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New euro states are likely to be less generous in accepting fiscal indiscretions from the bloc's older members, such as Greece, as they demand that the same stringent budget policies that they pushed through in order to join be enforced across the region, according to Katinka Barysch, chief economist at the London-based Centre for European Reform. "As more of these new member states join the single currency they will be very strict on the old member states," Barysch said in an interview with Bloomberg Television today.

Simon Tilford, chief economist at the European Centre for Reform, noted that the plan for the euro included "some elements of the French model" such as a greater need for intervention and regulation…. The French "were very quick to recognize how serious the situation was and that does contrast with one or two other governments, notably Germany." But he added, "I find the rhetoric coming out of France, with its attack on the markets as the reason behind the downfall of the eurozone, quite problematic.

"In this whole area of financial services, UK-EU relations could blow up," according to Philip Whyte, a UK-based analyst from the Centre for European reform. … "The Lib Dems will likely try to reign in Euroscepticism coming from their Conservative partners but they will not be shaping the UK's EU policy." Whyte also points out that the Tory electorate is still smarting from the fact that they did not have a referendum on the EU's Lisbon Treaty last year, serving to fuel their hostility to the bloc even more.

But Charles Grant, director of the Centre for European Reform, said there was increasing anti-British feeling across the EU, fuelled by the belief that Britain had allowed its currency to depreciate to gain a competitive advantage. "People are fed up with the British; we are deeply unpopular," Mr Grant said, warning that it would not be easy for the UK to find allies to help it on issues such as trying to revise an EU directive on hedge funds. "Nobody will owe us any favours," he said.

But putting changes into effect that would give the European Commission or other governments real control over national budgets is easier said than done, says Simon Tilford of the Centre for European Reform in London. Governments "are going to say all the right things." … "This isn't an issue that's going to be resolved by one or two governments getting tough on public spending," he says.

"It does not address the underlying issue – the terrible economic growth prospects of the southern eurozone countries and Ireland," said Simon Tilford, chief economist at the Centre for European Reform think tank. "Unless these economies can avoid deflation and get their economies growing, they have no future in the eurozone."

Katinka Barysch, deputy director of the Centre for European Reform, an independent research organisation in London, said this partly explained why Mrs Merkel had taken such a very tough stance against bailing out Greece. "Merkel felt that her hands were tied by very real and immediate constraints," Ms Barysch said. "But her cautious and delayed reaction is also in line with a deeper shift in Germany's European policies. In a European Union of 27, Germans no longer automatically assume that their national interest coincides with that of the Union."

"Cameron may be a eurosceptic, he is also a realist," said Simon Tilford of the CER. "He has already indicated he wants to let the European issue lie for the time being... Twenty years ago, a lot of prominent Tories were pro-European," Tilford recalled. "Now, to stand a living chance of being selected as a Conservative MP, you have to be eurosceptic."