Euro faces meltdown in the August heat

There has to be a good reason to keep euro leaders at their desks in the holiday month of August – this year there is

Larry Elliot

the Guardian, 2 August 2011

Less than two weeks ago the leaders of the eurozone were looking forward to an August sunning themselves on the beach after concluding a deal that was supposed to resolve once and for all the debt crisis on the fringes of the single currency.

Now the euphoria seems a distant memory, redolent of Neville Chamberlain's "peace in our time" as the financial markets threaten two of the big beasts of monetary union – Italy and Spain.

As bond yields in both countries rose to levels not seen since monetary union was created more than a decade ago, Spain's prime minister, José Luis Rodríguez Zapatero, said he was postponing his three-week holiday to monitor economic developments. Italy's economics minister, Giulio Tremonti, called an emergency meeting to discuss how his country, which has the biggest national debt of any eurozone nation bar Greece, could cope with the speculative attacks.

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