Yahoo Finance Leaders' New Year Warning Over Stricken Euro
As the troubled euro celebrates its 10th birthday, European leaders have used their New Year's addresses to stress the need for closer union to tackle the eurozone crisis.
In a televised New Year's speech, German Chancellor Angela Merkel said Europe (Chicago Options: ^REURUSD - news) must co-operate more closely if it wants the euro to succeed.
"Today you can be sure that I will do everything in my power to strengthen the euro, but this will only work if Europe learns from its mistakes," she said.
"One of these is that a common currency can only really be successful if we in Europe co-operate more than we have done. Europe is growing together in the crisis."
In a grave New Year's message, French President Nicolas Sarkozy pledged to find ways to pull the economy out of stagnation in the four months left before a presidential election.
Mr Sarkozy told the nation that the worst economic crisis since the Second World War would continue to hurt households in 2012.
"I know that the lives of many of you, already tested by two difficult years, have been put to the test once more. You are ending the year more worried about yourselves and your children.
"The only way to preserve our sovereignty, to control our destiny, is to choose... the route of structural reforms rather than that of impulsive actions which only add to confusion and chaos without restoring confidence."
Mr Sarkozy is due to meet Mrs Merkel in early January to push forward a European Union agreement for a new fiscal compact.
The eurozone's third largest economy, Italy, sparked fears in 2011 that its toxic mix of low growth, high debt and spiralling borrowing costs could force it to seek a bailout like fellow eurozone members Greece, Ireland (Xetra: A0Q8L3 - news) and Portugal.
In his New Year address, President Giorgio Napolitano called on Italians to make sacrifices to prevent the "financial collapse of Italy".
"Sacrifices are necessary to ensure the future of young people, it's our objective and a commitment we cannot avoid.
"No-one, no social group, can today avoid the commitment to contribute to the clean up of public finances in order to prevent the financial collapse of Italy."
Greece's Prime Minister Lucas Papademos said the country faced another tough year in 2012 but must stick to its programme of austerity and reform.
"A very difficult year is ahead of us. We must continue our efforts with decisiveness, to stay in the euro, to make sure we do not waste the sacrifices and do not turn the crisis into an uncontrolled and disastrous bankruptcy."
The Greek economy is set to contract for a fifth year in a row in 2012 with record rates of unemployment as it battles a debt crisis that has spread turmoil across the eurozone.
Athens is struggling to agree a deal with banks on a debt swap deal meant to slash its debt mountain - a key part of a second, 130bn euro (£109bn) bailout package.
Greece, which faces bond redemptions of 14.5bn euros (£12bn) in March, needs to seal the deal to avert a costly default.
"We will defend our position in Europe," said Mr Papademos.
"The euro is our currency. The Europe of developed countries is our common home."
