Leaders emerged from the latest summit that should have rescued Europe with two main proposals in hand. The first was a set of stricter budgetary rules to form a “fiscal compact”. The second was a pledge to increase the International Monetary Fund firepower to help it rescue the troubled European periphery.

The plan would require European Union countries to lend €200bn from their central banks. If this was forthcoming – a big if – it would supplement the €290bn the IMF can currently deploy. EU leaders hope that non-European countries will then match their contribution with a further €200bn.

This would allow the IMF, together with the eurozone’s own rescue funds, to meet the gross financing needs of Spain and Italy for several years. The conditionality clause attached to an IMF involvement – so the argument runs – should reassure lenders that their money would not be squandered. It should also facilitate recipient governments’ efforts to reform their countries.