The chairman of the 16-nation eurogroup, Jean-Claude Juncker, has warned that job losses will escalate this year despite measures taken by EU leaders in recent months to boost the economy.
"There's a risk of mass layoffs by the end of the year," he said while addressing a conference in Brussels on Wednesday (15 April) organised by European trade unions.
Mr Juncker, who is also the prime minister of Luxembourg as well as chair of the eurogroup, the EU nations using the euro currency, urged world leaders to move ahead with reforms agreed at the recent G20 meeting in London, but said the EU may need to do more if current stimulus programmes prove insufficient.
"If by 2010, we see this is not enough, we will have to reconsider. Now to simply pour more resources in would be premature," he said.
However, he repeated the line iterated by many EU governments in recent months in the face of US calls for increased stimulus spending that a clear exit strategy is necessary.
"We are in the process of getting into a spiral of debt ... Let's not destroy what we have achieved in ten years. Inflation is a true danger," he said. "We don't have the right to pay off the debt on the shoulders of future generations."
A top priority now is to unblock the EU's malfunctioning financial system, he said, and in particular, action was needed to remove toxic assets held by European banks that are adding to the current uncertainty.
In Germany on Wednesday, European Central Bank governing council member and head of the Bundesbank Axel Weber said that the bank would outline a package of policy measures next month in order to stimulate the economy.
While the bank is largely predicted to cut interest rates further at its monthly meeting on 7 May, a string of comments by board members in recent weeks suggest the bank may also announce new unconventional policy measures to deal with the crisis. These could include the purchase of corporate debt.
But Mr Weber said any new ECB measures should first concentrate of helping European banks due to the systemic role they play in the EU's economy.
"Additional easing of refinancing by banks, for example in the form of extending maturities of liquidity operations, should have priority. Direct intervention into capital markets should take a back seat," he said.
Mr Weber also mirrored comments made by Mr Juncker regarding the need to rein in deficit spending.
"The call for more short-term state debt taking is not in my opinion warranted," he said.
"Germany could exceed the three percent limit this year, and in the coming year, we can count on an additional marked rise in deficit," he said, adding that as a result, the country would likely incur the EU's excessive deficit procedure for breaching maximum deficits allowed under EU rules.