25 MAY 2011

By Hamish McRae | The Independent

What is happening in Europe is about money, of course, but in the past few days it has become clear how much it is also about power. The next stage? Well, it could be about the whole European social model.

It is just a year since Greece received its package of financial support from the EU and the International Monetary Fund. That support has failed in its aim to rehabilitate the country so that it could borrow again from the markets. The markets are shut. In theory it could borrow at 15 per cent but of course it cannot afford that and, were it to try, no one would lend it the money anyway. The markets are similarly shut for Ireland and Portugal, though the notional borrowing rates are somewhat lower. So these countries simply cannot pay their bills without help. The governments are not really in charge anymore.

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