20 July 2011 Last updated at 11:41 ET

Eurozone leaders warned over seriousness of Greek debt

Jose Manuel Barroso says the situation "requires full engagement by everyone"

Eurozone leaders must solve the Greek debt crisis or else the "negative consequences" will be felt across Europe and beyond, the European Commission president has warned.

Jose Manuel Barroso called the situation "very serious".

On Thursday, the 17-strong eurozone will hold an emergency summit to try to find a solution.

Earlier, French Finance Minister Francois Baroin had also stressed the need for Europe to act decisively.

'Strong message'

Speaking at a news conference, Mr Barroso said: "Nobody should be under any illusion: the situation is very serious. It requires a response - otherwise the negative consequences will be felt in all corners of Europe and beyond."

Mr Barroso has also said the minimum the summit must achieve is provide clarity on measures to ensure the sustainability of Greek public finances, the feasibility of public sector involvement in any aid package and more flexibility in existing European bail-out funds.

Earlier on Wednesday, French Finance Minister Mr Baroin said: "This meeting at the highest decision-making level should allow us to take a further essential step to establish the conditions of a new package for Greece, that will make Greece's debt more bearable."

"A strong message should be made tomorrow."

However, divisions appear to remain, and Germany's Chancellor, Angela Merkel, has played down the chances of Thursday's summit resolving Greece's debt crisis.

Mrs Merkel wants private investors to contribute to any aid package by agreeing to roll over loans they have made to Greece.

However, the European Central Bank disagrees, arguing that such a rollover would constitute a default in the eyes of the international credit ratings agencies and, as such, would undermine investor confidence and the euro itself.

President Barack Obama has also spoken to Mrs Merkel about the debt crisis.

What went wrong in the eurozone?

"They agreed that dealing effectively with this crisis is important for sustaining the economic recovery in Europe as well as for the global economy," a White House statement said.

The EU and the International Monetary Fund (IMF) have been discussing a second aid package for Greece, expected to be a similar amount to the 110bn euro ($156bn; £97bn) package agreed in May last year.

On Tuesday, the IMF warned that a failure to agree on an effective solution would be "very costly not just for the eurozone but for the global economy to delay tackling the sovereign crisis".

Reports have also suggested that the leaders will discuss a tax on banks.

Belgian Finance Minister Didier Reynders was quoted as saying such a tax "could be part of the solution, but it is not easy to put into practice" by Belgium's Le Soir newspaper.