue against the Spanish commissioner, Mr Pedro Solbes, who made the recommendation for censure.

Mr Solbes told the Financial Times that Ireland will be expected to adjust policies.

The recommendation will be a "very, very formal appeal. Every member of the Ecofin Council will expect Ireland to follow that appeal."