A quiet day in Euroland, for a change.

The markets are holding their collective breath as they await the EU summit next week.  Will the politicians, at last, come up with set of proposals that last a week?  The summit is being trailed as the 'big one' which will make major decisions on the direction the eurozone will travel: towards fiscal integration.  Already, there are rumblings that France and Germany are not of one accord as to the mechanism for enforcing fiscal policy.

Three other major issues which need to be resolved:

1. How to enhance greatly the democratic process within the EU

2. How to overcome the problem of eurozone countries with weak economies to ensure that the citizens of those countries do not suffer for many years for the errors of the past.  The simple answer would be to reduce the size of the eurozone or to have two eurozones.  This option does not appear to be part of the Sarkozy-Merkel axis's thinking.

3. Will the ECB be given the powers of a reserve bank?  Unlikely, in the scenario being proffered by M & T.

For the United Kingdom, will the likelihood of treaty change be the opportunity for repatriation of powers, or indeed for a UK referendum?  A two-tier Europe looks inevitable (I prefer this to the phrase 'two-speed' which suggests moving in the same direction but at different paces) with the UK on the periphery.  The UK government has stated that dealing with the eurozone's problems is the priority, but it will be in severe political difficulty should it fail to negotiate significant powers being repatriated the UK.  See: http://www.independent.co.uk/news/world/europe/sarkozy-wrongfoots-cameron-as-he-calls-for-twotier-europe-6270905.html

Some pertinent links below:

http://www.telegraph.co.uk/finance/comment/jeremy-warner/8929431/Germany-remains-oblivious-to-apocalyptic-warnings.html

http://www.spiegel.de/international/europe/0,1518,801338,00.html
New fiscal unity for Europe

http://www.spiegel.de/international/europe/0,1518,801156,00.html
ECB hints at pending eurozone integration

http://www.telegraph.co.uk/news/worldnews/europe/eu/8929042/Can-the-euro-be-saved.html

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100013600/germany-is-the-ultimate-victim-of-emu/

http://www.bbc.co.uk/news/world-europe-15997784
Merkel urges eurozone fiscal union.

http://www.bbc.co.uk/news/world-europe-16000335
Eurozone solution in sight?