Spain to push for EU economic governance when at presidency helm

"I agreed with President Sarkozy that if the European Union really wants to be a political union, which works for its citizens, it has to have a much more solid economic government and with tools," the Spanish leader told reporters after receiving a two-day visit from his French counterpart.

"I can't see a single market, a single currency, then not see an economic government with powers, with tools."

Currently fiscal policy is set at member state level with a degree of co-ordination between finance and economy ministers.

What greater degree of co-ordination or centralisation was not defined.

The two leaders also committed to closer co-operation on a number of bilateral issues, particularly in combatting Basque separatist group ETA, whose operations straddle the French-Spanish border.

Mssrs Sarkozy and Zapatero agreed to found a "strategic planning and coordination committee" to battle terrorism and organised crime.

"We will not lower our guard against this curse. We will act against the hateful face of ETA or Al Qaeda, given that we have to protect our citizens and give justice to the victims and preserve the democracies we have the honour of representing," the French president said on Monday night.

Mr Sarkozy also re-iterated his position that Spain should be represented at future G20 meetings.

Mr Zapatero has yet to be invited to the next such summit, due to take place in New York in September.

The French state visit came a week after it was revealed that Mr Sarkozy had made denigrating comments about a number of European and global allies while speaking to domestic parliamentary deputies. His description of the Spanish leader was particularly unflattering, categorising him as "not very intelligent".

Mr Sarkozy laughed off the gaffe while meeting with the object of his scorn.

"There was a misunderstanding. Do you think I lack the experience that I could fall into a trap like that?" he told reporters.

"I do not want to say that I do not consider Jose Luis very brilliant, and besides that, he is too young and he runs too fast," he added. The two had gone for a jog on Monday.

Mr Zapatero, for his part, seemed to have thought nothing of the incident: "President Sarkozy has shown himself to be the best friend Spain could have," he said.