Merkel and Macron propose eurozone budget

The leaders of Germany and France have agreed to create a eurozone budget they hope will boost investment and provide a safety mechanism for the 19 nations using the euro currency, and also to seek a European solution to migration issues.

The announcement from German Chancellor Angela Merkel and French President Emmanuel Macron came after a meeting in Berlin to co-ordinate the two major powers' positions on the future of the European Union ahead of next week's EU summit.

Mrs Merkel, who has been lukewarm on Mr Macron's idea of a European budget, said they had agreed to use the European Stability Mechanism, or ESM, as a basis for establishing one.

Emmanuel Macron is welcomed to Berlin by Angela Merkel
Emmanuel Macron is welcomed to Berlin by Angela Merkel

The ESM was established in 2012 to provide eurozone nations access to financial assistance in the event of crisis.

She said with the budget, Europe could respond earlier and better to immediately "answer asymmetric shocks", before a country is already in a financial crisis.

"We are opening a new chapter," she said.

Mr Macron said details were intentionally being kept general at the moment, so other member nations would be able to have their voices heard.

He said the idea is for the budget to be in place by 2021 as a "backstop to ensure financial stability".