Observer
December 3, 2011
Angela Merkel and Nicolas Sarkozy have claimed numerous times over the past 18 months to have struck a ground-breaking deal to snatch the eurozone from the jaws of disaster. But when they meet in Paris on Monday – and join their fellow European leaders in Brussels on Thursday and Friday – the stakes will be higher than ever, including those for their neighbours across the Channel.
Chancellor George Osborne and Sir Mervyn King, the Bank of England's governor, have made it crystal clear that the health of the economy, and the future of the banking system, critically depend on what happens in the eurozone.
By the end of this week, the outline of a plan appeared to be emerging. ECB boss Mario Draghi dropped a hint to the European parliament that if a new, more binding "fiscal compact" could be struck, "other measures" could come into play.
Euro-watchers heard his remarks as a promise of massive intervention by the Frankfurt-based central bank – so long as the eurozone's governments promise to subject their future tax and spending plans to strict oversight from Brussels, with penalties for transgression.
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