The pressures on Angela Merkel – and Germany – to solve the euro crisis through a decisive and comprehensive display of “solidarity” are intensifying by the day. As the yield on Spanish debt reached a new high of 7% early today (Thurs), heralding a new stage in the apparent crisis end-game, the German Chancellor told the Bundestag in Berlin:“Germany is strong, Germany is the economic motor and Germany is the anchor of stability in Europe. Germany is committing this strength and power – also in the service of European integration and of the global economy.” But, she warned: “even Germany’s powers are not unlimited”, and it could suffer “over-stretch”.

At the recent G8 summit in Camp David, Merkel cut a lonely figure, mirroring the isolation of the country she has led for six years. At the G20 summit in Mexico early next week – just a day after Greek voters’ dance with destiny at the re-run general election on Sunday – the pressure and isolation could reach new peaks. History beckons the nation of 80 million slap bang in the middle of the old continent: here is your opportunity to unify Europe for the third time in a century but, this time, through peaceful, democratic and “solidarisch” means.

This is what Tony Blair, back in the political fray, calls a “grand bargain” – in the FT (£) – between Germany and the rest of Europe to rescue the single currency. His recipe: a pooling of debt, a new push for growth and deficit reduction achieved through pension and welfare (structural) reforms. And, clearly, this is what Germany is inching towards – though whether it happens with or without ‘Grexit’, before or after the June 28 EU-27 summit, is far from clear.

What is certain is that, while many young Germans are fixated by Mario Gomez’s two stunning goals against Holland and expecting a victory in the final of Euro 2012, they also expect a display of solidarity with their fellow Europeans on the wider economic field. There is evidence that this “bargain” is being negotiated between government and opposition in Berlin within the endless set of discussions between the two sides over the “fiscal compact” endorsed by the EU-27 (without the UK and Czechs) at that fateful December summit.

Merkel needs the Social Democrats (SPD) and Greens to back the pact so it wins the required two-thirds majority

In the Bundestag – and the aim is to sign, seal and deliver before the summer break at the end of this month/early July at the latest. See here (auf Deutsch), and also here from FAZ. The SPD – whose trio of leaders flew down to Paris on Wednesday evening to agree pre-summit lines with Francois Hollande – does not only want further measures to promote growth but is suggesting that Germany sign up to some form of mutualisation of debt as Blair and others are suggesting.

During Wednesday’s plenary session the European Parliament approved its first reading on two Regulations presented by the Commission last November to enhance the coordination and surveillance of budgetary surveillance for all euro-area Member States – also known as the ‘two-pack’.

Reports like this in the Daily Telegraph – ‘Germany signals shift on €2.3 trillion redemption fund for Europe‘ - are premature. Having rudely rejected her “economic wise men’s” proposal for a redemption fund last autumn, Merkel is not going to give in so easily – and she won extraordinary applause from bankers and industrialists on Tuesday for a speech reiterating the case against “deficit refinancing” and for structural reforms. But, equally clearly, the SPD and Greens are backing the idea and, in consensual Germany, that counts. A lot.

Watch this space.