EU leaders put on show of unity as cracks widen

But they glossed over huge differences on bank supervision and the single currency.

They all ignored the fact that not one unified agreement has been agreed between the 27 EU nations on any outstanding issue, in favour of a rose-tinted assessment.

But their bankers didn't appear to agree.

While the leaders were bragging, European Central Bank (ECB) officials said that there was "no room for complacency" even while claiming that stresses from the debt crisis have eased on banks and financial markets.

The bank noted "a tangible easing of euro-area financial stability strains since the summer."

But it warned that if governments don't reduce their budget deficits - in other words to continue with their austerity programme - matters will get worse.

Europe needs to make new rules and institutions to safeguard the euro, the bank said in its twice-yearly financial stability report.

The EU is struggling with high levels of debt, financially weak banks and sluggish economic growth.

Greece, Ireland, Portugal and even Cyprus have needed government rescue loans.

And although commentators say that Spain and Italy are now breathing easier after struggling to finance themselves over the summer, reports from those countries cast doubt on such claims.

The Bank of Italy said today that public debt has swelled to its highest ever level, reaching €2.014 trillion (£1.65tn) in October, highlighting the country's fragile financial state in spite - or perhaps because - of the raft of austerity measures imposed by unelected PM Mario Monti.

And Spanish Prime Minister Mariano Rajoy is desperately trying to avoid the conditions that would be attached to any bailout, saying today that Spain currently has no need to tap a European financial aid programme yet.

Despite claims of an easing crisis, ECB vice-president Vitor Constancio was cautious when asked about eurozone progress out of its economic troubles.

"I have learned with ancient Greece not to be hubristic," he said, using the Greek word for excessive pride.