Merkel and Sarkozy to meet on the euro

They will present their plans to deal with the economic crisis at an EU leaders' summit in Brussels on Friday.

Merkel and Sarkozy are expected to discuss plans for greater fiscal unity among eurozone countries.

The German chancellor wants the European Union to oversee the budgets of all 17 euro-currency nations.

On Sunday, Deputy Prime Minister Nick Clegg warned the eurozone is "skating on very thin ice" ahead of the summit, which is being seen as possibly the last chance to avert a breakdown of the euro.

Meanwhile, Italy's government approved tough new austerity measures over the weekend, which will be presented to parliament.

The country's new prime minister, Mario Monti, is hoping the cuts will save the government €20bn.

The measures include immediate cuts to the costs of maintaining Italy's bulky political class as well as significant measures to fight tax evasion, Monti said after a three-hour cabinet meeting.

As part of the political cost cuts, Italy's PM said he would forego his salaries as premier and finance minister.

He said the move was a personal decision and not meant as an example for other ministers in the new government formed less than three weeks ago after Silvio Berlusconi 's resignation.

While the package includes measures to spur growth and competition, it raises the retirement age and the number of years of service to qualify for a full pension - steps strongly opposed by unions.

It will also see new taxes imposed on Italians' private wealth, including their homes, boats and luxury cars.

In Ireland, prime minister Enda Kenny warned that the country remains in crisis.

On the eve of its budget, Kenny addressed the nation to warn that Ireland is spending €16bn more than it is taking in from taxes.