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Commission President Jose Manuel Barroso said the solution lay in urgent progress towards ever greater integration, following a line taken by Germany, saying that the urgency of the crisis may not be “fully understood” by some governments.
In Rome, Italian Prime Minister Mario Monti said that he was “relaxed” about Italy’s outlook at a “crucial” time for the EU.

And German Finance Minister Wolfgang Schaeuble also maintained that Italy was not in “danger” despite a battering on bond and other markets since the weekend deal for Spain, which has failed to calm concern about Spain.
Barroso said the European Union was now in a “social emergency”.

Urging ever greater union, in the run-up to a June 28-29 summit of EU leaders, former Portuguese prime minister Barroso told the European Parliament: “We are now in a defining moment for European integration.”
He told lawmakers: “Even when governments take the right steps to reform, these can be negatively impacted by events outside their control.
“We must recognise we have a systemic problem. We need a vision and a concrete path . . . I am not sure the urgency of this is fully understood in all the capitals.”

Days from a second general election in austerity-ravaged Greece within the space of six weeks, with European Union leaders on tenterhooks as to whether the winners this time will respect a March deal on a second bailout worth US$296 billion, Barroso cited “worrying developments in the rise of poverty and social exclusion”.

The pressures of contagion from the situation in Greece, and new severe strains in the Spanish banking system, have again put Spanish and Italian bonds under pressure, pushing up borrowing rates.
Italy borrowed 6,5 billion euros for 12 months yesterday, but had to pay sharply increased rates.

Earlier, Monti told his cabinet that he was relaxed at this “crucial” moment for the eurozone.
“We are relaxed over Italy’s standing on the international stage and on the markets,” he said, adding that the country had a lower public deficit and unemployment rate than many other EU countries.

Schaeuble, referring to wide-ranging structural reforms and measures aimed at boosting growth, said: “If Italy continues on the path Monti has set out on it will not be in danger.”

He said in an interview published by La Stampa newspaper: “Italy has progressed greatly under Monti’s government. That is acknowledged throughout Europe and on the markets.”

As France announced slowing inflation — another indication of flagging economic fortunes — Madrid share prices slipped in early trading on deep misgivings among investors over the shape of the eurozone rescue loan for Spain’s banking sector, worth “up to” 100 billion euros.
European Union leaders still have 15 tense days to navigate before opening a summit for which expectations are already low.

The decision-making wheels turn slowly in Brussels, and Barroso acknowledged that a scheme to be presented at the summit to deepen economic integration among those countries which share the single currency (currently 17) “will be the start, not the end of the process”.
Yet he said the message that leaders would commit to ever-closer union was required now.

“Without confidence (on markets) in the irreversibility of economic and monetary union, our prospects are limited,” he said.
Creating a dynamic towards wholesale integration, from budgetary to tax policy and eventually pooled issuance of public debt, was “indispensable” for the future of the currency union.

He said Europe could jog medium-term growth
by avoiding the temptation to slash 100 billion
euros from the EU’s budget between now and the
end of the decade, as demanded by big governments led by Britain, which is not a member of the
eurozone, and supported by eurozone paymaster Germany.

In the Strasbourg-based EU Parliament, former Belgian premier Guy Verhofstadt, who leads a centrist grouping, said “the problem is not Europe — the problem is not enough Europe! Federal Europe is the solution.”
However, arch eurosceptic, the English MEP Nigel Farage who is fighting for a referendum on the United Kingdom’s future in the EU, claimed that “the euro ‘Titanic’ has now hit the iceberg — and there simply aren’t enough lifeboats to go round”. — AFP.