Nicolas Sarkozy and Angela Merkel sat down for a working lunch in Paris today, and emerged with a joint statement calling for big changes to the euro zone’s governing treaties aimed at preventing future crises. Their vision includes a new European monetary fund, zone-wide deficit limits, and automatic penalties for any country that exceeds those limits, the New York Times reports. “We want to make sure that the imbalances that led to the situation in the euro zone today cannot happen again,” Sarkozy said.
Sarkozy and Merkel will present their plan to a meeting of all the European Union leaders in Brussels on Thursday—a meeting many are seeing as the last chance to save the euro. “The survival of the euro zone is in play,” said one official. “So far it’s been too little, too late.” Meanwhile, new Italian Prime Minister Mario Monti unveiled a roughly $40 billion austerity plan that includes tax hikes and pension reforms, along with various growth incentives, Reuters reports.