After their holidays spent soaking up the August sun, Europe's political leaders are bracing themselves for storm clouds this fall.
The latest economic figures show that Europe is edging closer to recession, dragged down by the crippling debt problems of the 17 countries that use the euro.
These debt troubles have tormented the eurozone for close to three years and so far have defied leaders' efforts to fix them. And the longer they take to resolve, the bigger they get.
Leaders from France, Germany and Greece all meet later on this week in the latest round of shuttle diplomacy to attempt to put a lid on the eurozone's debt crisis.
Six eurozone countries — Greece, Spain, Italy, Cyprus, Portugal and Malta — are already in recession and others look feeble.
Europe's stumbling economy is hurting recovery in other parts of the world. The European Union recorded a gross domestic product last year of $15.5 trillion — slightly more than the U.S.'s output. It is also a major source of sales for the world's leading companies. Any further economic problems would be felt in order books back in the U.S. and China.
Forty percent of McDonald's global revenue comes from Europe — more than it generates in the U.S. The company reported a 0.6 percent slump in meals served in Europe last month. Ford Motor Co. warned last week that auto industry sales in the region through July were the lowest in 17 years.
The eurozone has already provided billion in loans and financial aid to keep Greece, Ireland and Portugal from defaulting on their debts. And now markets are worried that recession-hit Spain and Italy could soon be asking for assistance. Meanwhile, public anger over austerity measures and unemployment is spreading, and a key court ruling on the eurozone's crucial new bailout fund is due in Germany.
"September is going to be extremely busy," said Antonio Barroso, an analyst with the Eurasia Group political risk consultancy. "The potential for negative news is definitely there."
Here are some of the key events anticipated in the coming months that could alter the temperature and the tempo of Europe's financial crisis:
Greece is in its fifth year of recession. The economy is likely to contract another 7 percent this year, and unemployment is nearing 24 percent. Debt inspectors from the organizations that oversee Greece's bailout program — the "troika" of the International Monetary Fund, European Union and European Central Bank — are set to return to Athens in early September to finalize yet another round of austerity measures.
Greece has been kept afloat by bailouts from its European partners and the IMF since May 2010, after it found it impossible to pay off its debts on its own. The rescue loans came in exchange for harsh austerity measures and reforms to its public sector. The country's debt stands at more than €300 billion ($369 billion), and the economy is struggling through a fifth year of recession with unemployment at above 23 percent.
But the cash lifeline has been disrupted by months of political instability— that were resolved, for now, after two national elections — during which the austerity and reform process lagged severely. As a result, the next €31 billion installment, if approved by bailout creditors following a review of the country's finances, has been delayed until next month at the earliest.
To qualify for that payment, Greece's eight-week-old coalition government must identify by the end of the month a new round of budget cuts worth €11.5 billion for 2013 and 2014.
Officials have said this is likely to include additional cuts in pensions and the initial sums paid out on retirement. Greece has also promised to reduce its 750,000-strong workforce in the civil service and the broader public sector by 150,000 by the end of 2015.
Many in the country are worried that the continuing decline in living standards could result in a repeat of violent streets protests witnessed in recent years.
If the troika finds Greece is not sticking to the terms of the bailout agreement, it could hold off vital funding, forcing the country into a chaotic default on its debt. This could push the country out of the eurozone, further destabilizing the region.
Europe's finance ministers meet Sept. 14 and 15 in Cyprus to discuss Greece and its prospects.
The first batches of a loan worth up to €100 billion for Spain's debt-stressed banks are due to be sent to Madrid from the other 16 eurozone countries in the coming weeks, bringing some short-term relief for a country battling to avoid a full-blown bailout.
Spanish banks are sitting on an estimated €200 billion in toxic assets following the collapse of the country's real estate boom. The government is set to approve Aug. 24 a new law creating a "bad bank" which will pool the toxic assets. The results of a comprehensive audit of the Spanish banking sector are expected next month.
While those steps may help alleviate the financial sector's immediate problems, Spain — whose economy is five times larger than Greece's — is broadly expected in the coming months to become the fifth eurozone member to need a bailout.
On top of the problems with the banks, some of Spain's regional governments have overspent and are turning to the federal authorities for help. Some estimates put the regions' combined debt at €140 billion. The country is in a double-dip recession and unemployment is at nearly 25 percent. There have also been public protests at the government's €65 billion package of tax hikes and spending cuts.
The country is finding fewer and fewer buyers for its debt, with investors charging the country increasingly higher rates so that it can borrow the money it needs to keep the economy and public services working.
