German Chancellor Angela Merkel is calling for countries to give up more powers to Europe "step by step" as the continent tries to claw its way out of the debt crisis and says a "political union" is needed.
Merkel appeared on ARD public television's breakfast show Thursday amid pressure on Germany to defuse the crisis. The troubles of Spain's banking system and uncertainty over Greece's future are generating new uncertainty.
Merkel says: "We need not just a currency union; we also need a so-called fiscal union, more common budget policies. And we need above all a political union."
She says that means that "we must, step by step ... give up powers to Europe as well."