PARIS • German Chancellor Angela Merkel has said she is open to the creation of a finance minister and budget for the euro zone as proposed by French President Emmanuel Macron, after the two leaders emerged from a joint Cabinet meeting.

"I have nothing against a euro zone budget (and) we can talk about creating a European finance minister," Dr Merkel said yesterday after the talks in Paris with Mr Macron.

"We agree that the euro zone must be stabilised and further developed," Dr Merkel said at a joint press conference with the French leader.

"It is in our greatest interest that all euro zone countries are strong," she said.

Mr Macron has warned Germany that it must move to correct the "dysfunctions" of the eurozone and give it "the fate it deserves". A eurozone budget and finance minister would require changes to European Union treaties.

Dr Merkel reiterated yesterday that major reforms would have to wait until after the September elections in Germany - which her centre-right Christian Democratic Union is expected to win. "We need a mandate from Parliament, which we will seek after the elections," she said.

Mr Macron is keen to revive the traditional "engine" behind European integration - the post-war alliance of Paris and Berlin that ended centuries of conflict.

It is not the first time the French and German governments have held a joint Cabinet meeting - the last one was in April - but both sides are keen to capitalise on the momentum generated by Mr Macron's win in May's presidential election.

Dr Merkel said yesterday she wanted to breathe new life into Franco-German relations, promising closer cooperation between the two EU heavyweights with the aim of reforming the bloc, which is still grappling with the fallout from Britain's shock vote to exit the EU in a referendum in June last year.

But Brexit - along with perceived threats from the United States under Mr Donald Trump - has given the bloc a renewed sense of purpose.

Mr Trump irritated EU leaders during his election campaign last year by hailing Brexit and suggesting other countries might follow Britain out of the 28-nation bloc.

The EU last month created a European defence fund with an annual budget of €5.5 billion (S$8.6 billion), laying the basis for permanent military cooperation.

AGENCE FRANCE-PRESSE, REUTERS