The European economy is struggling to contain its deepening crisis at the moment but it will show progress starting next month, Karel De Gucht, the European Union’s trade commissioner, said Thursday in Seoul.

Speaking to journalists at a forum in Seoul, he pinned his hopes on the European Commission’s plans to recapitalize banks in the world’s largest economic bloc via public and private cooperation.

“It’s a master plan for enhancing the capital bases of banks and putting in place practice economic governance,” De Gucht said on the sidelines of the annual World Knowledge Forum hosted by Maeil Business Newspaper.

“I hope the EC would play a great role in overcoming this crisis. With Barroso’s five steps, Europe is going to face fewer hurdles next month.”

EC President Jose Manuel Barroso outlined a five-point plan on Wednesday in Brussels, which is “designed to break the vicious circle between doubts over the sustainability of sovereign debt, the stability of the banking system and the EU’s growth prospects.”

The package calls for decisive action on Greece; boosting the lending capacity of the European financial stability facility, the league’s major bailout fund, to 440 billion euros ($607.6 billion) and speedy launching of the European Stability Mechanism; reinforcing European banks; accelerating policies to spur growth such as free trade agreements; and greater integration for economic governance.

With regard to the FTA between Korea and the EU, he is still working to resolve non-tariff issues such as complex regulations and disparities in standards with his counterpart Kim Jong-hoon.

“Overall European companies are positive (about the pact) though a certain number of problems remain such as burdensome licensing for meat and vegetables. It’d take some time to make way with it,” De Gucht said.

By Shin Hyon-hee (heeshin@heraldcorp.com)