EU Commission President Jose Manuel Barroso has called for the EU to evolve into a "federation of nation-states".
Holding his annual state of the union debate with MEPs on 12 September 2012, he said that further integration was needed to combat Europe's economic crisis.
Mr Barroso said he was not calling for a "superstate", but rather "a democratic federation of nation states that can tackle our common problems, through the sharing of sovereignty".
"Creating this federation... will ultimately require a new treaty," he added.
The eurozone economy is expected to shrink throughout 2012, and only expected to grow by 0.5% in 2013, along with rising inflation.
The current crisis has led to high levels of unemployment, with youth unemployment in Spain and Greece standing at around 50%.
However Mr Barroso said that his plans to create a single supervisory mechanism for all banks in the eurozone represented "a quantum leap".
Responding to his speech, Liberal group leader Guy Verhofstadt urged the Commission president to go further.
"A federation of nation states is more of the same," he claimed. "We need a federal union...a post-nationalistic future for Europe."
However Conservative group leader Martin Callanan claimed the EU was acting as a "straitjacket" for struggling countries.
He said that despite having supported Mr Barroso's re-election as president in 2009, he was now "disappointed with the same old tired approach", and called for a new leadership for Europe.
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