Merkel links federal election with Europe

She said her own personal vision of the EU was of a "stability union" that has a presence on the world stage.

"Without Europe we would no longer be able to represent our values, our ideas, our ideals together.

Her words - made in the traditional 'summer interview' - come as she faces yet another EU test in parliament this week when the Bundestag is due to vote on the recent eurozone deal to lend Spanish banks €100bn, the first tranche of which is meant to be released by the end of July.

Merkel indicated she is expecting resistance from within her own centre-right ranks, making it unlikely that Spanish bank bailout will get the symbolic majority - known as the 'chancellor's majority' - through the governing coalition alone.

"We always get the majority that we need," she said.

Confirming that she intends to run in the 2013 election, Merkel said the 17-nation eurozone was "on the right track."

"More has been done in the past few months in Europe than in many years, but a lot still has to be done.”

The chancellor has spent much of the crisis balancing what needs to be done at the EU level with the doubts of German citizens who fear the implications of a transfer union - where the debt burden is shared among its members - that many analysts say is needed to solve the crisis.

These doubts have shaped her calls for tighter budget control for all member states before more solidarity.

Aside from managing her own fractious coalition with the business-friendly liberals, the chancellor's action are also bound by the country's top court.

Constitutional judges - kept busy by a series of complaints about the decisions relating to the eurozone crisis - are examining whether Berlin's decisions breach the constitution, or Basic Law.

The next court decision concerns the European Stability Mechanism (ESM), the eurozone's permanent bailout fund. Critics believe setting it up will undermine Germany's sovereignty and complain about a lack of democratic oversight.

As Europe's biggest economy, and paying the most towards into the bailout funds, the rest of the EU is dependent on Berlin and decisions by its court.

"I think (the judges) know the maximum timeframe in which we have to operate," Eurogroup chief Jean-Claude Juncker told Der Spiegel magazine, referring to autumn decisions that have be taken on Greece's bailout.

He added that he did not expect the constitutional court to block the setting up of the ESM, with markets already unsettled by the fact that the court may take up to three months to decide, rather than the expected couple of weeks.