Emmanuel Macron and Angela Merkel called for a budget that would tackle “common challenges”, as they made the announcement at Schloss Meseberg outside Berlin on Tuesday.

Merkel said after the talks: “We are opening a new chapter. We know that an economic and monetary union can only remain intact if economic policies converge.

"We are working to make sure that the eurozone budget will be used to strengthen investment, also with the aim of strengthening convergence within the eurozone," she added.

Macron also said that they had agreed on a “real budget with annual revenues and spending”.

On Twitter, he called it a “historic breakthrough”, which will respond to the challenges faced by the economic zone.

They hope to have the budget in place by 2021, which will aim to boost investment and promote economic convergence among the member states.

Merkel suggested that how the budget will be funded is up for discussion with other eurozone members, but it could be through regular transfers by countries or a tax on financial transactions.

She said: “We want Europe to find its place in a multilateral world.”

They also said they would push for greater solidarity among EU states to ensure a European response to the refugee influx and that the migrant flow to Europe needs to be reduced.

The reforms will be discussed at a summit of EU leaders on 28 and 29 June.