EU Leaders End 2012 on a High

Greece was handed an early Christmas present last night by Standard & Poor's, when it increased the country's credit rating by six notches from selective default to B- with a stable outlook. It came after the successful completion of a debt buyback by the Greek government and the Eurogroup's decision to release the latest €34.3bn installment of bail-out loans. Greece's finance minister Yannis Stournaras said the upgrade created a "mood of optimism" while recognising that "we still face a long uphill course ahead".

As the Eurozone crisis is live, that is a sentiment most likely shared by eurozone leaders in general as 2012 draws to a close: cautious optimism. They may have had harsh words for the rating agencies throughout the economic crisis, but will no doubt welcome S&P's recognition yesterday of the "strong determination of the European economic and monetary union member states to preserve Greek membership in the eurozone". Indeed, the European Commission has been at pains recently to point out that Greece, despite predictions to the contrary, is still part of the single currency.

"People have blamed the EU and the euro area for being behind the curve," economics commissioner Olli Rehn said in November. "Well, I want to say that those who still predict a Grexit, or bank on it, are themselves badly behind the curve."  Even before last week's landmark agreement on creating a single supervisory mechanism for eurozone banks, led by the European Central Bank, French President Francois Hollande was happy to claim that the crisis was "behind us". Speaking in Oslo at the ceremony to award the European Union with the Nobel Peace Prize – another confidence booster for the bloc towards the end of this year – Hollande said: "We've given Greece the funds it was waiting for. In Spain we've helped keep the banks afloat. In Italy, even if there's political uncertainty I'm sure the Italians will address it."

That uncertainty in Italy, with the impending resignation of Prime Minister Mario Monti and the return to the political stage of Silvio Berlusconi, may be one thing to dampen the festive spirit among the continent's political elite. In his latest intervention Berlusconi has renewed his warnings that Italy might be forced to leave the eurozone "if Germany doesn't accept that the ECB must be a real central bank, if interest rates don't come down". Inevitably German Chancellor Merkel opted for her usual cautious approach this week, telling journalists: "Over the past two-to-three years a great deal was achieved in Europe, but we are still not at the end of the road." The eurozone, of course, remains in recession and austerity continues to bite. But in general the landscape for EU leaders has improved, and the mood has been positive ever since Mario Draghi's mid-year pronouncement that the ECB would do "whatever it takes" to save the single currency.

As 2013 approaches the focus has moved from emergency crisis fighting to more sedate discussions over the long-term structure of the eurozone and the EU's seven-year financial framework. In July Croatia will become the bloc's 28th member state. And instead of losing one if its number, the single currency may before long gain another after Latvia announced that it would make its application to join the euro in February. Before then, in January, British Prime Minister David Cameron will set out his views in a set piece speech on Europe in a bid to settle, one way or another, the continuing questions about the United Kingdom's commitment to the bloc. Things will really be looking up if the next 12 months are not spent in an endless discussion about whether an independent Scotland, or indeed Catalonia, would automatically be a member of the EU

With Greece's place in the eurozone apparently secure, the first stage of the banking union agreed, the peace prize collected, discussions on deeper economic and political integration moving ahead and a new member state set to join the club next year, EU leaders will consider 2012 a success and be optimistic about 2013. On the other hand most ordinary Europeans still just hope for some easing of the economic pain.