BRUSSELS, Belgium - May 24, 2010 - Europe's economy will stagnate unless governments make major reforms to boost growth - just as they rein in spending to curb soaring debt levels, the European Union's economy chief warned Tuesday.

Low growth prospects and rocketing debt in many of the EU's 27 nations have alarmed financial markets in recent months, causing stocks to slide and the euro to fall sharply in value to a four-year low against the U.S. dollar.

EU Economy Commissioner Olli Rehn called for government action to speed up economic output, saying his forecasts show that growth will not top 1.5% and the jobless rate will stay close to current highs without reforms over the next five years.

"The big risk is that once the recovery gets more robust, we sit idly in self-complacency and forget the structural reforms. That would lead us to a sluggish recovery - or even a lost decade," he said in a speech at the Brussels Economic Forum organized by the EU's executive commission.

He said EU forecasts showed that "ambitious structural reforms" could help the economy grow by over 2% over the next ten years, creating more than 10 million jobs and taking unemployment down to 3% by 2020.

The reforms needed vary for each European country, he said, repeating a call for them to open up national markets and drop barriers that prevent foreign companies or individuals from doing business across the bloc.