With most stock markets showing healthy gains last week, the Footise up over 7%, there is a feeling that we have moved away from the edge of economic disaster but the cliff edge is still in sight.

Italy has just approved an important austerity package, part of the overall jigsaw but this week's news will be dominated by meetings in France between German Chancellor Angela Merkel and French President Nicolas Sarkozy, that will culminate in a summary presentation at the end of the week, in Bruxelles.

Closer financial cooperation is favoured by Merkel, who wants the budgets of the individual member countries to be decided by the EU, though this action may be difficult for Sarkozy to sell to his Government, in advance of elections next year.