Barroso laments EU jobs crisis in keynote speech
The European Commission President, Jose Manuel Barroso, has said unemployment is "still much too high" in the EU, in his first "state of the union" speech.
He used the US-style format to outline the 27-nation EU's priorities.
The high-profile speech to Euro MPs in Strasbourg is seen as part of a drive to explain the importance of the EU's role in restoring economic growth.
Some MEPs said the Commission must do more to earn citizens' trust in the EU.
Mr Barroso, in his second term as head of the EU's executive arm, said the recovery "is gathering pace, albeit unevenly within the union".
"Growth this year will be higher than initially forecast. The unemployment rate, whilst still much too high, has stopped increasing. Clearly, uncertainties and risks remain, not least outside the European Union."
Earlier, political group leaders in the European Parliament had considered imposing fines on MEPs who failed to attend Mr Barroso's speech.
But the assembly's president, Jerzy Buzek, said more time was needed to decide how to beef up attendance in parliamentary debates.
End Quote Jose Manuel Barroso European Commission President
The internal market is Europe's greatest asset, and we are not using it enough”
Mr Barroso spoke as Europe's finance ministers were discussing the economic crisis and ways to tighten regulation of the banking industry.
Debt-laden Greece is set to receive a further loan from its neighbours and the ministers agreed on an EU-wide system of financial supervision designed to prevent another crisis.
BBC Europe correspondent Jonty Bloom in Strasbourg says the British financial services industry is worried that this will mean more red tape and a shift of power and influence away from the City of London towards continental Europe.
Mr Barroso said "it is now time to exit" the period of budgetary expansion, when European governments poured taxpayers' money into the financial sector to boost liquidity and ease the banking crisis.
He stressed that the internal market "is Europe's greatest asset, and we are not using it enough".
He said that in the areas of energy interconnections, research and development aid "a euro spent at European level gets you more than a euro spent at national level".
But he said small and medium-sized businesses (SMEs) were "being strangled in regulatory knots".
"The Commission has put proposals on the table to generate annual savings of 38bn euros (£32bn) for European companies.
"Stimulating innovation, cutting red tape and developing a highly-skilled workforce: these are ways to ensure that European manufacturing continues to be world-class," he said.Sceptical MEPs
MEPs gave a generally lukewarm response to the speech.
The head of the European Conservatives and Reformists group, Michal Kaminski, said: "European institutions will do nothing to scale back on waste if the Commission president is pushing for yet more taxpayers' money.
"President Barroso is correct to say that this is the EU's 'moment of truth'. However it should also be time for some home truths about why the EU is so unpopular."
The head of the British Labour group of MEPs, Glenis Willmott, warned that "if the European Commission chooses to focus purely on free markets and unfettered deregulation, without consideration for the wider interests of European citizens, then it has little hope of regaining the trust that has been lost".
UK Independence Party MEP Nigel Farage, a Eurosceptic, dismissed Mr Barroso's speech, saying it "doesn't I think quite put you on a par with [US] President Obama because there is one fundamental difference - he of course is elected, and you are not".
He added that the European Parliament had to "beg to get MEPs to turn up to listen to you".