In order to generate new opportunities for employment within the European Union (EU), it is essential to safeguard financial stability, an official has claimed.

European commissioner for economic and monetary policy Olli Rehn highlighted the importance of fiscal consolidation, structural reform and reducing deficits for future growth.

Defending the EU's decision to bail out the struggling Greek economy, he insisted it is vital to protect financial stability in order to ensure a healthy economic recovery in the region and create more jobs.

According to the executive member, "we want to strengthen preventive budgetary surveillance, address macro-economic imbalances and set up a permanent and robust framework for crisis management" in order to protect against problems within member states in the future.

Speaking on sustainable growth and job creation at a European Parliament session in Strasbourg, Mr Rehn said this would be achieved through scrutiny and analysis of national budgets and fiscal measures.

The EU economy is showing signs of recovery, with the productivity index rising from 56.6 in March to 56.8 in April this year - any figure over 50 denoting growth.

Posted by Sarah Dixon