When fears about the collapse of the banking system were greatest in October, shortly after the demise of Lehman Brothers, European governments quickly united to shore up the sector. Now, with the focus on avoiding deep, protracted economic recessions across the European Union, it is proving harder to draw up an effective common response.

Conscious of its limited powers to direct economic policies, the European Commission is to announce proposals ranging from reduced labour taxes, particularly for workers on low wages, to cuts in value added tax. It will also suggest accelerating EU regional aid, which would help less-well-off member states in central and eastern Europe.