November 10th, 2011
08:11 PM GMT
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London (CNN) – The spectre of a two-tiered Europe has once again muscled its way center stage, as rumblings grow around the discrepancies between the strong and the weak economies struggling to co-exist on the continent.

Suggestions the eurozone is diverging into two groups is hardly controversial: One only has to look the economic performances of its 17 countries during the last 18 months.

Clearly some economies are thriving under the common currency, while others have collapsed. Greece can’t pay its bills and is surviving on the funds of Europe’s bailout pot and the International Monetary Fund. Portugal and Ireland are, of course, in the same club.

Germany’s economy – which makes up a mighty 27% of the eurozone’s – is led by exports, has benefited from growth in emerging markets such as China, and has been under the steady guidance of Chancellor Angela Merkel. It would clearly lead any club of elite eurozone members.

But increased speculation of some sort of two tier structure not only within Europe but the euro bloc was Thursday fed by a press report – later denied – that German and French officials were discussing a European Union overhaul and potentially smaller eurozone. This, in turn, threw into sharp focus comments previously made by French President Nicolas Sarkozy.

Sarkozy, speaking in Strasbourg this week, said Europe was moving to toward a two-speed model, which he described as: “One speed that moves “towards more integration in the eurozone” and another speed “for a confederation within the European Union."

Any indication that sort of line is being taken further – suggesting the eurozone could be a smaller club  - is politically explosive. While it apparently reflects economic reality, it runs hard against the intense drive, led by Germany, to hold the bloc together. And so Germany has actively dampened the speculation.

Even so, the suggestion raises interesting questions. How would one tighten membership of the eurozone? There are rules already in place to ensure financial responsibility - would they have to be changed? Can Italy - the bloc’s third largest economy – claim to be one of the elite since the eye of the eurozone crisis settled on the country’s €1.9 trillion debt pile and funding costs which this week pushed through 7%? Keep in mind Greece, Ireland and Portugal all took bailouts after their funding costs hit those levels.

Meanwhile, as the speculation and continued frantic negotiations to save the bloc continues, the region’s growth forecasts are sinking.

According to the European Commission, the recovery of the European Union economy “has stopped.” In a statement Thursday it blamed, among other things, deteriorating confidence in the region. So as the politicians squabble, the suffering on the ground looks set to continue.

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soundoff (13 Responses)
  1. Cherryll Scoth

    According to a European Commission, a liberation of a European Union economy has stopped. In a matter Thursday it blamed, among other things, deteriorating certainty in a region. So as a politicians squabble, a pang on a belligerent looks set to continue.

    November 10, 2011 at 11:36 pm |
  2. gliese42

    It looks like Turkey is having the last laugh. I met a few Turks and when I asked them are they Europeans and they replied they they are Turks. It is presumed that Turkey is now looking to towards the east especially the Middle East

    November 11, 2011 at 12:06 am |
  3. Ted Nugent

    Look at those two. They are totally doing it. Hey, you guys. Get a room already.

    November 11, 2011 at 12:17 am |
  4. Andrew Vilnius

    This is fantastic news. Since the current European Union structure doesn't work, the Franco-German alliance is moving towards a United States of Europe. As a European, I am so immensely proud today. Imagine as an American being able to witness the birth of the United States? These are historic times, I'm absolutely ecstatic! After some economic hardship, we will be stronger than ever before. Bye European Union, hello United States of Europe!

    November 11, 2011 at 1:48 am |
  5. alain morel

    This is in my humble opinion the most efficient solution although it may not seem politically correct.

    November 11, 2011 at 2:51 am |
  6. Peter Zhao

    We should blame the economy of Europe on someone who does not make the right decision.

    November 11, 2011 at 3:26 am |
  7. Bert K

    Let's pretend Greece had a stable economy with hardly any denomination of it's currency before the Euro shall we?

    November 11, 2011 at 4:28 am |
  8. lagaluga

    It seems those two countries should rethink about their approach for Turkey's situation. I am not sure how much Turkey is willing to be in the EU nowadays but it's clear that European Economy needs Turkey's dynamism. Turkey is extending her arms all around the Middle East and Asia markets.

    November 11, 2011 at 5:45 am |
  9. Bernard

    I think Germany should be the first to quit Euro, with all those bailouts, recessions, etc from these Euro zone countries.

    November 11, 2011 at 5:49 am |
  10. TYU

    BS, Germany have trade suficit with China, all Eurozone countries have huge trade suficit with China. Why? Becaouse China have labor market which we are able to compare with slavery. If EU and US don't protect themselves from slavery in some countries, like China, they will be all bankrupt in near future.

    I mean is it good that we live in the world where will children in Cambodia produce for NIKE products, which will we buy very expensive on the West? Global economy is ill, and it need to be fixed. Western countries must protect themselves, or they will all be bankrupt, including companies like NIKE.

    November 11, 2011 at 9:36 am |
  11. ross glynatsis

    i think every one should take a step backwards and think before they open there mouths,these are difficult times,stop pointing fingers, work together to help

    November 12, 2011 at 1:17 am |
  12. baldprice

    Третий уровень в Европе(самый главный) – БОЕВЫЕ ФИНАНСОВЫЕ ПРОЦЕССЫ
    Шефу НАТО Андерсу Фог Расмуссену срочно надо перестраивать свою отсталую Армию С учетом БОЕВЫХ ФУНКЦИЙ ДЕНЕГ

    1) Финансовая боеготовность
    2) Боевой финансовый мониторинг
    3) Боевая финансовая доктрина
    4) Глубина финансовой обороны
    5) Средства доставки финансового оружия
    6) Финансовые разведданные
    7) Боевая финансовая
    - тактика
    - стратегия.

    December 8, 2011 at 11:23 am |
  13. Greapgrooke

    I prefer good posts like this one, but it could be great to add couple of references regarding auto and home insurance which is topical and prepared with low cost quotes from major insurance agents. Look around and get home insurance quote zip code online.

    October 4, 2012 at 9:14 pm |

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