David McWilliams: Breakdown of trust at the heart of euro crisis
Where has all the optimism gone? A few weeks ago, the EU seemed to be back in the driving seat. The Council, driven by Italy and Spain, had extracted a major concession out of Germany and there was a sense that the interest of the European Union as a whole had been put for once to the fore.
Now this all looks like old history. Spain, the country with the worst unemployment -- apart from Greece -- looks to be shut out of the bond markets completely in the days or weeks ahead. This means another massive injection of troika funds, but more worryingly will also put Italy under the spotlight again, and so we will be back to square one.
Recent data indicated that Europe is heading into recession, quickly. For example, yesterday's survey data on France showed that manufacturing was at its weakest since 2009. As the economies of Europe contract, something odd is happening. Despite all the deficit-tightening going on around the eurozone which is aimed at bringing down the overall debt levels of the member countries, the actual debt/GDP ratios are going the opposite way. Latest numbers show that the actual debt-to-GDP ratio in the EU went up this year to 88pc from 86pc a year earlier. The economies are slowing quicker than governments can cut back.