Eurozone faces radical overhaul

GERMAN and French officials have discussed plans for a radical overhaul of the European Union that would involve establishing a more integrated and potentially smaller eurozone, EU sources say.

French president Nicolas Sarkozy gave some flavour of his thinking in an address to students in Strasbourg on Tuesday, when he said a two-speed Europe — the eurozone moving ahead more rapidly than all 27 countries — was the only model for the future.

The discussions among senior policymakers in Paris, Berlin and Brussels go further, raising the possibility of one or more countries leaving the eurozone, while the remaining core pushes on towards deeper economic integration, including on tax and fiscal policy.