French President Nicolas Sarkozy and German Chancellor Angela Merkel said Monday they want a new European Union treaty to control spending, in an effort to end Europe’s debt crisis and save the continent’s euro currency.

The two leaders held a working lunch in Paris and vowed to strengthen EU financial oversight over the budgets of individual countries. After a series of half-steps that failed to end the two-year-long debt crisis, Mr. Sarkozy said he is looking to create a “true economic government” in Europe, while Ms. Merkel has called for a “European fiscal union with strict rules.”

The French and German leaders are working on a plan to present in three days at an EU summit of leaders from the bloc of 27 nations, 17 of which use the euro.

U.S. Treasury Secretary Timothy Geithner is headed to Europe Tuesday to prod the continent’s leaders to take decisive action to end the crisis. U.S. leaders fear a collapse of the monetary union could sharply diminish the sluggish U.S. economic recovery and send the world economy into a recessionary tailspin.

Despite their common push for centralized control of government spending plans, both Mr. Sarkozy and Ms. Merkel, along with other leaders on the continent, are wary of giving ceding too much of their national sovereignty to a new EU authority in Brussels.

The German leader has opposed the creation of euro-based bonds, contending their possibly lower borrowing interest rates would reward debt-ridden governments at the expense of economically sounder nations like Germany. Mr. Sarkozy faces a tough re-election contest in April and yielding any control over French spending could prove damaging to his campaign.

Greece, Ireland and Portugal have already been forced to secure international bailouts over the last year and a half. The chief fear now for European leaders is that Italy and Spain, with the continent’s third and fourth biggest economies, may also need bailouts to avoid defaulting on their debts. But their debts could prove too large for Europe to handle if the Rome and Madrid governments default.

Italy’s new government moved Sunday to cut its spending, with Prime Minister Mario Monti unveiling a three-year, $40 billion package of emergency budget measures to pull the Rome government back from the brink of bankruptcy.

Mr. Monti said the measures include immediate budget cuts as well as significant steps to fight tax evasion. To do his part to cut the spending, Mr. Monti said he will forego his salary as prime minister. The measures will be presented to the parliament, which must approve them.

All 27 EU nations would have to approve changes to the 1992 Maastricht Treaty that created the EU, but that broad approval may not be necessary if spending controls apply only to the 17 nations that use the euro as their currency.

U.S. Treasury chief Geithner is planning to meet in Frankfurt Tuesday with European Central Bank President Mario Draghi and Bundesbank President Jens Weidmann. Later in his three-day trip, he is planning to talk with Mr. Sarkozy, Mr. Monti and Spanish Prime Minister-elect Mariano Rajoy.