The pressure heaps on Merkel

This morning there’s an odd disconnect between the joyful Jubilee coverage in the papers and the grim economic news inside them. The Eurozone crisis appears to be once again reaching one of those moments when there’s an expectation that something will have to give.

The Germans are coming under even more pressure than before to sign up to Euro-bonds and to allow the bailout fund to recaptialise ailing banks; the Spanish are particularly keen on the later point as it is their only way of avoiding an IMF programme. One British government source complains that ‘the Germans are working on a five to ten year timetable, but if they are not careful they are going to have to work to a five to midnight timetable.’

Just to add to the sense of uncertainty, we have now had the last opinion polls we will have from Greece before election-day on the 17th. Two polls had the pro-memorandum New Democracy ahead, but within the margin of error, while another had the leftist, anti-memorandum Syriza clear by six points. If Syriza do win, gaining 50 extra seats for winning the most votes, then many expect that Angela Merkel will try and persuade the ECB to cut off support to Greece and its banks in an attempt to force them to either stick by the original terms of the bailout deal or leave the single currency.