Record one-day gains on stock markets rippled outwards from Brussels even as far as Wall Street after the EU agreed its emergency package to stabilise the euro.
The bold rescue plan – the biggest since G20 leaders threw money at the global economy in the wake of the Leman brothers collapse – triggered a major rally as confidence returned.
At the World Economic Forum, political historian Timothy Garton-Ash put into context the package of standby funds and loan guarantees designed to shut out predatory credit markets.
“We heard today, here at the World Economic Forum, both Jose Manuel Barroso and Herman Van Rompuy, saying monetary union needs an economic union which needs a political union – that is the logic of the situation. My own view is that most European countries are not ready to follow that logic to the end including Germany which is clearly not ready.”
But even though some are warning the stability pact will not solve low growth rates in member states, at least the deal appears to have papered over the cracks of the recent disunity within the bloc.
EU Commissioner for economic affairs, Olli Rehn said: “ We have to reinforce economic governance in Europe both in terms of preventive budgetary surveillance and compliance with the stability pact and also in terms of addressing the macro- economic imbalances . EU member states are committed to significant new measures of fiscal consolidation especially Portugal and Spain have made very clear commitments recently.”
Meanwhile, Portugal, one of the countries with so-called credit market wolves baying at its heels, is to make deeper cuts to reduce its public deficit.
The government is to postpone building a new Lisbon airport and to consider taxing the 13th month salary bonus.