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Two-speed Europe is the future of enlarged EU, Juncker says

BRUSSELS (Reuters) - The European Union will have to review its framework to allow some countries to do everything together and others to be less involved, the president of the European Commission said on Wednesday.

A Bulgarian seamstress manufactures EU flags in a factory in the town of Parvomai, south east of the capital Sofia, in this December 13, 2006 file photo. REUTERS/Stoyan Nenov

His comments came as London and its European partners thrash out reforms Britain wants in the EU, before the country holds a referendum on whether it will remain a member or leave - a so-called Brexit.

Speaking at a conference in Brussels, Juncker declared “Brexit will not happen”. But he added that the EU should reconsider its organisation to make sure members may share policies at different speeds, if they wish.

“I think that, eventually, it will no longer be possible that 33, 34 or 35 states will proceed with the same speed and the same momentum in the same direction,” Juncker said.

His comments mark a clear departure from the line of the previous EU executive, led by Jose Manuel Barroso. Barroso opposed allowing a split within the EU and creating core and non-core EU countries - a two-speed Europe.

The EU now has 28 members. It is in negotiations to accept all the Balkan countries not already members and Turkey in the long term.

Switzerland, Norway, Liechtenstein and Iceland already apply most of the EU legislation, even though they are not members of the European Union, because it makes cooperation and trade with the large neighbour easier.

Of the 28 EU countries, 19 share the euro currency and more laws and procedures than non-euro zone members. They have a banking union with a single bank supervisor, a bank resolution fund and a European deposit guarantee scheme.

Euro zone countries also have a bailout fund, must coordinate their budget policies more than others. In time, they may create a euro zone finance minister with a separate budget, and possibly some joint unemployment policies.

Under current legalisation, all countries that join the EU must also eventually adopt the euro. Britain and Denmark are the only two countries that have a permanent opt-out from that rule.

“One day we should rethink the European architecture with a group of countries that will do things, all things, together and others who will position themselves in an orbit different from the core,” Juncker said, a move that is likely to be interpreted positively in London.

British Prime Minister David Cameron called for financial and economic safeguards for countries outside the euro zone and for Britain to be excluded from the principle of “ever closer union”.

In a less encouraging note for Britain, Juncker also said the Commission is planning to present in the first six months of 2016 a proposal on “common, minimum social rights to be applied in all member states”.

Britain is trying to obtain further exemptions on EU welfare rules. Juncker said that the EU executive, which he leads, “is reviewing all social directives to see how we can amend or complete them”.

Reporting by Francesco Guarascio; Editing by Jan Strupczewski, Larry King