Germany and France at odds on integration France and Germany remain sharply divided on their priorities for closer economic integration in the 17-member eurozone, on the eve of a two-day summit in Brussels that is supposed to lay down guidelines for the next step to reinforce the European economic and monetary union. Angela Merkel, the German chancellor, wants the European Council to focus on new rules to improve competitiveness throughout the common currency area before she will discuss putting any new money on the table in the form of a eurozone budget. She also wants to leave complex negotiations on establishing a single banking supervisor for the eurozone - the first step towards a banking union - for finance ministers to decide. François Hollande, the French president, is adamant that progress must be made on agreeing a eurozone budget, as well as steps towards common debt issuance by eurozone member states, before he will sign off on new ways to enforce progress on structural reforms to boost competitiveness. He is also pressing for swifter agreement on bank supervision. "If we accept (the need) to co-ordinate reforms and growth and competitiveness policies, it is logical that there should be access to eurozone instruments, such as a budgetary capacity or common borrowing," a French official said. The differences that emerged from separate briefings in Berlin and Paris mean that expectations of a big step at the summit towards closer co-ordination, with the European Commission getting substantial new powers to drive economic reform, are already being played down. The meeting is supposed to consider proposals from Herman Van Rompuy, president of the European Council, José Manuel Barroso, Commission president, Mario Draghi, president of the European Central Bank, and Jean-Claude Juncker, chairman of the Eurogroup of finance ministers, for big new steps towards integration. Their plan includes a banking union, a fiscal union, economic union and political union to ensure democratic legitimacy for the whole process. Instead of deciding what elements each pillar should include, the summit is likely to do no more than set a timetable for action in the next four to six months, according to a senior German official. It will not attempt to take decisions on "how economic and monetary union might look in 2020," he said. The proposal for some form of jointly-guaranteed debt, in the form of eurobills or eurozone bonds, put forward by Mr Barroso, has been dropped from the agenda of the summit by Mr Van Rompuy in the face of fierce German resistance. Ms Merkel has repeatedly rejected the idea of debt mutualisation, reflecting strong opposition in the ranks of her coalition government. With German elections due next September, there is little prospect of any early change in Berlin. Germany and France also disagree on the need for further EU treaty changes to underpin the whole integration process. German ministers say such a move may be necessary to clear the way for a single European banking supervisor under the umbrella of the European Central Bank, and to ensure that the recommendations of the European Commission's recommendations are enforceable. The German official said Wednesday, that treaty change was "not off the table." The thinking in the chancellor's office is that treaty change will be needed to make rule changes enforceable, but it does not have to be decided "today or tomorrow." In contrast, Mr Hollande is loath to open the way for any treaty change that might force him to hold a referendum in France, likely to reopen divisions over Europe in his own Socialist party. David Cameron, UK prime minister, is also hostile to any early treaty change that would force him to call a referendum during the life of his coalition government. Short of full treaty change, Germany is strongly backing a proposal for the European Commission to sign "bilateral contracts" with each eurozone member state, setting out agreed plans for structural reforms to boost competitiveness, including labour market and tax reforms. Ms Merkel wants agreement on the parameters to be used to design such contracts, using countries such as China, India and Brazil as benchmarks for global competitiveness. In Paris, the response is that "contracts are useful only insofar as they contribute to growth." France wants a eurozone budget to be used to counter cyclical downturns in individual member states, and boost growth, while Germany sees such a tool as "time-limited and project-oriented."