Research

But Charles Grant, of the Centre for European Reform, says the German political class's deep-seated commitment to Europe has not changed. "Germany is becoming a more unilateralist, nationalist partner," he says. "But ultimately the German political elite will do whatever is necessary to save the EU, and although the parties are pretending to be nationalistic they will go along. There is no chance that the popular will can break through – the German system is much more elite-driven."

"Policy won't change significantly on substance," said Charles Grant, director of the Centre for European Reform, "they will try to be constructive. But there are plenty of issues that will have the Conservative Eurosceptics frothing at the mouth, and that will put pressure on the coalition."… "I think this suits Cameron, because he can say to the right of his party: 'I have done a couple of things on Europe.

New euro states are likely to be less generous in accepting fiscal indiscretions from the bloc's older members, such as Greece, as they demand that the same stringent budget policies that they pushed through in order to join be enforced across the region, according to Katinka Barysch, chief economist at the London-based Centre for European Reform. "As more of these new member states join the single currency they will be very strict on the old member states," Barysch said in an interview with Bloomberg Television today.

"It's the best possible result for the EU because Cameron doesn't have his hands tied by the hardline eurosceptics in his own party, it was a great result for the status quo," said Hugo Brady, analyst at the Centre for European Reform.

Hugo Brady, Senior Research Fellow at the Centre for European Reform, said coalitions could be short-lived because they were often formed to get a country through periods of instability but pointed out that was not always the case. "With the right leader they can be very stable creations once they get over an 18-month to two-year period in which all their frailties are exposed," Brady said. "Power becomes addictive, the partners become hooked on it, and they stay on."

But Charles Grant, director of the Centre for European Reform, said there was increasing anti-British feeling across the EU, fuelled by the belief that Britain had allowed its currency to depreciate to gain a competitive advantage. "People are fed up with the British; we are deeply unpopular," Mr Grant said, warning that it would not be easy for the UK to find allies to help it on issues such as trying to revise an EU directive on hedge funds. "Nobody will owe us any favours," he said.

"The country's political elite is still wedded to the European project even though Germany is no longer willing to pay over the odds to make European compromises possible," said Katinka Barysch, an analyst at the London-based Centre for European Reform think tank, in a research note. "The risk is that the Greek crisis brings a latent sense of frustration and disillusionment with the EU to the boil", she said. "It is hard to see how the EU could make progress on anything ...

"Trichet is a diminished figure," said Charles Grant, director of the Centre for European Reform think tank…. Grant said the decisions did nothing to resolve the economic fundamentals of European weakness and imbalance. "Southern Europe will be stuck in a vicious circle of deflation and recession for many years."