German Chancellor Angela Merkel told parliament Thursday, the structural reforms supporting austerity measures are the only way for Europe to survive the current debt crisis.

Chancellor Merkel said countries using the euro should not scale back or abandon austerity measures now in place. She also said increasing debt to implement growth would plunge the economy back to the early stage of the financial crisis. She said there is no “miracle cure” and that the combination of debt reduction and growth are the two “pillars” to bring the European Union out of the current economic crisis.

Chancellor Merkel's comments came just days after voters in Sunday's parliamentary elections in France and Greece overwhelmingly rejected candidates supporting cuts in social spending.

With Greece facing a funding crisis, the European Union decided Wednesday to grant the country a $6.7 billion loan payment with $5.5 billion to be paid out this week and the rest in the near future.

In another economically troubled country, Spain's government announced Wednesday it is taking over Bankia, the country's fourth-largest bank.

Bankia is holding tens of billions of dollars in bad loans to developers and landlords. Bankia is the largest financial institution to be taken over by the Spanish government since the 2008 recession.

(( OPTIONAL SOUNDBITES

European financial analyst Andreas Lipokow in German:

A Greek default would certainly lead to a drop in the markets. It would also serve as an example of what happens when negotiations fail and when, in the Greek case, the outcome (the implementation of austerity measures) was taken for granted. The IMF and the EU have brought a bail-out package into place which in the end would (in the case of default) have had no result and achieved nothing.

Economic analyst Theodore Krintas in English:

You can not reject the austerity measures for simple reasons: if you do so you are going to be abandoned by the markets, so you are going to face directly between two-and-a-half and five billion euros of shortage in fiscal, so you will need to find a way to cover the shortage. And once you will have abandoned the measures on your own, you are going to face another problem, which is the balance of trade. Actually, there will be no one trading with you. As a result Greece will face severe problems with products of first need like food, petrol and et cetera.

European Council President Herman Van Rompuy in German:

In order to convince European people we need to do more, political leaders must tell the truth, they have to say what the truth is. Populism and nationalism are not appropriate answers to challenges we face today. Those who claim that their country can be successful in going it alone are not just deluding themselves, they are lying. If we did not have Europe the cost would be inconceivably high.