It is a measure of the speed at which the politics of the euro crisis is changing. Only a fortnight ago all the attention was being lavished on France's new president, François Hollande, being sworn in in Paris as Monsieur Growth and rushing off on his first assignment to challenge Europe's Frau Austerity, Chancellor Angela Merkel.

"We need new solutions. Everything's on the table," Hollande pledged, meaning he would force Merkel to remove the noseclip and consider things that give off a foul odour in Berlin, foremost among them eurobonds – Germany solving the crisis at a stroke by agreeing to underwrite the debt of Spain, Greece, Italy and all the rest. Fat chance.

By Saturday the growth versus austerity contest had receded as Merkel turned the tables on Hollande.

It was her turn to declare there should be no taboos in grappling with the hard options facing Europe's leaders as they wait to see what will happen in Greece and Spain, and plot their next moves at what is shaping up to be a momentous summit at the end of the month.

Merkel appeared to be calling not only Hollande's but France's bluff. By announcing there could be no censorship of the eurozone to-do list, she meant tabling radical, federalist steps involving gradual loss of national sovereignty over budgetary, fiscal, social, pensions, and labour market policies with the aim of forging a new European political union over five to 10 years.

The USE – United States of Europe – is back. For the eurozone, at least. Such "political union", surrendering fundamental powers to Brussels, Luxembourg and Strasbourg, has always been several steps too far for the French to consider.

But Berlin is signalling that if it is to carry the can for what it sees as the failures of others there will need to be incremental but major integrationist moves towards a banking, fiscal, and ultimately political union in the eurozone.

It is a divisive and contested notion which Merkel did not always favour. In the heat of the crisis, however, she now appears to see no alternative.

The next three weeks will bring frantic activity to this end as a quartet of senior EU fixers race from capital to capital sounding out the scope of the possible.

Herman Van Rompuy, president of the European council, Mario Draghi, head of the European Central Bank, Jean-Claude Juncker, Luxembourg leader and longstanding head of the eurogroup of single currency countries, and José Manuel Barroso, chief of the European commission, are to deliver a eurozone integration plan to an EU summit on 28-29 June.

All four are committed European federalists.

Before the summit there is a fateful Greek election and French parliamentary polls, while time appears to be running out for the Spanish banking sector. The finance minister in Madrid, Luis de Guindos, says that the fate of the euro will be decided over these weeks in Spain and Italy.

The quantum leap in integration being mulled will not save Greece, rescue Spain's banks, sort out Italy, or fix the euro crisis in the short term.

The leaders may even run out of time, exhausting the reserves of brinkmanship and last-minute calls that have characterised the "crisis management" of the past 30 months.

But they hope that by unveiling a medium-term strategy for a fiscal and political union in the eurozone they will convince the financial markets of their resolve to save the euro, that the currency is irreversible, and that the heat will be off.

The impact of "the project" will be immense, if it takes off.

Logically, you would need a new European treaty. That will be tortuous. You would probably need a new German constitution, which may prove a step too far.

The current perennially cited "democratic deficit" in how the EU is run would widen exponentially without a radical overhaul of the electoral underpinning of eurozone government. What would be the point in voting for a government in, say, Slovenia, when in a eurozone political union the tax, spending, pensions, or labour policies are decided in Brussels?

A much more entrenched two-speed Europe would emerge, with key decision-taking centred in the eurozone and not in an EU of 27 or 28.

The gap between Britain and core Europe might become unbridgeable, generating only mutual rancour and ultimately ending the UK's unhappy EU dalliance, although the "political union" is precisely what David Cameron and George Osborne are recommending as the "remorseless logic" of sharing a currency.

In the third year of muddling through, the choices facing Europe's leaders are getting starker – the death of the euro or the birth of a new European federation.