Gordon Brown today called on EU countries to take concerted action to "root out" the problems that first caused the economic meltdown in Europe.
But he warned that the fight against climate change was more important than ever as he ruled out relaxing EU targets in the face of the global financial crisis.
The premier held a joint press conference with the EU commission president, José Manuel Barroso, following pre-summit talks on the possible next steps to keep up EU financial coordination and cooperation, while leaving national authorities free to tailor rules to domestic needs.
Brown said it was essential that all EU countries felt part of the process necessary to stabilise the system and move the economy of the EU forward.
Lauding the leadership of both Barroso and the French president, Nicolas Sarkozy, over recent days as countries in Europe reeled from the collapse of banks, Brown said that countries had well worked well together on "stage one" of dealing with the economic crisis, by stabilising the banking system.
The EU now needed move on to what the PM called "stage two" – namely, tackling the underlying fault lines that had caused the crisis in the first place to "make sure these problems do not recur again".
"We need to root out the irresponsibilities in the system and introduce new rules to ensure better supervision," said Brown.
He added: "To build confidence, which is essential for every investor, every depositor and every business, we have to make sure we deal with the problems in the first place."
With the economy now a global, rather than merely European or national phenomenon, it was time to overhaul international institutions, and put in place a new "college" of supervisors to oversee the financial regulatory system, he said.
"The International Monetary Fund has to be rebuilt and made fit for purpose for the modern world," he said.
"We need an early warning system for the modern economy. Instead of having 15 different supervisors meeting separately, we need to have a college of supervisors to deal with these issues."
He also called for greater transparency across the financial world.
But the premier said a focus on tackling the underpinnings of the economy should not be at the expense of the climate change agenda.
Citing rising fuel prices, energy security and environmental damage, he added: "If the last year shows us anything it is that we must deal with climate change problems."
Flanked by Barroso, he added: "There are concerns about energy security and about affordability and making us less dependent on a volatile commodity so I believe the climate change agenda is part of the solution to the challenge in the economy that we face today."
The president of the EU commission said EU leaders needed to remain committed to the 2020 climate change targets.
"I believe it is critically important to keep it," said Barroso.
Acknowledging the potential "burden" to the EU economy if European countries committed to tackling climate change while others did not, he added: "If we send a signal that we are not committed to doing it it will not encourage others to do it. It would be a complete mistake to say after all this time it is not so urgent."
