Germany and France are pressing their case that European leaders need to act quickly to resolve the continent’s debt crisis and save the common euro currency.

German Chancellor Angela Merkel and French President Nicolas Sarkozy detailed their plan Wednesday to end the two-year debt contagion in a letter to European Council President Herman Van Rompuy, a day ahead of a European Union summit in Brussels. The German and French leaders called for automatic penalties against governments that violate budget limits, a unified corporate tax rate and a new financial transaction tax.

Ms. Merkel and Mr. Sarkozy, who oversee Europe’s two strongest economies, said they are “convinced that we need to act without delay.” They said new EU treaty provisions should be ready for adoption by March.

But even as they pushed for broad European oversight of individual government budgets, news agencies quoted an unnamed senior German government source as saying that he is more pessimistic than a week ago that all 27 EU nations will agree to treaty changes. More likely, he said, is that the 17-nation bloc that uses the euro might agree to more centralized authority over budgets.

Britain, with its own currency , says it is worried about handing control over its spending to a new European-wide authority. That could make a Europe-wide debt resolution more difficult to achieve.

Some analysts say the survival of the continent’s 12-year monetary union is at stake at the summit. Economists worry that the world economy could plunge into a new recession if the European debt crisis is not resolved.

U.S. Treasury Secretary Timothy Geithner, fearful of the effects of a euro collapse on the fragile American economy, is on a three-day trip to European capitals to prod officials to adopt strong measures.

After meeting with French Finance Minister Francois Baroin in Paris, Geithner expressed confidence that the European officials will move to control government spending, create new economic growth and calm jittery financial markets worried about governments defaulting on their debts.

Credit agency Standard & Poor’s this week put 15 of the 17 nations that use the euro, including Germany and France, on a negative credit watch. It also warned it may downgrade the top rating of the bailout fund for Europe’s debt-ridden countries. Greece, Ireland and Portugal have all already needed international bailouts, with analysts fearing that Italy and Spain, the continent’s third and fourth largest countries, also might need help.

The credit rating agency has criticized European officials for “a very slow and reluctant response” to the continent’s debt crisis. It has also expressed skepticism that European leaders would act decisively at the summit.

One British bookmaker has adopted a similar outlook, offering gamblers three-to-one odds that the euro will cease to exist by the end of 2012.