German chancellor Angela Merkel yesterday announced that a Greek bailout is not on the agenda for discussion in Brussels next week during the summit which is to be convened.

France and Germany have both been vociferous lately in dealings on Greece (and Spain, Portugal and Ireland’s) financial situation. While the Germans – known sticklers for financial prudence – mooted various ideas on how to punish countries which repeatedly breach EU rules on finance, the mood seems to have shifted towards the French proposals.

France suggested that the way forward was for European countries to at least put a package on the table which would allow Greece to borrow money to finance its debts at a reasonable rate. French thinking suggests that the mere fact of ‘cash’ on the table, should allow market forces to afford Greece loans at a 4.5 per cent interest rate, rather than the 6.5 per cent they have been paying as they struggle to implement austerity measures.

The issue of a bailout has been discussed at length, but Mrs Merkel, who seems to be taking a leading role in telling everyone who, what and when will be discussed, has allayed any fears that ‘prudent’ nations (including Malta) would have to bailout the PIGS (Portugal, Ireland, Greece and Spain).

But seeing that the bailout is not on the agenda, one would have to surmise that the road to economic recovery and the issue of burgeoning deficits and public debt will most likely take up most of discussion time.

Germany, though taking the lead in attempting to set the agenda, will be in for a surprise as the European Commission has already warned the four largest eurozone economies (France, Germany, Spain and Italy) that the predictions for economic growth are way to optimistic. The plans, therefore, to slash deficits as percentage of Gross Domestic Product to below three per cent as stipulated in the Maastricht Treaty – the Growth and Stability Pact, have been labelled by the commission as “not having left any margin for error”.

One can rest assured that the issue of economic forecasts and growth charts will be up for discussion, along with a lot of back patting for having steered countries out of recession.

But sorting out growth forecasts is of paramount importance. Many EU nations have made their predictions of growth and have budgeted accordingly. The EC’s concerns are justified because while all this optimistic talk is helping to restore market confidence, not meeting those targets will cause havoc and will well and truly hit the euro’s credibility even further.

In doing so, it would spell out disaster as the currency would weaken against the dollar and other currencies. While this would favour exporters, it would hurt the markets where it really matters –in our own back yard – to be clearer, the streets of Valletta, Berlin and Madrid.

Hype about economic recovery will do no one any good, especially if the hype falls flat and the results are not what were predicted. If anything, it could even trigger off a dreaded W-shaped (or double dip) recession which would bring about the worst case scenario for Europe, and most importantly the eurozone. One hopes that Germany will be fastidious enough to convince others that predictions should not be far fetched. Germany should take lead role in this, and perhaps revise its figures.

After all, on money matters, when Germany talks, everyone else tends to listen.