(BRUSSELS) - The European Commission called on Wednesday for a 200-billion-euro (259-billion-dollar) stimulus package to snap Europe's economy out of recession through spending hikes and tax breaks.

"Coordinated European action can and will make a difference," commission chief Jose Manuel Barroso stressed as he unveiled the wide-ranging package.

"Business as usual is not an option. That would lead to a vicious recessionary cycle," he told journalists, adding that that was "the lesson of the 1930s."

Of the total, 170 billion euros will come from national government budgets and about 30 billion euros from the budgets of the European Union and the European Investment Bank.

Barroso said the bulk of the measures, made up of a smorgasbord of national and EU programmes, would be rolled out as soon as the beginning of next year and the rest over the course of 2009 and 2010.

The combined national and EU campaign, worth the equivalent of 1.5 percent of the European Union's gross domestic product (GDP), exceeded the 130 billion euros that Barroso had mooted as a possible target in recent days.

The European Commission will urge member states to formally sign on to the plan at a December 11-12 summit and asked finance ministers to ensure that it is followed up afterwards.

However, the commission's proposals met with a mixed reaction as some governments welcomed the package and others wondered where the money would come from.

"If there is something that's missing these days on the market, it's money," said Polish Prime Minister Donald Tusk. "I would be cautious about such political declarations."

While Brussels has been drafting pan-European recovery plans, a growing number of individual EU countries have pressed ahead with their own national packages.

Germany, Europe's biggest economy, has voiced skepticism about EU-wide initiatives and German Chancellor Angela Merkel warned on Wednesday against a "race" between European states over the size of their stimulus measures.

"We should not fall into a race of billions (of euros)," Merkel said in a speech to the German parliament.

Earlier this month, Berlin unveiled measures that Merkel says are worth 32 billion euros and should constitute Germany's contribution to the EU measures.

Usually the guardian of budgetary rigour, the European Commission urged the 27 EU governments to step up spending and craft targeted tax breaks in the face of the worst recession in decades.

While it would be up to governments to decide on the balance between spending and tax initiatives, the commission urged them to focus on measures to help the poor and investments that would benefit Europe in the long term.

It said governments should consider cutting employers' social charges and the commission planned to bring forward spending under an EU social fund that can be used to soften the blow of mass layoffs.

The commission also called for increases in research and development spending, citing the car and construction industries, and particularly for energy-efficient technologies, including electric vehicles.

Despite its call for increased spending, the commission said that governments would still be expected to respect the EU's fiscal rules, which give considerable leeway in tough economic times but over time call for budget deficits to be kept below 3.0 percent of GDP.

However, the final version of the commission proposals dropped an earlier reference for member states to return to deficit fighting in 2011 at the latest, saying instead that the budgetary stimulus should be "temporary."

The EU package remains dwarfed by similar measures taken in the United States while the incoming administration of President-elect Barack Obama is reportedly working on plans worth as much as 700 billion dollars.

It also left some economists unimpressed, with Marco Annunziata at Italian bank Unicredit describing it as "more of a publicity stunt than anything else."

"The commission's plan is long on lofty rhetoric and short on concrete details, as is too often been the case," he said.

• European Economic Recovery Plan - briefing
• Main points of EU's EUR 200 billion stimulus package

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