Economic recovery is gathering pace in the European Union and growth this year will be higher than initially forecast, European Commission President Jose Manuel Barroso said today.

In a policy speech to the European Parliament in the French city of Strasbourg, the head of the EU executive said structural reforms must be accelerated in the next 12 months and the 27 countries in the bloc must show solidarity.

'Europe must show it is more than 27 different national solutions. We either swim together, or sink separately,' he said.

The latest official forecasts put growth in the EU at 1% in 2010 and estimated growth in the 16 countries that use the euro would be 0.9% this year. Revised forecasts are expected to be announced later this month, officials say.

Countries in the EU and the euro zone have been struggling through a debt crisis this year.

Barroso said he saw a willingness among governments to accept stronger financial and fiscal monitoring. He said the bloc, which represents over 500 million people, must now tackle the imbalances between the countries with strong economies and those performing less well.

The European Commission President also said that the EU will unveil plans next month to strengthen its single market, aiming to create jobs and boost cross-border trade and investment.

The single market is based on the principle of the free movement of people, goods and services across the EU's 27 countries which are home to 500 million. But Barroso said the benefits were not always being sufficiently realised.

'The internal market is Europe's greatest asset and we are not using it enough. We need to deepen it urgently,' Barroso told the European Parliament. 'Next month we will set out how to deepen the single market in a comprehensive and ambitious Single Market Act,' he added.

The act will consist of 30 proposals designed to resolve around 150 barriers and bottlenecks within the European Union identified by Mario Monti, the former internal market commissioner, in a report produced for Barroso.

Monti proposed a 'package deal' which would see all member states making concessions in return for gains in other areas. He also called for better-coordinated tax policies.

Monti cited the difficult environment for small and medium-sized enterprises in the single market, with only 8% of such firms doing cross-border trade and only 5% having set up foreign subsidiaries. He also cited their demands for simpler and less burdensome regulation and concerns.

The act is likely to focus on improved regulation, tax-coordination initiatives, a deepening of the internal market in services, and measures to improve standardisation, public procurement and energy infrastructure.

It will also focus on making it easier for small and medium-sized enterprises to get access to capital, and on measures to fight counterfeiting and piracy.

Europe signs up for national budget peer review

European countries signed up today to a plan for national budgets to be subjected to peer review in a bid to make sure EU partners avoid nasty shocks.

The deal, passed by European Union finance ministers in Brussels at talks centred on putting in place new cross-border supervision of banks, insurers and markets from next January, takes effect next March.

Read more on the supervision agreement here

The move will allow the 'economic and budgetary policies of the member states to be monitored in parallel during a six-month period every year,' a statement said.

The aim is to 'detect any inconsistencies and emerging imbalances,' and will involve 'medium-term budget strategies' being submitted for scrutiny by the end of April each year with a June summit of leaders empowered to offer 'policy advice'.

Britain signed up after deadlines were moved so as not to impinge on its demand to present interim budgets to the London parliament first, after a string of angry rhetoric about encroachment on its sovereignty.