What now?

One of the constants of this crisis in the euro zone is that one never knows if the last-chance summits have managed to save the single currency for good. The December summit is no exception. Angela Merkel and Nicolas Sarkozy managed to get the approval of their partners for writing fiscal discipline into the European marble. The mixed reaction of the financial markets on the day that followed the European Council, however, may be a sign that it is not over yet.

Because the agreement that was reached, which excludes the Eurobonds that many financial players were demanding, also rules out granting a banking license to the European Stability Mechanism that will be set up in June 2012. This would have allowed the rescue fund to procure money from the European Central Bank, thus ensuring unlimited means in the euro zone to be able to help the countries in distress. This option has always been turned down by Germany, which fears inflation and any submission of the central bank to political dictates. This refusal, however, deprives the euro zone of the "bazooka" that would make markets understand that it can cope with all eventualities.

With the reform of the European treaties now underway, the Union has won a little time, and we should still be able to use our euros early into 2012, contrary to what some were not hesitating to predict these last weeks. This is not an insignificant outcome. Whatever the opinion one has on the markets, the rating agencies and speculators attacking the European economies, however, we must hope they will be satisfied with the decision of the Twenty-Seven. Because the price is already very steep: the institutionalisation of a multi-speed Europe, and the question mark now clearly hanging over the future of the UK in the EU.

While these decisive political problems must be tackled, two actions would help make the price more palatable. First, that Germany, now that she has got the discipline she demanded of the rest, be open to the idea that monetary stability can be compatible with a form of solidarity – Eurobonds, or clearer support from the ECB for the weaker countries. Second, that European governments grasp that they must get away from the logic of austerity and lay the foundations for a genuine policy of growth across the Union. For this there is already a tool: the Europe 2020 strategy, which asks only to be taken seriously at last.