COORDINATED ACTION LAUNCHED

    Despite the rejection of a European bailout fund, calls for coordinated action strengthened as the financial crisis deepened in the EU.

    "We are asking and urging member states for closer cooperation. It is critically important for confidence in the markets," European Commission President Jose Manuel Barroso said in early October. "It is not just a problem of injecting liquidity. We also need to inject credibility in the European response."

    In an urgent bid to restore financial stability, leaders from the 15 euro zone countries hammered out a joint action plan for a coordinated response at their first ever summit in Paris on Oct. 12.

    The action plan, which saw European governments buy in banks to boost their finances and temporarily guarantee bank refinancing to ease the credit crunch, was then endorsed by all EU leaders at a broader summit three days later.

    As Barroso put it, the joint action plan served as a "toolbox," in which EU member states could choose their own national measures.

    Based on the plan, EU governments finally mounted a unified attack against the financial crisis, pledging more than 2 trillion euros (2.78 trillion dollars) so far on their national bailout packages.

    SPLIT ON ECONOMIC STIMULUS

    However, the delayed coordination failed to prevent the worsening financial crisis from further spreading to the real economy.

    Hard hit by the crisis, the euro zone economy plunged into its first-ever recession in the third quarter of this year and the EU is set to follow suit in the last quarter.

    Faced with an economic crisis, EU countries again embarked on their own way to stimulate their economies.

    In a bid to coordinate national efforts to cushion the slowdown, the European Commission proposed in November an EU-wide economic stimulus package worth 200 billion euros (278 billion dollars).

    The sum amounts to 1.5 percent of the EU's gross domestic product (GDP), with 1.2 percent coming from EU governments and the rest from EU funding.

    Although EU leaders adopted the plan at their summit on Dec. 12,divergence on details remained.

    Germany, the largest economy within the EU, has opposed a call for it to expand its national fiscal stimulus plan for the benefits of the EU economy as a whole, saying their current plan worth 32 billion euros (44 billion dollars) is enough.

    On specific measures, EU leaders also failed to agree on a proposal pushed by the Commission to cut value-added tax (VAT) on green goods and labor-intensive services such as restaurants, putting off the debate until a meeting of EU finance ministers in the spring.

    Dubbing the summit as the most important one since he assumed the top EU post, European Commission President Barroso declared the EU had succeeded in its "credibility test" by adopting the stimulus package.

    But there is still a big question mark hanging on the solidness of the EU's unity, as daunting tasks still lie ahead of EU countries for them to tackle the spreading financial crisis, analysts warned.