Gloom gathers over the challenges that Germany faces

It is tempting to think of refugees and migrants as a new source of labour. But in this case this just is not true, at least not for now. The majority of those who arrive in Germany lack the skills needed in the local labour market. They will enter the low wage sector of the economy, and drive down wages, producing another deflationary shock. This is the last thing Germany and the eurozone need right now.

I expect that this policy will change at some point this year. What I do not see, however, is a successful political coup against Ms Merkel from inside her own party. What protects her is the grand coalition with the Christian Social Union and the SPD. There is no majority to the right of her, or to the left for that matter.''

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Finally, 2016 promises to be the year of backlash against German dominance of the eurozone. That did not happen during the crisis. The leaders of the countries in the eurozone periphery kept their heads down. Under German pressure, they signed up to treaties and legislation, such as the fiscal compact and the new resolution mechanism for banks, that were clearly not in their long-term interest. [Matteo Renzi] is not alone. The Italian media, too, are becoming more hostile towards German dominance of the EU. Even if 2016 does not see another eurozone crisis, it could easily be a year of mutual alienation, which is more dangerous in the long run.