Meeting with Italian Prime Minister Monti on Thursday in Berlin, the German chancellor expressed optimism that a deal on the European Union's 2014-2020 budget would be reached during next week's summit.

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

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

After failing to reach an agreement in November, EU leaders are set to meet on February 7-8 in Brussels for a second attempt at finding a deal on the 27-nation bloc's seven-year budget, likely to total around one trillion euros.

On Thursday Monti said that "for Italy it is essential for the next European budget to have resources commensurate to the union's ambitions and to support growth and solidarity."

"It is also important for Italy's contribution to be proportionate and fair compared to that of other net contributors," he said, adding that the system of discounts currently favors some countries and that Italy had paid "more that is justified by its relative wealth."

"I trust that, as the chancellor said, (we will be able) to find a compromise," he said.

Thursday's meeting between Monti and Merkel kicked off a string of such top-level talks ahead of the summit.

Merkel is set to meet with Spanish Prime Minister Mariano Rajoy and French President Francois Hollande before the budget talks begin.

hc/msh (Reuters, dpa)