Chancellor Merkel said " we want France and Germany to move closer in terms of fiscal integration." President Sarkozy agreed that the two neighbors must move closer on the budget issues.
Their proposal calls for a true European economic government. It would include the leaders of 17 countries of euro area and would be led by the European Union president. The current president is Herman Van Rompuy of Belgium. The group would meet at least twice a year.
One goal would be to control the budget deficits of euro area countries. Rules limit the deficits of EU members to about 3% of the size of their economies. But many members, including France, have a bigger deficits than that.
The leaders also proposed a tax on European financial dealings. But they did not support the idea of European bonds. These would be loans guaranteed by all euro countries instead of only the countries seeking them.
The European Commission says it supports the proposal of France and Germany. The commission proposes and enforces legislation for EU. EU spokemany Olivier Bailly said on Wednesday that the calls for a true ecnomic government were a step in the right direction.
