Barroso says EU economic recovery gathering pace-UPDATE 1

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Wednesday September 08, 2010 01:47:08 AM GMT

* Recovery gathering pace, growth higher than forecast

* Structural reforms needed in next 12 months

* Barroso sees willingness for closer fiscal monitoring

(Adds quotes, edits)

By Gilbert Reilhac

STRASBOURG, France, Sept 7 (Reuters) - Economic recovery is gathering pace in the European Union and growth this year will be higher than initially forecast, European Commission President Jose Manuel Barroso said on Tuesday.

Delivering an annual "State of the Union" speech to the European Parliament in Strasbourg, the head of the EU executive said the 27-country bloc had come through the economic crisis strongly but risks remained.

He said structural reforms must accelerate in the next 12 months and the 27 countries in the bloc of more than 500 million people must show solidarity.

"Over the last year, the economic and financial crisis has put our Union before one of its greatest challenges ever. Our interdependence was highlighted and our solidarity was tested like never before," Barroso said in a 40-minute address.

"As I look back at how we have reacted, I believe that we have withstood the test ... My message to each and every European is that you can trust the European Union to do what it takes to secure your future."

Barroso, said the economic outlook was better than a year ago despite the bloc's struggles with a debt crisis.

"The recovery is gathering pace, albeit unevenly within the Union. Growth this year will be higher than initially forecast. The unemployment rate, whilst still much too high, has stopped increasing. Clearly, uncertainties and risks remain, not least outside the European Union," he said.

The latest official forecasts predict growth in the EU of 1.0 percent in 2010 and of 0.9 percent in the 16 countries that use the euro.

Revised forecasts are expected to be announced later this month, officials say.

SINK OR SWIM

Barroso, a conservative former Portuguese prime minister who has led the European Commission for almost six years, spoke as European finance ministers met in Brussels to discuss how to tighten fiscal discipline and prevent another debt crisis like the one that began in Greece.

He said he saw a willingness among EU states to accept stronger financial and fiscal monitoring by peers and Brussels, and the bloc must now tackle the imbalances between the countries with strong economies and those performing less well.

"Europe must show it is more than 27 different national solutions. We either swim together, or sink separately," he said.

Calling for renewed efforts to tighten financial regulations to prevent another global economic crisis, Barroso urged the parliament to pass legislation creating new pan-European financial supervisory bodies.

He also said Europe would urge the Group of 20 leading and developing countries to push for more stable and more responsible financial markets and agree on reform of international financial institutions at a summit in November.

He set out the following five challenges for the EU in the coming year:

-- dealing with the economic crisis and economic governance, or policy coordination;

-- creating jobs

-- making a push on asylum and migration by building an area of "freedom, justice and security"

-- launching negotiations on the next EU budget from 2014

-- enhancing the EU's role on the global stage.

For more on Barroso's speech, click on [ID:nLDE6860EI]

For more on the ministers' meeting, click on [ID:nNDE6860CR]

(Writing by Timothy Heritage, editing by Patrick Graham)

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