Eurozone retreats from austerity - but only as far as 'austerity lite'

Simon Tilford, the chief economist at the Centre for European Reform, agreed. "I don't think anything has fundamentally changed inEurope as yet, although it probably will at some point. All they have done is take into account that when economies grow much more slowly there are obvious implications for tax revenues. They haven't moved from a pro-cyclical fiscal stance to a neutral one, let alone a counter-cyclical position."

Eventually, Tilford added, the eurozone's economic predicament will force change. "Europe is in a very dangerous place. It is hard to see how a meaningful economic recovery will take place in the foreseeable future … I doubt whether democratic countries can maintain the necessary public support for this sort of strategy indefinitely. There is no light at the end of the tunnel.Eventually, Tilford added, the eurozone's economic predicament will force change. "Europe is in a very dangerous place. It is hard to see how a meaningful economic recovery will take place in the foreseeable future … I doubt whether democratic countries can maintain the necessary public support for this sort of strategy indefinitely. There is no light at the end of the tunnel.

"There will come a time when relations in the eurozone become more confrontational. There will be a standoff between the French, Spanish and Italians on one side and the Germans and other core countries on the other. How that standoff plays out will determine the future of the eurozone."