EU chief Jose Barroso called for moves towards a Federal States of Europe

Jose Manuel Barroso claimed the fate of the euro and European Union were intertwined and that the only answer to the growing threat of collapse was a massive Federal Europe. As the crisis in Greece deepened Mr Barroso told the European Parliament: "We are confronted with the most serious challenge of a generation. "What we need now is a new, unifying impulse, a new federalist moment - let's not be afraid to use the word. "The right way to stop the negative cycle and strengthen the euro is to deepen integration, mainly in the euro area. This is the way to go." He even claimed the crisis was "a fight". "This is a fight for the jobs and prosperity of families in all our member states.

What we need now is a new, unifying impulse, a new federalist moment - let's not be afraid to use the word President of the European Commission, Jose Manuel Barroso

"This is a fight for the economic and political future of Europe. "This is a fight for what Europe represents in the world. This is a fight for European integration itself," he added. His outrageous land grab comes as two French Banks were downgraded by Moody's, one of the big three credit agencies, due to their exposure to the Greek debt. He said the big problem was that new rules governing the running of the euro area had been agreed but not fully implemented by the euro-zone countries. Barroso added: "In the cacophony of criticisms, counter-criticisms, magic bullets and miracle panaceas that are proposed on a daily basis, the truth has been drowned out - that solid, feasible and concrete proposals have been made. That they have been agreed upon. But they have taken too long and have not yet been fully delivered.

"Economic and monetary union cannot function properly only on the basis of decisions taken by unanimity. "Because if a eurosceptic fringe can determine the position of one member state and one member state can block decisions, the result is that we are not credible. This is not about institutional positioning or power. It is about efficiency and delivery." Deputy Prime Minister Nick Clegg dismissed suggestions - rife on the Tory backbenches - that Britain should take the opportunity presented by the crisis in the eurozone to renegotiate its relations with the EU through new treaties.

In a speech at the London School of Economics, Mr Clegg said: "On a day like today, when people have been talking openly about the possibility of a Greek default, the key question is not, how do we seek to renegotiate the United Kingdom's place in the European Union in a treaty that hasn't even materialised yet. "The single most important question, the urgent question, is what role can we play in helping the eurozone avoid further turmoil, creating the stability needed for prosperity and jobs in the eurozone, of course, and in the United Kingdom too. "A stable, healthy eurozone matters massively to the UK. It's where we send 40% of all of our exports. And together we all face a long-term problem of competitiveness - a problem not even a raft of new treaties could fix.