The EU is at a crossroads despite the European Council meeting, Spain and Italy pose bigger risks than Greece right now
Europe is at a critical crossroads in the aftermath of the European Council meeting. Germany’s desire to balance additional liabilities with a move towards a fiscal union will be opposed by France and others.
Many of these differences are unlikely to be resolved given the German constitutional court’s decision to stay the ratification of the fiscal compact and European Stability Mechanism. For now most of the heavy lifting in the short to medium term will still come from the ECB.
While a Greek exit from the eurozone is a real risk at the end of the year, the bigger threat to the euro right now comes from Spain and Italy where early elections are quite likely.