WESTMINSTER is in the spotlight, as MPs return and reshuffle scuttlebutt fills the air. But the Eurozone crisis too, after a summer lull, is ready to leap up and bite. After Mario Draghi pulled out of last week’s Jackson Hole conference, speculation mounted that he was busy preparing for a big announcement this week. That now seems less likely.
If this Thursday’s ECB meeting disappoints, the market optimism that followed Draghi’s promise at the end of July to “do whatever it takes” to save the euro will be on shakier ground, especially with the German constitutional court’s critical ruling on the constitutionality of the European Stability Mechanism (ESM), the giant Eurozone rescue fund designed to replace the EFSF, due on 12 September.
While the chance of the court ruling against the ESM is small, it’s possibility creates uncertainty and provides one more sign of just how easily the worst of the crisis could reassert itself. Reconciliation between leaders fearful of the consequences of allowing any part of the Eurozone project to fail and restive electorates increasingly unwilling to write blank cheques to pay other countries’ bills remains elusive. That means can-kicking, half-measures and sudden panics are all set to continue.
Marc Sidwell is City A.M.’s managing editor.