Member states have been urged to invest in the European Union if they are to compete on a global scale.
Former Birmingham City Council leader Sir Albert Bore issued the warning at the Committee of the Regions Plenary Assembly in the European Parliament yesterday.
The committee backed an EU Commission proposal to set a budget based on 1.14 per cent of gross national income (GNI).
Some member states have argued to cap the budget at one per cent of GNI, but Sir Albert (Lab Ladywood) said the enlarged EU required sufficient investment.
The proposals do not constitute an increase in the percentage of GNI that member states have been paying in recent years.
However, the total funds will increase as the EU has enlarged to 28 member states last year.
Sir Albert submitted to the committee an opinion on the EU commission's proposed budget for 2007-2013 which was adopted.
In the report, Sir Albert said the expected 1 trillion euros generated by the budget would help ease deprivation in the EU and boost the bloc's economic growth rates, which have been lagging behind China and the United States in recent years.
He said: "It is unrealistic to expect more Europe for less money. Since enlargement, the EU is the world's largest economic and trade bloc, housing many of the world's most productive and innovative cities and regions. ?Unless all components of the European economy adapt to the structural changes enforced by globalisation, the European economy will decline further during the 2007-2013 period, jeopardising the prosperity, stability and security of our cities and regions.
"We must recognise that the challenge to defend and sustain the European social model based on growth, competitiveness and solidarity is faced, in the context of increasing public doubt about its efficacy as well as a situation of global instability, with a need to take coordinated action that reflects the responsibilities and potential of all spheres of governance."
