The Tánaiste, Ms Harney, has suggested that the euro-zone's budget rules should be made more flexible or risk being undermined by serial breaches by such countries as France and Germany.

Speaking in Brussels, Ms Harney said that the Stability and Growth Pact was being undermined so grievously by being broken that its rules should be loosened.

"I think greater flexibility is far more desirable than having some big countries in breach of the guidelines. I think if you have guidelines you must either enforce them or allow greater flexibility so that the same rule applies to everybody," she said.

Ms Harney said Ireland could not have reached its present stage of development if the pact had been in force in the early 1990s and she suggested that new member-states would need to be able to borrow to develop. She said that the pact's rules and the emphasis on stability over growth could be dampening economic growth in the EU.

Ms Harney said that the Government was calling for a more flexible application of the pact at every available political forum and she expressed the hope that changes would be made either before or during the Irish EU presidency, which begins in January.

"As a low-debt country with a poor infrastructure or certainly an infrastructure that isn't in line with our state of development, I would very much welcome a greater flexibility in the Stability and Growth Pact to allow us to make the investment in infrastructure. By infrastructure I mean the physical infrastructure like roads and transport but also human resource infrastructure - research and development," she said.

An attempt to introduce a more flexible interpretation of the pact failed earlier this year when EU finance ministers were unable to agree on a formula to resolve the issue.

The Minister for Finance, Mr McCreevy, said last week that he expected the current rules to remain in place for at least a further three years.