Economists across the Continent have been warning about it for months. Now, the European Union too has said that a recession in the euro zone has become a distinct possibility. "Growth has stalled in Europe and there is a risk of new recession," said European Commissioner for Economic and Monetary Affairs Olli Rehn on Thursday in Brussels. He also said that unemployment in the 17-member currency union will remain stuck at 9.5 percent.But with Italy facing massive market pressure to accelerate the passage of critical structural reforms -- and to put an end to the era of Prime Minister Silvio Berlusconi -- the euro zone continues to focus more on its survival than on economic growth. And this week, that focus has led to yet another round of debate as to what the future of the European Union might look like.
Citing EU sources, Reuters reported on Wednesday that German and French officials had met to discuss a splitting up of the euro zone. While the news agency offered few details on the alleged meeting, Berlin was concerned enough to issue a swift denial. "The German government is most definitely not pursuing such plans," said Chancellor Angela Merkel's spokesman, Steffen Seibert, on Thursday. "On the contrary, our policies are aimed at stabilizing the euro zone in its entirety and attacking the root of its problems."
In a Wednesday evening speech in Berlin, European Commission President Jose Manuel Barroso likewise felt compelled to strongly condemn any moves aimed at splitting the common currency zone. "There cannot be peace and prosperity in the north or in the west of Europe if there is no peace and prosperity in the south or in the east," he said. He added that, were the euro zone to shed members, the German economy could shrink by as much as 3 percent. "What is more," he said, "it would jeopardize the future prosperity of the next generation." more
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