Germany, Finland want fast deficit sanctions: Merkel

German Chancellor Angela Merkel (R) and Finland's Prime Minister Mari Kiviniemi address the media after bilateral talks at the Chancellery in Berlin September 1, 2010.

BERLIN (Reuters) - Germany and Finland will argue forcefully that the European Union should in future quickly impose sanctions on member states that breach the bloc's budgetary rules, Chancellor Angela Merkel said on Wednesday.

After meeting Finnish Prime Minister Mari Kiviniemi in Berlin, Merkel said both nations believed budget consolidation was vital to underpin the shared European currency.

Reforms designed to prevent a repeat of the sovereign debt crisis that shook the euro zone this year are being worked out by a task force led by EU President Herman Van Rompuy.

In the future, countries which breach the bloc's budget deficit limit of three percent of gross domestic product need to face penalties without delay, the chancellor said.

"Hence Finland and Germany will negotiate very hard in the Van Rompuy group (to ensure) that sanctions are imposed not after the three percent limit has been exceeded for a long time, but that we learn from history and act quickly and decisively," she said.

Only if member states maintained solid finances could the prosperity of the economic area be assured, Kiviniemi said.

"The debt spiral must be broken as quickly as possible," Kiviniemi told reporters at a joint news conference.

Merkel also praised the Greek government's efforts to consolidate its finances, adding that she favored closer coordination of EU economic policy in future.

Germany and Finland are among the euro zone members which have weathered the debt crisis best, and secondary market yields on their bonds are among the lowest in Europe.

Leaders in Merkel's center-right coalition have urged the bloc to tighten up its budgetary rules, but anticipate resistance from nations whose high deficits and debt have unsettled markets during the crisis, like Greece, Portugal and Spain.

(Reporting by Dave Graham; Editing by Patrick Graham)