Luxembourg's Prime Minister Jean-Claude Juncker has declined to rule out leaving the EU's Stability and Growth Pact unchanged.
Juncker, whose country currently holds the EU's rotating presidency, made the comments after EU finance ministers had failed to reach agreement in Brussels on reforming the euro zone budget rules.
'It is a pact which works badly, but I have no wish to replace a pact which is doing badly with a pact which gives the impression of working but which will go badly later,' he said.
After marathon late-night talks on Monday, euro zone ministers agreed to hold a new meeting on March 20, on the eve of an EU summit aimed at finalizing an agreement to rewrite the pact.
The Luxembourg prime minister has also since January been the chairman of the eurogroup, comprising ministers from the 12 countries which share Europe's single currency.
Asked why he believed the reform proposals would fail to win the backing of all 25 countries, he said many of the new member states wanted to avoid 'absolutely every change to the pact'. He added: 'Then there are those who want to push flexibility as far as they can'.
Earlier, Britain's finance minister Gordon Brown said he would oppose any move to give the EU Commission more say over member states' economic and fiscal policies.
The proposed reforms retain the commission's right to launch disciplinary action against high-deficit countries and grant it the power to issue official warnings to member states for not getting their public finances in order quickly enough.
EU economic and monetary affairs commissioner Joaquin Almunia was equally downbeat about the chances of a final deal. 'I am far from sure that there will be a satisfactory solution,' Almunia said.
Juncker said overnight talks between euro zone finance ministers failed over the question of whether or not to introduce a list of special circumstances under which deficits over 3% of GDP - the current ceiling - would be tolerated.
The presidency's proposed reforms made major concessions to Germany and France, which have repeatedly exceeded the 3% limit. But Germany is still not happy with what it has obtained, a point Chancellor Gerhard Schroeder was expected to make in talks with Juncker in Luxembourg later tonight.
The presidency suggested the costs of German reunification, the rise of the euro and certain types of spending should qualify as special circumstances in deficit surveillance.