Earlier this month, European Central Bank President Mario Draghi said the ECB was ready to unleash its financial might and buy government bonds to help drive down borrowing costs in debt-ridden countries such as Spain — on the condition that governments approach the eurozone's emergency bailout funds for assistance first.
Mariano Rajoy's government has so far tried hard to avoid the political indignity of asking for financial help, which usually implies surrendering some degree of sovereignty over a country's financial affairs. However, two weeks ago Rajoy edged closer to asking for a bailout when he told reporters that he would consider asking for aid for his country only once the ECB has fleshed out its crisis-fighting plans for buying government bonds.
Draghi has said the ECB's plans for helping out governments would be announced in the coming weeks. Meanwhile, German Chancellor Angela Merkel is to visit Madrid on Sept. 6.
Mario Monti is in a race against the clock. Italy's unelected premier and his technocratic government, appointed by Parliament last November to put the eurozone's third-largest economy back on a path to fiscal health, have until next spring to conclude their task. Elections are scheduled for the first half of the year — most likely, April — after which Monti's team hands over power to the new government.
After a short period of calm at the beginning of the year — when Monti took over and the ECB flooded the market with €1 trillion in cheap loans that banks used to buy government debt — Italian borrowing rates have been climbing amid market uncertainty about the wider eurozone and Italy's high debt load. The ECB and Draghi also had Italy in mind when they were drawing up plans to help bring down countries' borrowing costs.
The Bank of Italy said national debt reached a record €1.972 trillion in June, up from €1.966 trillion the previous month — that's 123 percent of the country's gross domestic product.
The government says its priority immediately after the summer break is reducing the stock of public debt and pruning public sector waste.
Monti's measures have antagonized many. In his attempts to break down barriers to entry for certain professions that he claims are stifling economic growth, he has taken on powerful lobbies. They include such professions as bakers, taxi drivers, pharmacists, lawyers, notaries, railroad workers and newsstand dealers.
On top of this, some of the parties in the Italian Parliament — in particular former premier Silvio Berlusconi's People of Freedom Party — have brought up the possibility of early elections. Any hint that Italy's chronic political instability could return would worsen its standing with investors.
Leaders of the eurozone hope their plans for a €500 billion permanent bailout fund, the European Stability Mechanism, will be the antidote to their financial problems. Germany — the eurozone's biggest economy and therefore the biggest contributor to the fund — was one of the main architects of the new fund and the fiscal stability pact, a treaty that lays down strict budget rules.
The ESM and the pact need to be ratified by the 17 eurozone countries. Several leaders and politicians from the bloc's economically sounder members — such as Germany, the Netherlands and Finland — have been showing worsening symptoms of "bailout fatigue" with repeated calls for the rescues to stop.
German dissenters have filed complaints at the country's highest court, which is to rule Sept. 12 on whether it should issue an injunction to delay the ESM's introduction so it can decide whether the fund interferes with Germany's sovereignty. If it chooses to issue the injunction Europe's grand plan for recovery could easily be scuppered.
"A significant postponement of the setup of the ESM ... could mean a serious unsettling of markets far beyond Germany and a serious loss of confidence in the eurozone," Finance Minister Wolfgang Schaeuble warned the court's panel of eight judges.
Inspectors from the troika, who granted Portugal a €78 billion bailout last year, are due back in Lisbon on Aug. 28 to review how well the country is managing its economy. They will encounter a country that is enduring deep hardship and is likely to need more help.
The coalition government has won praise for sticking to the terms of the financial rescue agreement signed in May 2011. It has introduced deep spending cuts and adopted key economic reforms.
But the government forecasts an economic contraction of 3 percent in 2012, bringing a third recession in four years, and unemployment has risen to a record 15.2 percent. Opposition parties and trade unions say austerity is to blame.
Bailout lenders may have to grant Portugal more time — perhaps an extra year — to meet its debt targets.
Investors will be keenly watching France —the eurozone's second-largest economy — from September when the country's new Socialist government unveils its 2013 spending plans.
President Francois Hollande has pledged to cut the deficit from its current 5.2 percent of GDP to 3 percent.
But it won't be easy: an independent audit of the country's finances says Hollande will have to find an extra €33 billion if he's going to keep that promise — and that's assuming 1 percent growth next year. Government statistics show the economy was stagnant in the second quarter, the third straight quarter it hasn't grown.
So far the government has decided not to cut spending to reach the deficit goal — opting instead to raises taxes on the higher earners and rolling back some of the labor reforms of the previous Sarkozy administration.
Markets are worried that France's new government has not fully recognized the extent of its problems.