The issue of sovereignty is starting to be raised over the Irish bailout. Some European countries want Ireland to raise its corporate tax rate. That would presumably drive away the businesses that have only located themselves in Ireland because of the low corporate tax rate, but that, of course, is partly the point. Ireland cannot devalue because it is locked into the Euro, so it must have deflation. One way to get deflation is to drive away productive businesses.

However, the Irish government is making fiscal sovereignty something of a red line, and the popular press is making comparisons to the gaining of sovereignty on independence from Britain. As the Euro is fundamentally a political project, the emergence of this kind of political red line is an intermediate step in the breakup of the single currency. That is not to say it actually will break up — the Irish may well cave in.