European leaders must anchor their actions in more austerity if the eurozone is to avoid "disintegration" and "depression," the EU's economics commissioner Olli Rehn has warned.
With Spain facing imminent financial danger and Greece already tipped to possibly exit the single currency, Rehn said there are no shortcuts and that budget consolidation, reforms and some public investment hold the keys.
"To be frank, this is the case if we want to avoid a disintegration of the eurozone and if we want it to survive," Rehn said.
Rehn said that "default or disintegration" would likely cause much greater pain for Europe's citizens than further unpopular austerity and reforms, as it "would lead to terrible depression in Europe and around the world".
He said the solution remained "first, by staying the course of fiscal consolidation, second, undertaking structural reforms, and third, by boosting both public and stimulating private investment in order to provide fuel for the growth engine."
At this "critical" juncture for the euro, Rehn downplayed the merits of eurobonds, or shared sovereign debt.
This pooled approach was pushed heavily by French President Francois Hollande at an EU summit last week, as a way to prevent the huge gulf between the interest rates eurozone strugglers like Spain must pay to borrow, compared to safe-bet German bonds.
German Chancellor Angela Merkel remained resolute in her opposition to pooling liabilities.
But Rehn told a conference of economists in Brussels: "We will not be able to overcome our problems by focusing only on joint issuance of euro debt."
He warned of "yet another false debate between fiscal consolidation and growth," and said "genuine stability" came from the follow-through of clear government action.
He said a "much-upgraded firewall" was required, just weeks from the entry into force of the 800-billion-euro European Stability Mechanism.