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By Paul Goodman
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What Governments say about yesterday's Eurozone deal doesn't matter much.  What the markets do in response to it will matter very much indeed.  Its main elements won't surprise them: The Times (£) summarises them as the writing-off of a significant proportion of Greece's debt, the shoring-up of the continent's banks (some of which will take a hit in consequence) and the reinforcement of the bailout fund, which is intended to act as a firewall preventing the other PIIGS (PIIS?) from going the same way as Greece.  The Eurozone still clings by definition to the single currency whose inflexibility is helping to drive the crisis: since it is still in place after the deal, the latter by definition cannot work in anything other than the short-term.

David Cameron flew from PMQs to the summit and attended a meeting of all 27 EU leaders, which covered liquidity and the banks.  He then left that part of the talks saying “some good progress” had been made.  The Guardian reports that the Prime Minister supports Sarkozy's proposal for the ECB to be "in the front line intervening massively and playing the role of a federal central bank".  Merkel wants the ECB to continue to mimic the Bundesbank and be independent – and thus opposes the idea.  The Guardian quotes the Prime Minister as telling other European leaders that the plan shouldn't be written off.  But he was clearly not one of the main shapers of yesterday's deal, since his input seems to have been restricted to the initial meeting.

Until or unless the Government recommends the break up of Euro (which isn't going to happen), Britain will not be a major player in this drama.

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