German Chancellor Angela Merkel said ahead of a meeting with visiting Italian Prime Minister Mario Monti that she was optimistic a deal on a long-term EU budget could be clinched.

"I am very optimistic that on the question of the long-term EU budget, we will be successful, that we will get an agreement," Ms Merkel said, standing alongside Mr Monti in the Chancellery in Berlin.

"Italy and Germany are both net payers, we have common interests. But of course these talks won't be easy and we can expect Italy to push its interests."