German Chancellor Angela Merkel and French President Emmanuel Macron agreed on Tuesday to create a euro zone budget charged with boosting investment in the bloc and promoting economic convergence between its 19 states.
The leaders met to prepare for a summit of European Union leaders on June 28-29, with Macron keen to push through wide-ranging reforms to strengthen the euro zone and insulate the single currency union from future crises, while Merkel has been more cautious.
Merkel said euro zone reform was the toughest issue in their talks at her Meseberg retreat outside Berlin, where they also touched on European foreign and defence policy and immigration.
“We are opening a new chapter,” Merkel said after the talks.
“We are working to make sure that the euro zone budget will be used to strengthen investment, also with the aim of strengthening convergence within the euro zone,” she added. “Because we know that a economic and monetary union can only remain intact if economic policies converge.”
While Europe’s economy has picked up and there is no immediate sign of financial stress, many analysts maintain that reforms are needed to protect the single currency.
Merkel, under pressure at home where her conservatives are divided on how to curb migrant arrivals, said she was optimistic her government and parliament would back the euro zone reforms.
“We have an draft for a new euro zone and that is a really good thing, I would say,” she said.
Macron said the new joint euro zone budget agreed would be operational by 2021.
Details of the budget, including its amount and whether it would be financed by national sources or a bloc-wide tax, would be hammered out by ministers before the end of the year, he said.