Greece must speed up its debt restructure or risk getting no more bailout cash, warns senior European leaders.

The country is currently negotiating debt haircuts with its creditors. The next bailout, funded by the EU and International Monetary Fund (IMF), will be €130billion.

"We will reach the point of not being able to pay the next aid tranche to Greece," said German Chancellor Angela Merkel, after a Berlin meeting with French President Nicolas Sarkozy.

The pair were meeting to thrash out details of the Eurozone rescue deal which will see closer fiscal integration and stricter budget controls.

As Merkel and Sarkozy met, the latest financial data to come out of stricken Greece shows output had shrunk by 7.8 percent across a year.

Its tough austerity package, which includes deep-to-the-bone spending cuts and tax rises across the board, imposed by the IMF after it agreed to bailout the country is crippling the economy.

Now Greece needs a second load of cash, causing Merkel and Sarkozy's warning to the Greeks to get their house in order if they want more money.

Greece may yet be excluded from the Eurozone.

Merkel will with Christine Lagarde, head of the IMF, in Berlin on 10 January.

Europe Must be 'Strong' and 'Competitive'

While Merkel and Sarkozy were all smiles as they entered the morning talks, they have a number of European headaches aside from Greece.

The reason for the Berlin rendezvous is to discuss new fiscal plans centred on stricter budget rules and closer fiscal integration.

This, it is hoped, would ensure stability and fiscal prudence, as well as reassuring markets of its long-term survival, to bring down spiralling borrowing costs.

"We are pleased that the negotiations for the fiscal union are going well," said Merkel.

She is hopeful that EU and Eurozone countries will be able to sign up to some points of agreement at the EU council meeting on 30 January and reach a full agreement at the next EU summit in March.

At December's EU summit, 26 of the 27 countries agreed in principle to closer fiscal integration, with Britain being the only country to reject a new treaty, as Prime Minister David Cameron wielded his veto.

Sarkozy said the focus is on "employment and competitiveness" in Europe at this "pivotal" time for the area.

Merkel said the two are "committed to stabilisation" and want a "strong, competitive Europe".

Financial Transaction Tax Still on the Cards

Both Merkel and Sarkozy are demanding a financial transaction tax to be implemented across Europe.

"I am pushing this tax because Mrs Merkel and I said we agreed in principle," said Sarkozy.

He mentioned the "scandalous" behaviour of the financial sector in triggering the crisis.

They have been at loggerheads with Britain's Prime Minister David Cameron over the issue.

Cameron has said that he does not disagree with the idea of a financial transaction tax, but that he would never sign up to a Europe-wide tax, as it would make Britain less competitive worldwide.

For him to sign up, there would have to be a global agreement, as it could be damaging to Britain's sizeable financial sector, he argues.