Of all the challenges posed to the eurozone by its Greece-induced woes, none is more pressing than reviving economic growth. The €750bn rescue package may already have succeeded in staving off an immediate liquidity and default crisis, either by a nation or a cascade of eurozone banks. But investors were right to take the package outside yesterday and kick it around the playground. Most markets retreated after Monday’s euphoria. That is not surprising: for the package to serve its purpose, sustained eurozone growth must return. Yet the fiscal adjustment required to meet its conditions may shut off the very growth it is designed to inspire.

Policymakers were able to sign off on the package on the back of promises by governments on the eurozone’s periphery to undertake the necessary austerity and structural reform measures to make it work. Spain and Portugal promised additional measures; Ireland and Greece are already in full austerity mode. Eurostat figures suggest that Ireland, Spain and Portugal should grow modestly in 2011. But that seems far too optimistic given the scale of fiscal adjustment required to reduce their budget deficits, not to mention their ratios of debt to output, which admittedly are far more favourable than Greece’s.

Portugal, Spain, Greece and Ireland together represent only 15 per cent of the eurozone economy; Germany accounts for 25 per cent alone. But 15 per cent is not negligible. As Deutsche Bank notes, pre-2008 growth in periphery countries was faster than in the core economies. It predicts that, without that boost from the periphery, eurozone growth will converge to the pace of Germany, France and Italy – about 1.5 per cent yearly. Even that may be optimistic if Germany cannot expand domestic demand. Angela Merkel, the chancellor, has imposed reform on her southern neighbours; can she do so on her fellow Germans?