EU Home Affairs Commissioner Cecilia Malmstroem demanded a crackdown on bungs, backhanders and other fraudulent practices across the 28 member states.

In a damning report, the European Commission named countries failing to do enough to stamp out corruption including France, Italy, Spain, Romania, Bulgaria and Greece.

“The extent of the problem in Europe is breathtaking,” said Ms Malmstroem. The United Kingdom was found to be among the best at stopping dodgy practices, winning praise for its Bribery Bill, although the commission called for a cap on donations to political parties, further steps to stop foreign bribery in “vulnerable” industries such as defence and greater accountability in the governance of banks.

Three out of four EU citizens believe that corruption is widespread in their own country, according to a poll.

The report, calling for tougher rules and better enforcement, is the first by the Commission despite years of warnings that corruption in the EU is rife.

Shadow Europe minister Gareth Thomas said today: “Allegations of corruption need to be investigated fully.”