European Union leaders will tonight pledge to give greater priority to securing economic growth as they increase the pressure on Germany to do more to solve the eurozone crisis.
At an informal dinner in Brussels, several leaders will acknowledge the need for an EU "growth pact" after critics warned that Europe's "collective austerity" is stifling growth in the 27-nation bloc. The change of tone follows the election of the Socialist François Hollande as President of France, who will be attending his first EU summit.
But Angela Merkel, the German Chancellor, is expected to rebuff Mr Hollande's plan for eurozone nations to issue jointly guaranteed eurobonds to allow them to borrow more. Ms Merkel insists that it is not the right time to reduce the pressure on euro members to cut their deficits.
David Cameron backs eurobonds and is expected to side with the pro-growth lobby inside the EU despite sticking to his deficit-reduction strategy in Britain and rejecting calls for a Plan B to jumpstart the flatlining economy.
Yesterday George Osborne, the Chancellor, said the eurozone was reaching a "critical point". He added: "Eurozone countries need to stand behind their currency or face up to the prospect of Greek exit, with all the risks that that could involve. The British Government is doing contingency planning for all potential outcomes. It is our responsibility to ensure that while we work for the best, we prepare for something worse."
EU leaders are unlikely to take any major new initiative on Greece's debt crisis ahead of the country's second election on 17 June. Their key decisions on the "growth pact" and Greece will be put off until their next summit on 28 and 29 June. But Greece could potentially benefit from a European Commission plan to pilot EU "project bonds" to finance cross-border infrastructure schemes on transport, energy and communications. Some €230m (£185m) of EU money could unlock up to €4.6bn of investment. EU leaders will also discuss plans to hand another €10bn to the European Investment Bank to boost growth and jobs.
Herman Van Rompuy, the European Council president, who will chair tonight's talks, signalled the change of gear by saying the EU had to "ensure that fiscal consolidation and growth mutually reinforce each other". In a letter to the 27 leaders about the meeting, he hinted at support for eurobonds by saying: "There should no taboos concerning the longer-term perspective."
Christine Lagarde, the managing director of the International Monetary Fund, said during a visit to London that eurobonds could eventually play a role but understood Germany's reluctance to pool eurozone debts. She said: "The country that would carry the burden would be countries such as Germany and it's certainly understandable that Germany would want to receive in consideration for that sharing of liability significant commitment to improve productivity to structural reforms so it does not continuously carry the weight of the entire zone."
Alexis Tsipras, the leftist leader in Greece, hit back yesterday at claims by Mr Cameron, who has told Greeks that it is now time to decide whether they want to remain part of the single currency by voting for pro-bailout parties in the country's general election next month.
Speaking in Berlin, on the second day of a tour around Europe for talks with other left-wing leaders, Mr Tsipras said that a rejection of the harsh austerity measures imposed by Athens's pro-bailout parties would not automatically mean expulsion from the euro.