As European leaders were preparing to gather for a summit in Brussels yesterday, German Chancellor Angela Merkel was addressing the Bundestag, putting forward a proposal for an EU monetary commissioner to be given the power to veto national budgets.

The move is a bold one, and Mrs Merkel has sweetened the proposed deal by suggesting that the EU could set up a new fund to finance projects in struggling countries. There is more to it though; Mrs Merkel plans to finance the fund through the proposed Financial Transaction Tax, which she has been lobbying for. She has the support of 10 eurozone members, but seven are holding out – Malta being one of them.

At the same time, Mrs Merkel is increasing in stature within the EU, seeing that François Hollande has not yet firmly grasped the yoke of power that Nicolas Sarkozy ceded.

She is still very firm in opposition to the idea of pooling eurozone debts, and this is where the proposal of funding for struggling nations came in. The summit is likely to focus on tightening financial integration, creating a banking union and how to deal with the financial needs of Greece and Spain. But she will definitely push the monetary commissioner concept. Her idea is simple, but unthinkable in more nationalist states.

In a bid to keep European countries from overspending again in the future, Germany argues that the EU’s monetary affairs commissioner should have the power to veto budgets if they violate deficit rules.

Merkel acknowledged many nations don’t want to concede to Brussels the power to intervene in budgets. However, she said her government will “continue to push for it”.

“I am astonished that, no sooner does someone make a progressive proposal... the cry immediately comes that this won’t work, Germany is isolated, we can’t do it,” she said. “This is not how we build a credible Europe.” She is, of course, right. The EU and its citizens recognise that the bloc must reform, something must be done in terms of regulating finances and spending and more. In fact, long-term proposals for overhauling the EU appear likely to play a leading role at this week’s summit.

Mrs Merkel again insisted that “quality must come before speed” as Europe works on setting up a continent-wide bank supervision system – something that many countries would like to have in place in January. She says that’s unrealistic.

The German Chancellor has urged Europe to focus on what is important, rather than get lost in the mundane and unimportant. She said that Europe needs to change and that concrete action needs to be taken before it is too late. Europe does have to change – radically. In truth, the EU is an evolving being. It changes month after month as new laws are gradually brought in. It also changes in terms of candidate countries being taken on and in terms of multiculturalism. Let us not forget that the EU is, in nature, multicultural – Nordics mix with Continentals, Mediterraneans and Slavs. But now the bloc must sit down and really hammer out a way forward.

For the past two years, summits have seen a lot of to and fro. Proposals are always watered down and another band aid is applied. We have wasted far too much time and this is not the time for dilly-dallying around. Leaders must, on our behalf, decide which way they want to take out this “unique experiment in democracy”. We are falling behind. The US is gaining in its recovery. China is in the ascendant. Australia is becoming a much more influential political and economic power, and India and Brazil have huge potential. Europe was the most competitive and successful economic and trade market in the world just a few years ago. Now, it is losing steam and growth can only be described as sluggish – at best. If we are to regain our competitive edge, we must face up to our woes and take decisive action now. We are already looking over our shoulders because we are in danger of being overtaken.

This Continent has always found a way. We are sure that we, the Old World, will manage to do so again. But this all depends on how quickly we get ourselves in gear.