24/05/2012 13:14 BST | Updated 24/07/2012 06:12 BST

The Eurozone Faces One of Its Biggest Ever Decisions

When the first Euros were printed in 1999, Europe chose a bold new future.

Economic and monetary union was a symbol of a new European self-confidence: the first currency union in Europe in modern times, within the world's largest trading bloc, and a degree of political co-operation that belied our troubled past.

But beneath the surface, the new European economy was built on shaky foundations. For many years the availability of cheap credit masked serious underlying structural problems. When the US mortgage markets collapsed, Europe's lack of competitiveness left us deeply exposed.

Now Europe finds itself at a crossroads. Our choice will set Europe's course for a generation. One path leads to protectionism and stagnation; the other to competition and growth. Which will we choose?

The decision is one of the biggest we have faced. The answer is clear: Europe must go for growth.

When Chancellor Merkel, Prime Minister Cameron and other Heads of Government meet at next month's EU Council, we must take strides towards a new growth agenda for Europe.

The work that has already been done on fiscal discipline and debt reduction is a necessary precondition, but not a guarantee of growth. The next stage involves stating our commitment to two priorities: completing the Single Market, and getting more strategic investment in the areas that will deliver growth in the future.

We have spent years talking about these things but achieving little. Now the time for warm words is over. When we meet in Berlin today we will be focusing on actions.

The Single Market is a huge achievement, but it is still work in progress. We can no longer afford to turn a blind eye to lax enforcement of the rules which govern the market: in tough times, it is even more important that EU countries and the countries we trade with believe that the market works equally for all. The June European Council should focus on clearer implementation and stronger enforcement.

We should push for completion of the single market for the digital, postal and services sectors. Implementation of the Services Directive to date has already added 0.8% to EU GDP - completion could add a further 1.8%. The benefits would be even greater if steps could also be taken to raise the bar on restrictive practices in Member States and explore further areas for liberalisation. Completion of the digital single market could bring really substantial benefits - an estimated 4% increase in EU GDP. Commitment to completion is good for our consumers, good for our businesses, and good for growth.

Making the Single Market work better for Europe also means extending its reach into new sectors. We should secure more competition and further liberalisation in the railway sector, and make similar progress on energy: increasing interconnections and continuing our work to integrate clean energy.

Another driver of growth is smarter regulation: for example, the Commission has already committed to exempt micro businesses from new red tape wherever possible. We need to turn that commitment into practical measures to reduce existing burdens for businesses in Germany, the United Kingdom, and elsewhere.

Market reforms will provide opportunities for trade and prosperity, but we will also need targeted investment in projects that will generate growth. We can do more to mobilise private capital for strategic investment, through public private partnerships that are budget neutral. More strategic private investment can be matched by smarter spending of public funds, too, for example by raising and increasing the quality of spending on R&D.

And now is the time to deliver on an ambitious, protectionism-busting external trade agenda, especially with a view to developing third-country markets by Free Trade Agreements with emerging economies and others. Swift progress on a Free Trade Agreement with the US, based on equal commitment from both sides, could pave the way for an all-new comprehensive transatlantic marketplace.

These changes are significant; but so are the challenges before us. It is not enough for Europe to indulge in another round of empty declarations. Now is the time to deliver real change, because the alternative does not bear thinking about. We must summon the political will and return to two of the founding principles of both the Single Market and the Union itself: economic integration and liberal, open trade, delivering growth for all our citizens.

Britain and Germany are united in this belief: fiscal discipline, debt consolidation and structural reforms are all preconditions for a more prosperous, stable future for all Europe's citizens.

Together, we must signal our commitment to overcome the current crisis and lay the foundations for future success. Such a commitment requires vision and political leadership in equal measure. We have reserves of both: now is the time to summon them. Once more, we must choose a new future for Europe.