At a discussion this evening on the state of the European economy and the prospects for economic reform, an elegant point was made that something profound has changed within the EU.

It used to be described as an economic giant and a political dwarf, being the world’s largest market but without the commensurate influence around the world. Correcting this imbalance was an objective of the federalists

In fact, though, recent experience shows that this has not so much been corrected as reversed. The actions of the EU during the crisis in Georgia and the inactions of the EU in the face of the banking crisis – the decisions of the summit on Saturday ignored on Sunday and discredited by Monday morning – suggest that the EU is now a political giant but an economic dwarf.