Update: Read Gavyn’s comment on the likely outcome of the emergency summit in Brussels.

Ever since Italy was sucked in to the European debt crisis a couple of weeks ago, commentators have warned that there has been a profound transformation in the nature of the crisis, which requires an equally profound change in the political response from Europe’s leaders. Ahead of tomorrow’s European summit, no such response appears to be forthcoming.

By all accounts, the summit will focus primarily on Greece. In addition to new loans, we should see some genuine debt relief for Greece, finally attacking the solvency issue, and not just the liquidity problem. With luck that might remove Greece from the limelight for some time. Eventually, similar programmes will become inevitable for both Ireland and Portugal. But it is still far from clear whether any of these countries will be able to implement the fiscal tightening they are promising. And the wider systemic issues which are now plaguing the eurozone will be left completely unresolved.