French President Nicolas Sarkozy hosts German Chancellor Angela Merkel on Monday to thrash out details of a plan to save the euro at the start of a pivotal week for the single currency.
The meeting comes as Italy kicked off the crucial week with a draconian austerity package of cuts, taxes and pension reforms to be presented to parliament on Monday.
Ireland’s Prime Minister Enda Kenny is also to announce a 3.8 billion euro austerity budget on Monday, a day after warning citizens to brace for years of economic hardship during a historic television address.
Merkel and Sarkozy are to meet for a working lunch in Paris, having vowed to propose European Union treaty changes to create what Merkel has dubbed a “European fiscal union with strict rules” and Sarkozy calls “true economic government”.
The two leaders are to hold a joint press conference after the lunch, which is to start at 1230 GMT.
Whatever proposals emerge from the talks must be seen as a credible guarantee that eurozone governments will at last bring their deficits under control and thereby satisfy restive markets.
European Central Bank chief Mario Draghi has said he could then take action, and many hope the ECB will intervene to protect European banks from a credit crunch and buy bonds to rein in soaring rates on government borrowing.
After Monday’s Franco-German mini-summit, EU leaders will have three days to digest the two countries’ proposals before Thursday, when an EU summit begins in Brussels and the ECB board meets in Frankfurt.
Some countries may be obliged by national law to put any new treaty proposed by Sarkozy and Merkel to a referendum, which might delay or even derail its implementation.
Sarkozy and Merkel have sought to take charge of the debt crisis, working so closely together that the media have dubbed them “Merkozy” and running the risk of alienating smaller EU states wary of Franco-German domination.
Europe’s main stock markets advanced at the start of trading on Monday, with investors reassured by the Italian austerity measures and hopes of a breakthrough this week.
London’s FTSE 100 index climbed 0.56 percent at 5,583.57 points, Frankfurt’s DAX 30 gained 0.93 percent to 6,137.87 points and in Paris the CAC 40 added 1.32 percent to stand at 3,206.67.
In Rome, the cabinet gave its go-ahead to the crisis-busting plan on Sunday estimating that it would save 20 billion euros ($27 billion) but warning that it would not prevent the economy from slipping back into recession next year.
“This is a decree to save Italy,” Prime Minister Mario Monti told reporters after the cabinet meeting. Italy will “put its deficit and debt under strong control,” he said.
Milan’s stock market opened 2.02 percent higher to 15,787 points as investors hailed the approval of the austerity budget.
Italy, the eurozone’s third-biggest economy, is desperate to prove to its European neighbours that it should be part of the discussions on saving the eurozone — rather than being seen as one of its biggest problems.
In Dublin, Kenny said the Irish government would need to cut public spending by 2.2 billion euros and raise 1.6 billion euros in extra taxes to meet its obligations.
Ireland has had four austerity budgets in just over three years after its Celtic Tiger economic boom turned to bust when a property bubble collapsed and triggered a banking crisis.
Amid concern that the eurozone crisis will trigger a global economic downturn, US Treasury Secretary Timothy Geithner has also been dispatched to Europe, where he arrives on Tuesday to pressure leaders to take effective action on the debt crisis.
Eurozone banks meanwhile deposited the biggest amount of overnight funds at the ECB for more than a year on Sunday, official data showed Monday, in a signal of banks’ wariness of lending to each other.
Banks put 332.71 billion euros on deposit for 24 hours at the European Central Bank, the highest amount since June 2010.
‘The world is on fire!’ Fox News pundit stunned after Trump decides to host G7 at his golf club
Fox News politics editor Chris Stirewalt was stunned by the White House decision to host next year's G7 summit at a property owned by President Donald Trump.
White House acting chief of staff Mick Mulvaney announced the international gathering would be held at Trump's struggling Doral golf course in Florida, and even the conservative Stirewalt couldn't believe the decision.
"The idea that this administration, dealing with what this administration is dealing with, right? A lot -- the unraveling in Syria, you’ve got the march to impeachment here at home, breaking news story every day. The world is on fire. Why?"
Hosting the G-7 at Doral is still worth a million dollars to Trump — even if he donates all the profits: reporter
President Donald Trump's chief of staff Mick Mulvaney said that holding the G7 summit at Trump's Doral resort would not be a profit for the president. Reports about it fly in the face of the White House claims, however.
The Miami Herald reported in July, when Trump floated the idea, that Doral is in a financial rut and the G7 meeting could help Trump climb out of it.
"Hosting foreign dignitaries has been a financial boon for Trump’s private Palm Beach Mar-a-Lago Club, providing some insight into what financial gains might be expected from hosting the G7 Summit at Trump Doral," said The Herald.
‘This has become the catch-us-if-you-can administration’ after Mulvaney blows off corruption: CNN’s Jim Acosta
On Thursday, White House Chief of Staff Mick Mulvaney dismissed concerns that the Trump administration had pressured the government of Ukraine to dig up information on political rivals.
"We do that all the time. Get over it," Mulvaney told reporters. "Politics is going to be involved in foreign policy--elections do have consequences."
CNN's Jim Acosta observed Thursday afternoon that corruption has just become the norm for Trump and his aides.
"I think that's probably a pretty remarkable admission coming from the acting Chief of Staff," Acosta said.
"You could almost read between the lines here where the acting Chief of Staff was almost saying to everybody in the room here, 'Catch us if you can.'"