Merkel faces loss of political clout

"Other euro members won't be able to put their public finances on a sustainable footing if their economies cannot return to economic growth," says Simon Tilford, chief economist at the Centre for European Reform. "It's all very well to talk about the need for greater fiscal discipline - that's only one element of the problem, which is why Germany's strategy lacks any real credibility with the markets or with its European partners. … If all economies were to pursue the course that Germany advocates - cuts in budgets and real wages - then the eurozone would find itself on a very dangerous course, economically, socially and politically. ... If everyone does that simultaneously, the result will be rampant deflation."