Angela Merkel
Angela Merkel has called once again for more Europe Reuters

Germany's Chancellor Angela Merkel has reiterated her desire to unite Europe as she laid down her plans for a tighter fiscal compact for the eurozone in 2012.

She told world leaders at the Davos economic and political forum in Switzerland: "We need a more cohesive, even faster, Europe that will be more resolved and be able to make changes."

Merkel admitted there were still tensions between countries inside and outside the eurozone. "We have to be careful," she said. "But I do believe there remains a common Europe that can stay together."

The EU leaders met in Brussels in December in a summit that was dubbed a "make or break" for the euro. It infamously ended with David Cameron vetoing a new treaty that included a fiscal compact.

But Merkel, who has rigorously defended the euro project since the crisis was brought to a head during 2011, said: "Solidarity is measured by how much we are willing to do for each other. Germany will continue to help increase the rescue fund and help out neighbours.

"We will not promise something we cannot fulfil. If the markets turn against us, we will not be able to help."

Chancellor George Osborne attended the first meeting of EU ministers over a new fiscal compact but only as an observer.

The terms of tougher financial powers for Brussels over eurozone economies are due to be set out at an emergency summit of EU leaders next week and formally approved at another summit in March.

The more immediate problem is to resolve the terms of a new bailout for the Greek economy, with the prospect approaching of a default and a new low in the rollercoaster ride the eurozone has experienced since the economic downturn began to bite in 2008.

European Council president Herman Van Rompuy has insisted the eurozone would achieve financial stability when the fiscal compact was in place.

He said he expected talks on the compact - with Britain as a silent partner - would be completed by the end of the month.