Two months after being heralded as the solution to all of Europe’s fiscal ills, the austerity drive is seemingly running out of steam. On a superficial level, it seems logical. To keep their deficits in check and their debts from spiralling out of control, governments should keep their expenditure under control.

But it is not as simple. For one, austerity has an obvious effect on economic growth, which reduces its revenue. Whether the reduction in spending is greater than the reduction in revenue, particularly in the long term, remains to be seen.

Such an argument has been made by France’s new president François Hollande, whose predecessor and rival Nicolas Sarkozy had helped steer the EU’s austerity drive in alliance with German Chancellor Angela Merkel. While he still pushes for fiscal discipline, he believes that the way forward is to promote growth, and is seeking to revise a treaty on fiscal discipline 25 EU members signed just two months ago amid much fanfare.

The fiscal compact obliges national governments to limit their annual structural deficit to 0.5% of GDP – with deviations only allowed in “exceptional circumstances” – or face steep fines and other sanctions. It does not specify when the budget balancing will have to take place.

The treaty could prevent countries from overspending their way to economic growth – Greece is a classic example. However, it would do little to prevent a number of other situations from causing debt-financing crises, such as banking or economic problems.

Dr Merkel and Mr Hollande should hold their first-ever meeting today, and the former has been repeatedly insisting that the treaty must be left unchanged since the latter’s election.

Germany, of course, is not simply acting selflessly in Europe’s interest. The treaty’s obligations mirror those the German government had set for itself earlier, and austerity measures which keep eurozone inflation low stand to benefit what is one of the world’s leading exporters.

It is also rejecting any measures addressing an inherent flaw in the common currency: The lack of a central coordination for debt funding.

The main proposal being made to this effect – including by the European Commission – is the introduction of eurobonds, which would be issued by the European Central Bank to fund the debt-refinancing needs of the entire eurozone collectively. At a time of fiscal crisis, this could be helpful for a number of reasons, including by relieving troubled countries from excessively heavy interest rates.

But the idea is unsurprisingly unpopular in countries whose finances are in good shape, especially in Germany, which would assume the largest responsibility for European debts as the eurozone’s largest economy and which would likely see its own interest payments go up.

At the other end, however, there is Greece, where voters who have endured round after round of severe austerity measures punished the parties backing them. That the previous situation was unsustainable is not in doubt, but the outcome was nevertheless hardly surprising.

The country is likely headed towards early elections after attempts to form a ruling coalition have been unsuccessful. But Greek resistance to the measures is set to occur, whatever government forms: Parties willing to accept some form of austerity want the terms reviewed, and they are also wary of forming a government obliged to implement unpopular measures which are milked by the parties in opposition.

Whatever happens, time is running out. Greece is expected to implement further cuts next month or miss out on bailout loans, while the Irish will vote on the fiscal compact in a referendum in a couple of weeks. As things stand, the end result may be beyond politicians’ control.