Finance ministers of the 12 nations that use the euro currency have expressed concern over the economic threat from high oil prices and large budget deficits.
After two days of meetings, Luxembourg Prime Minister Jean-Claude Juncker, whose country holds the EU presidency, told reporters that the cost of oil is hurting European growth.
He said the current levels are beginning to weigh heavily on the economic growth potential of the world, especially Europe, making it more difficult to have sustainable growth.
Oil has recently traded as high as about $58 per barrel. Growth in the 12 nations that use the euro currency has been sluggish, and is expected to decline this year below the two percent rate of 2004.
Meanwhile, the European finance ministers also discussed the budget deficits in nations like France, Germany, Greece and Italy, which Prime Minister Juncker said are worrying.
A system of rules called the Stability and Growth Pact limits deficits in the euro zone, but the pact was weakened after France and Germany broke the limits several times forcing changes in the way the agreement is enforced. Despite the violations, European Union Commissioner Joaquin Almunia said he will apply the revised pact firmly.
"I have announced to the ministers, and I can announce to you, that the intention of the Commission of course is to implement with rigor the new pact, the reform of the pact, to keep budgetary stability and to create better conditions for stability and growth in the euro area and in the European Union as a whole," he said.
There has been a big controversy in the European Union about letting France and Germany get away with breaking the euro-zone rules and critics say this has damaged the credibility of the currency. But the euro has remained high because of the decline of the dollar during the past few years, and this has hurt European exports.