|Countries in the eurozone must accept that Europe “has the last word” and need to work together more closely if the continent is to avoid going into decline, German chancellor Angela Merkel has warned.
In the latest signal that Germany backs stricter Europe-wide controls over national budgets, the chancellor said that eurozone members had to be prepared to surrender authority to European institutions.
Speaking at an event hosted by Deutsche Bank in Berlin alongside Polish Prime Minister Donald Tusk, Mrs Merkel said: “We seem to find common solutions when we are staring over the abyss.
“But as soon as the pressure eases, people say they want to go their own way.
“We need to be ready to accept that Europe has the last word in certain areas. Otherwise we won't be able to continue to build Europe.”
European leaders are due to meet in June to discuss moving towards fiscal union. Germany favours tighter, centralised controls of national budgets and has proposed that the EU’s economics commissioner should be given more powers to police countries’ budgets. Berlin insists that deficit reduction is key to rebuilding the euro zone economy.
Other European countries, particularly France, disagree with this approach to solving Europe’s debt crisis and have pressed the case for banking union.
The Polish prime minister said it would be "dangerous" if other countries in Europe felt Germany was imposing its own economic model across the entire bloc. A majority of the Polish population now has doubts about adopting the euro following the crisis, Mr Tusk said.
But Mrs Merkel denied that Germany was imposing its view, saying Europe was made up of different cultures and economies with different strengths.
She said: "We don't always need to give up national practices but we need to be compatible. It is chaos right now.
"We need to be prepared to break with the past in order to leap forward. I'm ready to do this.”
This meant Germany accepting more compatible social security systems so that Europeans could move between countries without worrying about their pensions.
Mrs Merkel rejected the idea that her country was seeking "hegemony" in the European Union, and pledged to seek consensus.
She said: "Germany has a ... sometimes complicated role because we are the largest economy - we are not the richest, but we are the largest. Therefore Germany will only act together with the others - hegemony is totally foreign to me."
Mrs Merkel said Europe needed closer cooperation to succeed amid tough global competition and to avoid decline, pointing to her personal experience growing up in the former communist East Germany.
"Look, I've experienced the collapse of a country. The economic system failed under the aegis of the Soviet Union.
"What I really don't want is to look on, eyes open, as Europe as a whole slips back. I would find that absurd, we have all the skills in our hands."