As European leaders meet for a Summit in Brussels tomorrow, the crisis brought about by the euro grinds on. It is a political as well as an economic tragedy, a slow-motion car crash for the vision of “ever closer union” that inspired two generations of politicians. It has now produced a situation precisely the opposite of what was intended. The creation of a common currency without a common finance ministry for economies as different as Germany and Greece has proved as unworkable and  presumptuous as many had predicted.

A mechanism devised to render nationalism and national egotism irrelevant and to dilute and disperse German power has instead inflamed national feeling, especially in the weaker southern European states, and concentrated political decision-making over the future of Europe in the office of the German Chancellor in Berlin. The EU has a common policy-making machine without a common politics.

But most worryingly of all, the failure of the euro has exposed a gaping democratic deficit throughout the European Union. Across Europe, populists of the far left and the far right are on the rise as anger at the handling of the economic crisis deepens among ordinary people whose livelihoods and way of life have been severely adversely affected and sometimes destroyed by harsh austerity measures and rising unemployment. The economies of southern Europe are shrinking. The eurozone is in recession. The prolonged, acute unemployment is alarming. Fears of a political backlash are high and rising.

In France, the head of the Left Front party vies with the far-right National Front party, using rhetoric that would have sounded familiar in the 1789 revolution, determined to “purify” the political system through “a big sweep of the broom” to purge France of its elite, which is tainted by charges of corruption. Support for the EU in France has plunged to an even lower level than in the United Kingdom – and that is saying something.

“Pirate” parties in Sweden and elsewhere, stand-up comics in Italy, billionaires in Austria and born-again Robespierre populist upstarts in France are re-shaping Europe's political map. Formerly fringe parties, such as the United Kingdom Independence Party (UKIP), a once minor party which could now  be heading for victory in next year's European parliamentary elections, are becoming main-stream with startling effect.

None more so than in Germany – the fount of European integrationist ambitions - where the so-called “Professor's Party” has been launched, in advance of elections in September, with the aim “to bury the euro”. Alternative fur Deutschland (AfD), a party which calls for the euro to be broken up, has tapped into a strain of euroscepticism, or at least a deep-seated scepticism about the euro, in Germany.

AfD is a movement mainly of professors, not the usual long-haired revolutionary students of past years. Its policies have seemingly little in common with eurosceptics elsewhere in Europe. Unlike UKIP in the United Kingdom, it wants to stay in the European Union. Unlike the Freedom Party in the Netherlands, its driving force is not resentment of Muslims and immigrants. Unlike the Five Star Movement in Italy or the Left Front in France, it does not seek to smash the corrupt political class.

AfD wants the euro to be abandoned, just like the misplaced idea of forming a European defence community was abandoned in the 1950s. Most importantly, AfD taps into a mood of resentment in Germany at the broken promise that the country would never have to stand behind the debts of others in the eurozone. In echoes of the debate in the United Kingdom, AfD's leaders highlight that the German people were never asked if they wanted the euro, or indeed any other Europen Union treaty.

Demands for a referendum are not a purely British obsession. They are articulated by AfD leaders who say: “This is not what we went on the streets for in 1989. There is a feeling that democracy has gone wrong”. Perhaps the most subversive impact of AfD in Germany is to spread the idea that the EU can flourish by giving up the euro. “The euro is destroying Europe's economies and it will eventually wreck the whole European project if the common currency is not abolished in an orderly fashion” say its leaders.

Similar arguments can be heard in Austria, where a new anti-euro and anti-establishment party, Team Stronach after its billionaire founder, is polling about 15% in the polls in advance of elections which, as in Germany, are also also taking place in September.

Political consent for the euro, and for the European project as a whole, is eroding. Support is waning fast. Anti-Germanism is on the rise. A recent survey found that while Germans were seen as the “most trustworthy” nation by all except the Greeks, they were also seen as the “most arrogant” and “least compassionate” by almost everybody else. Anger at the Berlin-backed austerity measures has combined with rising unemployment and resentment of immigrants to fuel a revolt against established parties across Europe where mainstream politicians are seen as corrupt and incompetent.

The rise of fascist-saluting neo-Nazis from Greece to eastern Europe, political gridlock in Italy which has left the country rudderless, a lack of faith in the country's institutions in Spain which has also spread to the Royal Family, a mix of corruption and anger in Slovenia, far right parties thriving in Austria and diminishing support for mainstream parties in Denmark, France, the United Kingdom and elsewhere have prompted dire predictions of Europe lapsing into deeper turmoil.

It is clear that the euro crisis has pushed old resentments to the surface, with anti-austerity protestors from Cyprus to Spain mindlessly caricaturing German Chancellor Angela Merkel as a goose-stepping Nazi. Europe's increasingly ugly mood points to a chapter of the continent's history when economic hardship and anger against establishment politicians produced the same toxic brew that presaged the rise of fascism and communism during the 1930s.

At the heart of the problem lies the EU's democratic deficit. This is the real challenge facing Europe. As more power over economic policy has been transferred to the European level because of the euro crisis, legitimacy is being eroded. The European Commission, which enforces the rules, is unelected and has lost influence. The European Parliament, which is more of a pressure group than a debating chamber, is not an adequate vehicle for democratic input.

Malta, together with the rest of the eurozone, finds itself once more at a critical juncture. The tectonic plates of the European Union are shifting as euroscepticism, populism and deep disenchantment with the existing political orthodoxy increases. While the euro is the most spectacular symptom of the crisis, the cause may lie far deeper in the flawed structure of the Union itself with its loose confederation of nation-states as the main sources of power. Across Europe, voters have grown resentful of both their own politicians and the EU. Unless a bigger role for national parliaments can be devised, the democratic deficit which is at the very heart of this crisis may well stretch it to breaking point with unforeseeable consequences for the continent as a whole.