"The reasons for this reduced confidence are widespread and include sluggish economic growth, heightened feelings of economic and personal insecurity, fears of a loss of identity and a more general feeling of 'disconnect' between what happens in 'Brussels' and in people's everyday lives".

"Europe is therefore at a crossroad", says the report which lists the strategic objectives of the union under four main headings: prosperity, solidarity, security and freedom and Europe as a world partner.

The main body of the report contains little in the way of big visions. Its main emphasis is on economic growth with an aim "to take the Europe we have and make it work".

However, as he introduced the report, Mr Barroso urged a daring approach to Europe.

"We must release Europe's enormous untapped potential", said the commission president.

"I believe that we must embark on a process of transformation as bold and as courageous as the single market in 1985, the launch of the single currency or the unprecedented enlargement of the European Union to 25 member states."

The Commission president, who is considering dropping next week a headline goal of making Europe the most dynamic economy in the world by 2010, also used his speech to make a strong plea for more money to achieve its economic goals.

"All the Commission is asking, is to endow the Union with the financial translation of the commitments made at various European summits over the years".

He added: "We have come to a point where I hear proposals to reduce the Union budget even to a level below that of 2006 ... is this feasible, is this realistic?"

His words come as member states square up for a bitter fight over how much money to put into the EU's coffers between 2007-2013.

A bastion of member states, including France, Germany and the UK, are calling for a cap on the budget and have shown no sign of moving as the political deadline for agreement approaches.

Mr Barroso's five year plan was condemned by the Party of European Socialists as being "a thinly-disguised Neo-Conservative agenda" but the centre-right EPP said the programme is "realistic and at the same time ambitious".

Several other MEPs said the list of aims needing to be achieved was too long.