GERMAN Chancellor Angela Merkel and French President Nicolas Sarkozy put on a united front today in their first meeting of the year as eurozone members try to hammer out an inter-governmental treaty with tougher budgetary rules for the 17 members.
Ms Merkel said that if an EU-wide financial transaction tax can’t be agreed, France and Germany will push for a eurozone one.
Britain has been very vocal that it will fight such a measure unless it is an international tax.
She added that work on the new treaty will be finalised over the next few days and signed by March 1 while she said that both she and Mr Sarkozy have agreed to ask the European Central Bank to do what it can to make the European Financial Stability Facility, or bailout fund, work as well as possible.
But she also warned Greece that the next tranche of bailout money will not be made available unless there is more progress on its austerity measures including a voluntary write-down on the country’s debt held by private creditors.
"We must see progress on the voluntary restructuring of Greek debt," she said at a joint conference with Mr Sarkozy.
Earlier Greece’s prime minister warned of a possible default if the details of a second bailout were not finalised.
The euro came back from a 16-month low today ahead of the meeting.
Meanwhile, billionaire George Soros has warned that the European debt crisis is more dangerous than the financial turmoil which hit markets in 2008.
He added that a "deflationary vicious cycle" could hit the real economy.
Italy remains a key focus of the crisis because of its size, debt load and the amount it needs to borrow in the first three months of the year.
In addition, the yield on its 10-year bonds are back above the 7pc level that is considered a danger mark late last week.
And Greece's prime minister has warned of possible default if details of a second bailout are not finalised.