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European debt crisis --Barclays Capital caught the mood best – the result was "more than expected but not enough to make us sleep soundly". First, the definite good news. The yield on Greek two-year debt has plunged from 40% to 28%. Clearly, even the lower rate shows Greece is miles away from being able to fund itself in the market. But the danger of an imminent chaotic default has been removed by the eurozone's softer stance on lending. The country will get €109bn (£96bn) of loans at 3.5%, ranging from 15 years to 30 years in length. The banks will volunteer (ie have their arms twisted) to join the relief effort, but not by so much as to trigger worries about holes being ripped in their balance sheets. The precise sums are hard to determine given the complexity of the volunteering menu but the hit to the private sector could be €50bn for 2011-14, calculate analysts; banks will count that as a good result for themselves. But will the assistance be enough to shift Greece back on the road to financial solvency? And is the eurozone now equipped to cope with an outbreak of worry about Spanish and Italian debt? It is hard to answer "yes" to either question. The debt-relief programme simply doesn't look big enough to be a permanent solution. The country's debt-to-GDP ratio, previously set to hit 160%, could still emerge as high as 130% and its economy still looks too uncompetitive and too weak to allow higher tax rates to take a meaningful bite out of the debt pile Well, four years after the beginning of the 2007-8 financial collapse, this time it is different. After a recession, one normally expects a recovery in the major industrial economies. This time, recovery has had to be postponed – except, for a time, in Germany. Which is a disappointment, evidently, to our chancellor, George Osborne, who last week conducted a dramatic U-turn with regard to his party's view of the eurozone. Our very Conservative chancellor is now in favour of greater European integration, and has declared that "the remorseless logic" of monetary union is greater fiscal union. The "remorseless logic" is hardly news to those of us who, while being pro-European, were always concerned about the deficiencies of a monetary union without a full fiscal counterpart. But what is new is the chancellor's enthusiasm for it. The motive for this change in Treasury – as opposed to Foreign Office – policy towards the eurozone is not at all hard to find. Osborne was quite candid: if the eurozone crisis spirals out of control – 40% of our exports go to the eurozone – it will exacerbate what Osborne acknowledges is Britain's "tough" economic situation.