Speaking at a joint press conference after the meeting of the 27 EU heads of state and government, Sarkozy and Merkel were pressed to comment on the separate meeting they held with Italian Prime Minsister Silvio Berlusconi on the sidelines of the summit.
Italy's mix of chronically low growth, a public debt mountain of €1.84 trillion, or 120% of GDP, and a struggling government coalition, has caused mounting alarm in financial markets. The country, which is politically unstable, would need at least €600 billion in the case of a bailout (see background), too much for the eurozone's €440 billion bailout fund.
The government last month pushed through a €60 billion austerity package – bringing forward its original balanced budget target by one year – in return for ECB support for its battered government bonds market.
But doubts are now growing over the country's ability to implement these austerity measures.
Sarkozy made clear that Spain, previously considered to be in a similar situation to Italy, had made great progress. "Thanks to the efforts of [Prime Minister] Zapatero, and thanks to the sense of responsibility of the Spanish opposition of Mr Mariano Rajoy, Spain is no longer on the first line," he said.
But his body language made it clear that he was unconvinced by the Italian situation.
Asked if the Italian Prime Minister had given new assurances that economic reforms would be carried out, and if he was reassured after talking to him, he raised his hands and remained silent, raising laughter amongst assembled journalists.
"We were together in this meeting," he said, pausing before adding: "As we say, we trust the sense of responsibility of the Italian political, financial and economic authorities."
For her part, Merkel said that together with Sarkozy, they had "outlined in great clarity" how important Italy was for the EU.
"This is a meeting among friends. Trust and confidence needs a clear-cut perspective. Italy is a very strong country economically speaking, but it is also a highly indebted country, and this has to be reduced credibly and sustainably over the next few years to come," Merkel said.
'Problem of democracy'
Without specifically naming Greece – the main offender – or Italy, Sarkozy spoke at length about those countries admitted to the eurozone without being ready, a problem he insisted was inherited from past leaders.
He argued that there was a 'problem of democracy', since the leaders of France and Germany had 'no mandate' to run those countries, but felt obliged and determined to ask them to make efforts and sacrifices.
Berlusconi's centre-right coalition has been deeply divided over policy and personal issues and further distracted by an array of scandals surrounding the prime minister.
Economists and business leaders say Italy would be better served by a government of technocrats who could craft measures aimed at lowering the country's public debt and addressing the weakest growth rate in the euro zone.
Opposition leaders have called repeatedly for the government to resign over its handling of the economy and there is widespread speculation that Berlusconi could be forced out of office before his term expires in 2013. However, repeated votes of confidence in the Italian Parliament allowed the Premier to avoid resignation.
