France and Germany are to propose that eurozone members adopt a constitutional "golden rule" on balanced their budgets in a bid to tackle the bloc's spiralling debt crisis, French President Nicolas Sarkozy said Tuesday, dpa reported.
Addressing a joint press conference with German Chancellor Angela Merkel, Sarkozy said the two leaders would also propose that the eurozone get a fixed president, renewable every 2.5 years, and that European Council President Herman Van Rompuy should be the first person to hold the post.
After two hours of talks at the presidential palace in Paris, the leaders of Europe's two biggest economies ruled out the creation of eurobonds, that would see eurozone members effectively guarantee each other's debt.
"I don't think the eurobonds would help us today," said Merkel, who however did not rule them out in future, saying it was a "debate we will have."
For Sarkozy, eurobonds were the "culmination of a process of integration and in no way a preamble (to further economic integration of eurozone members)."
Among the other proposals announced, Sarkozy said France's and Germany's finance ministers would draw proposals for taxes on financial transactions "as of next month."
"It's a priority for us," he said.
The talks in Paris came amid mounting fears that the eurozone could be sliding back towards recession, with statistics released earlier on Tuesday showing that Europe's biggest economy, Germany's, grew by just 0.1 per cent in the second quarter of the year.
The figures caused further dismay, days after France's economy was shown to have stopped growing altogether in the second quarter.
Tuesday's meeting between Merkel and Sarkozy had been planned since a eurozone leaders' summit in July.
But it took on added significance after markets went into a tailspin last week over concerns about rising borrowing costs for Italy and Spain, a downgrade of the United States credit rating and speculation that France could be next to lose its AAA rating.
The tumult, which forced the European Central Bank to intervene by buying up Spanish and Italian bonds, has led to calls for greater economic integration in the eurozone, with stronger economies shielding the weak.
Ahead of the meeting, European Commission spokesman Olivier Bailly reminded the two leaders that, "in the end any improvements of the governance of the euro area will have to be decided by all the members of this area, including the commission."
Ahead of the meeting, Sarkozy met with Prime Minister Francois Fillon to discuss France's public deficit, which France has vowed to cut from 5.7 per cent of gross domestic product this year to 3 per cent in 2013.
To meet its targets, experts say France has to make savings of around 10 billion euros (14.4 billion dollars) in the 2012 budget.
Writing in the Financial Times, International Monetary Fund chief Christine Lagarde, a former French finance minister, warned of draconian austerity measures.
While recognizing "an unmistakable need to restore fiscal sustainability through credible consolidation plans," Lagarde warned that "slamming on the brakes too quickly will hurt the recovery and worsen job prospects."
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