Countries using the euro currency should accelerate structural reforms and consolidate public finances to make the single currency area work better, the European Commission said today.
In a report on the 12-nation euro zone, the European Union executive also called for deeper integration of financial markets and warned politicians not to use the euro as a scapegoat for national economic problems.
"Action is needed. The adjustment in the euro area has been slower than we would like and we cannot ignore this fact. We need to promote more structural reforms," EU Monetary Affairs Commissioner Joaquin Almunia told a news conference.
The report said: "Structural reforms must be accelerated and public finances more firmly consolidated to create the necessary margin for manoeuvre to weather the next economic downturn."
Mr Almunia said the European Central Bank's monetary policy was too expansionary for some countries in the euro zone, an unavoidable situation which could be alleviated by reforms and better coordination of fiscal policies.
"The impact of this monetary policy is linked with different conditions of the member states," he said. "We need to improve the way the member states are going to adjust to this impact to obtain the maximum benefit from being members of the monetary union."
Mr Almunia called for an improved dialogue between the ECB and euro zone governments.