EU leaders are using the financial transaction tax to hide a Spanish-led revolt against Germany Let's start with Spain. Throughout February and probably before, officials from Madrid pleaded with Brussels for permission to relax their deficit targets, arguing that Spain, with youth unemployment soaring over 50pc, couldn't take any more austerity. The answer was firm and consistent: nein, non, niet. At the beginning of March, leaders gathered in Brussels to sign their "non-negotiable" fiscal pact, binding all European countries (except Britain and the Czech Republic who refused to sign) to tough rules on budget discipline. Angela Merkel was tickled pink: the deal would last forever, she said. But with sensational timing, Mariano Rajoy announced Spain would break the rules, immediately. The quietly spoken prime minister said Spain would aim for a deficit target of 5.8pc of GDP for 2012. He acknowledged this was far above the 4.4pc set by authorities in Brussels but said he'd chosen his target rather than taking €44bn from the budget at a time of economic crisis. The new figure was both "sensible and reasonable," he said, and a "sovereign decision made by Spaniards." At a stroke Rajoy had demonstrated breath-taking defiance, heart-warming patriotism and a different path to recovery. Even worse, he pointed out the elephant in the room: the eurozone is a monetary union, not a political one, and if members want to run their own affairs, neither Brussels nor Berlin can stop them. After days of silence, last night in Brussels finance ministers asked Spain to set a deficit target of 5.3pc. Not only is the figure a massive leap in Madrid's direction, but the language was completely different too. In a statement, the ministers expressed hope rather than demand: "The Spanish government expressed its readiness to consider this in the further budgetary process," it said. So maybe the tables have turned. Greece is small enough to bully but Spain - and Italy, Portugal and Ireland - are all big economies, without which the eurozone would disintegrate. If Merkel's austerity drive is unacceptable to these members, if they are prepared to simply ignore hard-fought fiscal pacts and do their own thing, what next? A new plan? A new strategy? New leaders? Time to get out the FTT, quick.