When Britain won a commitment in 2005 to a “no-taboos” mid-term review of EU spending as the price for agreeing the bloc’s next seven-year financial framework, many were sceptical. It was not at all clear why France and other traditional beneficiaries of the Union’s budget would be any more willing to sign up to radical change four years down the line than they were then.

The worst financial upheaval in living memory may have provided one reason why they might. For Dalia Grybauskaite, the woman responsible for steering the budget review through the European Commission, the global financial storm “makes radical budget reform more important and necessary than ever before”.

Photograph: Erik Luntang/EUP-Images

The impact of the crisis will be both positive and negative, says the Lithuanian commissioner, a no-nonsense former finance minister with economics degrees from Leningrad and Moscow universities – and a black belt in karate. “On the one hand it will force us to rethink the extent to which we coordinate, our regulation of state aid, our accounting rules for the financial sector, our competition policy. And it will influence our Stability and Growth Pact and the flexibility with which we use it to help member states.

“On the other hand, the crisis is already seriously affecting the real economy.”

Her assessment of the EU’s response to the economic turmoil is clear. “We have seen that those member states that went it alone have been drawn back to work on a common solution. This shows that a more European and indeed global approach is the only way out of the crisis,” she says.

Though the first-ever summit of leaders of the eurozone countries on October 12 was welcomed by markets, Grybauskaite warns that the crisis will be a major test for the single currency: “It will show whether it is easier to face these global pressures from inside or outside the eurozone. All these questions are now on the table and Europe will need to find answers.” But she argues that the euro has already proved its worth for small countries such as Ireland and Belgium which have been hard hit by the financial storm. “As Jean-Claude Juncker [Luxembourg prime minister and chair of the eurogroup] has said, if there were still 15 separate currencies at such a time of crisis, it would have been catastrophic for them.”

Time will tell whether the crisis will strengthen the long-term prospects for the euro. For now, Grybauskaite has more immediate concerns. On November 12 a major conference in Brussels will assess the results of the most far-reaching consultation ever held......