After meeting at the French seaside resort of Deauville, Chancellor Angela Merkel and French President Nicolas Sarkozy announced a common position to move more quickly to ensure budget-busting member-countries faced penalties.
But Germany did not get its way altogether. Europe's largest economy wanted penalties to apply automatically if a country allowed its deficit to exceed the EU limit of 3 percent of gross domestic product. Instead an offending member will be first warned and then penalised if they have not take satisfactory efforts to curb their deficits within six months.
Sarkozy said France and Germany wanted to amend the EU Lisbon treaty, introduced last year, by 2013, cracking down on deficits in order to assure financial stability.
Under the proposals, a country "with an excessive public deficit that has not taken measures to correct it will be sanctioned," Sarkozy said.
France and Germany want the European Council of all EU member states to have the right to impose "preventive sanctions if a state does not sufficiently reduce its deficits," Sarkozy said.
"Germany and France together will put forward a revision to the (EU) treaties so that political sanctions can be made and for support mechanisms to be made ongoing in order to ensure the financial stability of the eurozone."
A joint statement by Sarkozy and Merkel said their proposal would allow for member states to have their EU council voting rights suspended "in cases of serious violation of the basic principles of economic and monetary union."