Jose Manuel Barroso hails 'defining' EU summit

The latest EU summit on the euro crisis will be a 'defining moment for European integration', Jose Manuel Barroso said today (EPA)

The latest EU summit on the euro crisis will be a "defining moment for European integration", EU Commission President Jose Manuel Barroso said today.

The gathering of EU leaders on Thursday and Friday comes as Cyprus joins eurozone countries in need of a bail-out and with officials already talking down expectations of final answers.

But Mr Barroso told an audience of business leaders in Brussels: "It is now clear that the world expects Europe to commit to credible and concrete solutions to become more integrated and more united.

"We are now in a defining moment for European integration. We must articulate the vision of where Europe must go and a concrete path for how to get there."

Mr Barroso insisted the answer was more political as well as economic unity.

He added: "What is at stake is not only the economic integration; it is also the overall economic confidence in the euro area, and indeed our commitment to the European project.

"This is why we need to be bold and define the way forward.

"For a genuine economic and monetary union to be established, I think that we need a banking union, a fiscal union and further steps towards a political union."

He said he expected leaders to agree a "comprehensive package" of economic growth measures at the summit, including an increase in lending capacity of the European Investment Bank, to target job-creating infrastructure projects in member states, and a better-focused use of existing EU regional aid funds.

Deeper changes were needed to get out of the economic crisis, Mr Barroso said.

He added: "A vicious circle has become established, whereby the use of taxpayers' funds to rescue banks makes sovereigns weaker, while the increasingly risk-averse banks stop lending to businesses that need funds, making the economy - and the banking sector with it - slow down, which again further weakens the sovereign.

"We can break this negative cycle now if we are bold enough to establish a strong and integrated financial framework."

He said the starting point had to involve all 27 member states, adding: "We must recognise that some countries do have opt-outs.

"These opt-outs must be taken into appropriate account in the future architecture. But they remain the exception, not the rule."

After a banking union, the second building block should be a "fiscal union", followed by a "more integrated and stronger" political framework for the EU, Mr Barroso said.

He explained: "In a more integrated economic and monetary union, sound fiscal positions will not be optional, they will be non-negotiable. We propose to look at further steps that may require changes to the Treaty.

"Let me tell you here that fiscal union is about much more than just euro bonds or stability bonds.

"It also means more co-ordination in taxation policy and a much stronger European approach to budgetary matters at national and European level.

"These decisions on deeper economic, financial and fiscal integration imply major changes to the way our citizens are governed and to the way their taxes are spent.

"Greater democratic accountability and legitimacy are absolutely crucial. And here comes the third building block we propose to look at - a more integrated and stronger political framework, or a 'political union'."

Mr Barroso warned: "This crisis is the biggest threat to all that we have achieved through European construction over the last 60 years. Faced with this stark reality, standing still is not an option.

"A big leap forward is now needed. It may not be simple. It will require ambition, vision and determination to enact far-reaching reforms.

"But I believe this is the best, and indeed the only way, forward that can give our citizens the prosperity, our businesses the opportunities and our young people the futures that they all deserve."

PA