European Central Bank President Jean-Claude Trichet said ahead of today's euro zone meeting that failure to reform national economic policies rapidly would lead to long-term decline in the region's growth rate.
Mr Trichet spoke before a meeting where finance ministers will assess prospects for a long-awaited economic recovery as well as the merits of institutional changes to make the euro zone a more coherent and influential voice in world economic affairs.
Europe's ageing population means that average gross domestic product growth would fall below 2 per cent a year by 2010 if there was no supply-side reform so that more Europeans worked longer, Mr Trichet said in a speech in Brussels.
One of the main reforms he and economists consider crucial, though politically difficult, is a move to looser labour protection laws in many countries to give employers greater freedom to hire and fire staff.
"Very ambitious and comprehensive reforms are absolutely of the essence for raising medium term output growth in the euro zone, or even to sustain long-term growth potential in the presence of the depressing effects of demographics," he said.
He and the 12 euro zone ministers meet in Luxembourg later today with European Monetary Affairs Commissioner Joaquin Almunia; ministers from the rest of the 25-country European Union join them tomorrow.
Mr Almunia last week cut his forecast for euro zone growth to 1.2 per cent this year, although he and most politicians and economists believe the latter part of the year will see an upturn they have been predicting for some time.
Mr Trichet, who frequently calls for economic reforms to move euro zone growth rates closer to those in the United States, said the European Commission should publish league tables of member states' progress in reform.
The European Commission already publishes similar tables on countries' success in implementing EU competition policy.