A big deal

NICOLAS Sarkozy said it was “historic”, Christine Lagarde, the new head of the International Monetary Fund, called it “game-changing”.
Britain's Chancellor, George Osborne, who had earlier in the week told the eurozone leaders to “get a grip on things”, said the deal was “important and positive”.

Going into Thursday's crisis meeting of the 17 eurozone members, Angela Merkel, had tried to lower expectations but in fact her seven hour meeting with President Sarkozy on Wednesday night had already succeeded in shaping a second rescue package for Greece and in formulating a new approach to economic co-ordination in the eurozone that should prevent a repeat of the crisis-management of the past few months.

Doubtless closer examination of the details of what the 17 eurozone members have agreed on will reveal problems requiring further examination but the key elements seem clear: Immediate additional help for Greece and a provision that the European Financial Stability Fund will be able to intervene earlier in future crises -- a measure that could be very important to Italy and Spain in the coming months.

The international markets have shown a positive response to the deal and the threat to the integrity of the euro has probably receded.
In the longer term President Sarkozy's belief that “economic government” in the eurozone has been greatly strengthened carries a political dimension that Britain cannot afford to ignore.