Fifty years on from the signature of the Treaty of Rome, which created the European Economic Community, the member states of the EU still cannot agree what it’s all about.

It is still a popular club — two new members, Bulgaria and Romania, joined over the weekend — and still one that lacks purpose. Even among the veterans, there is no consensus: is it an economic area or something much greater with supra-national ambition? Germany took on the presidency of the EU for a six-month term on Monday and, with some bravado, Angela Merkel, the Chancellor, set as her Government’s task the revival of the constitutional process, a project that was scuppered by voters in France and the Netherlands when in 2005 they rejected the EU constitution.

Coincidentally, Germany is also chairing the G8 group of top nations this year. Taking full advantage of her place at the head of both tables, Ms Merkel has drawn up a joint menu, a sort of new year’s list of good deeds — revitalising Middle East peace talks with the help of the US, the UN and Russia and forging common European positions on key issues. These would include a post-Kyoto global warming pact, a European action plan on energy, a single energy policy towards Russia, a push for greater regulation of hedge funds and a new road map for a European constitution, something she hopes to announce in time for the March 25 Treaty of Rome commemorative celebrations.

Much of this, notably the Middle East initiative, is political spin designed to promote Berlin’s ambition to play a much bigger role in the world. More interesting than Ms Merkel’s agenda is the reason for having one at all. It is the expectation that 2007 could be a watershed year for Germany and the end of its lengthy economic and political slumber.

The EU’s biggest economy is going gangbusters, GDP rose by at least 2.5 per cent last year, more than a quarter of a million jobs were created and German businesses are, at long last, feeling good. Corporate profits are soaring; the IFO index of business confidence was 108.7 last month, the highest score since 1990.

More importantly, this has been achieved not by the pump-priming that pushed Germany into recession and penury after the unification with the former communist East but by economic reform. A series of employment benefit and tax reforms have spurred employers to hire and the jobless to get moving.

Indeed, the Merkel tax package has, if anything, threatened to dampen rather than stimulate consumption, raising VAT by three percentage points.

Germany is feeling more confident and Ms Merkel hopes that will translate into a bigger leadership role. She is in pole position at a time when Germany is the only substantial European nation that can boast a leader who is neither lame nor discredited. France is already embarking on what promises to be a bloody presidential election campaign. Britain is preparing for an imminent transition from a prime minister discredited by a disastrous war and the whiff of corruption to another, Gordon Brown, whose antipathy to Europe is notorious.

That leaves Ms Merkel a clear field in which to pitch her European tent. Who will join her and what will they find inside? It is clear that Ms Merkel’s Europe is circumscribed by geographical limits, defined by “European” cultural values, led abroad by a common foreign and security policy and underpinned by a growing economy.

This is not a vision shared by British governments, which have consistently promoted the original Europe of free trading nations with open borders. Britain cynically embraces enlargement but resists further delegation of powers to Brussels. It’s a policy that allowed Britain to thrive as an offshore deregulated financial centre in a weak Europe that needed a political go-between to access a hostile president in Washington.

That latter role for Britain is much diminished. Washington is cultivating Ms Merkel and a resurgent Germany. The question is how Britain is to be enticed into a political Europe led by Germany. Elections to the European Commission might help, as would robust support from Germany for more deregulation.

Besides, foreign policy is not such a big issue. The risk of being corralled by foreigners into their political and military adventures is always there and we take it, literally, on the chin.

carl.mortished@thetimes.co.uk