MORNING BRIEFING – By Benedict Brogan (Daily Telegraph

All eyes will be on the Hollande-Merkel meeting in Berlinthis afternoon. Not least because politicians and traders will be looking for relief on yesterday’s rocky day on the markets – shares, oil, and the euro were all sold heavily. The reaction anticipates that anti-austerity parties will gain further support in a second Greek election likely to be held next month.

This isn’t happening without British input, of course, George Osborne is over there, stirring up trouble with the Germans. The Chancellor accused Mrs Merkel of damaging Britain’s interests after speculating that Greece could leave the euro. He said:

“The eurozone crisis is very serious and it’s having a real impact on economic growth across the European continent, including in Britain, and it’s the uncertainty that’s causing the damage,” said Mr Osborne, the Chancellor.

“Of course countries have got to make difficult decisions about their public finances. We know that in Britain. But it’s the open speculation from some members of the eurozone about the future of some countries in the eurozone which I think is doing real damage across the whole European economy.”

Read our report and follow the story as it unfolds on our Live Blog.

Our leader column discusses the implications for Britain, concluding:

“Since this country stayed out of the euro precisely because many people – principally Conservatives – foresaw just such a disaster, we are not obliged to contribute anything towards clearing up the mess. However, because we are so bound up with the EU economy, we cannot escape the “massive impact” predicted by Vince Cable.”

And in a surprising move that will cheer many Tories, Ed Balls suggested that we should have a referendum on Europe. Speaking at a Centre for European Reform in London yesterday, he said there was a case for a future referendum although added now was not the time. This follows a similar call by Lord Mandelson, and their joint article in the Guardian yesterday opposing austerity measures. Read the Guardian’s report.

David Cameron should be quaking in his boots: not only does this add extra pressure for a referendum, but shows strong unity in the Labour Party – something that cannot be said of the Conservative Party.

There’s trouble at the opposite end of the political spectrum too. Our business splash reports that Tullett Prebon, the bond trading firm, has said that “public expenditures have hardly been reduced at all” and that claims of a “big cut in public spending is bare-faced deception”.

Tullett Prebon has produced figures showing that public spending actually rose during 2010-11 and fell by just 1.5 percent last year. Dr Tim Morgan at the firm has accused the Government of “mendacity” and “spin”, adding:

“The motivation for government spin is obvious enough. On the one hand, rises in market interest rates could be a disaster, given the extent to which British households are leveraged. On the other, implementing the real cuts required to back up a genuine austerity package have proved politically unpalatable.”

Owch. Made worse perhaps by the threat that it was “improbable” that the bond markets would “continue to fall for this spin-job” and would “sooner rather than later” call the Government to account.

SPECIAL NEEDS REFORM

Closer to home, we’ve splashed on the Government’s plans to strike hundreds of thousands of children off the special needs register. Following yesterday’s narrative on disabilities benefit cuts, this programme hopes to crack down on abuse of the system. Ministers are concerned that schools are using the system to disguise poor teaching.

The Government publishes its Green Paper on this today. Education Minister Sarah Teather was on the Today Programme earlier and said:

“I think at the moment we have a number of children who are identified as having special educational needs who actually may have other problems… what we’re trying to do is to get identification much better…”

On the number of children to be removed from the register: “I don’t have a target, for me this is not about numbers, this is about getting the right children identified and getting the support in place.”

TORY TROUBLE AHEAD

And, of course, the Tory party turmoil rolls on. Last night traditionalist MPs warned of a No 10 coup in the election for the executive of the 1922 committee since one in five Tory MPs voting will be on the payroll.

Nominations for the executive close at 2pm today with voting on a secret ballot on Wednesday afternoon – the results should be available on Wednesday evening. More trouble is brewing.

MORE RESHUFFLE KERFUFFLE

Rumbles in the Labour Party continue too since that reshuffle could be today. The FT (£) have previewed it, saying Ed Miliband is now sufficiently confident that dealing with his frontbenchers is no longer like walking a Ming vase across the floor.

The Times (£) leader column calls for Alistair Darling, Andrew Adonis and David Miliband to be recalled, with the latter as Labour chairman (presumably because of his famous people skills).

BROOKING IT

Best to check the news at 10am today, we’re set to find out whether Rebekah Brooks will be charged.

Lord O’Donnell made things more awkward for Jeremy Hunt yesterday when he said that he should have known if his adviser was talking to BSkyB, saying:

“I would have expected the minister to be clear about what he thought his special adviser should be doing.”

Read the Guardian report.

TWEETS AND TWITS

Lib Dem MP Malcolm Bruce ‏tweets:

“@malcolmbruce: Brilliant Danish philosophy. Work smarter – not harder!”

With over a month’s summer holiday this year, Mr Bruce should tell his constituents that.

POLL WATCH

Latest YouGov/The Sun results: Conservatives 31%, Labour 45%, Lib Dems 7%, UKIP 8%

Overall government approval rating: -42

TOP COMMENT

In The Telegraph

Mary Ridell: Ed’s got talent, but he has to win over the toughest crowd of all

Philip Johnston: Why should an insult be against the law?

Neil O’Brien: Benefits: the disabled and deserving?

Leader:Don’t land us with the bill for Europe’s folly

Best of the rest

Polly Toynbee in the Guardian: Clegg and Cameron’s cruellest day

Rachel Sylvester in the Times (£): Too clever by half just isn’t clever enough

Liam Fox in the Times (£): Never take your foot off the reform pedal

Dominic Sandbrook in the Daily Mail: A last roll of the dice for the euro – and a gathering storm that should terrify us all

THE AGENDA

Today: Francois Hollande sworn in as French President and meets Angela Merkel in Berlin

Today: Sarah Teather to publish Government response to the Special Educational Needs and Disabilities Green Paper and outline the Government’s plans to reform the system

Today: Nick Gibb to launch consultation on the legal duties that could be applied to schools and colleges regarding taking biometrics from children

9.30am: ONS to publish statistics for disability-free life expectancy

9.45am: Children’s Minister Tim Loughton speech at the Safe and Sound conference, giving update on the Child Exploitation action plan. British Library, 96 Euston Rd

10am: Adam Boulton and Lord Wakeham to give evidence to the Leveson Inquiry. The Royal Courts of Justice, The Strand

11am: Damian Green appears before the Commons Home Affairs Committee on Heathrow’s boarder controls

11am: Lynne Featherstone will outline proposals to streamline equalities-related regulations in response to the Red Tape Challenge, Home Office

11.45:Ed Miliband will give a speech to Royal College of Nursing conference. Harrogate International Centre

2.30pm: Justice Questions

2.30pm:Continuation of Queen’s Speech debate in the Lords, focusing on education, culture, home affairs, health, law and justice and welfare

6pm: Bernard Hogan-Howe will give a speech on priorities for reform. Policy Exchange, 10 Storey’s Gate,Westminster