As a possible solution, increasing the competencies subject to qualified majority voting in the Council would lessen the power of a big state such as Germany to unilaterally dictate federal policy. Additionally, the E.U. Commission could send its proposals first to the European Parliament instead of the European Council.
If the German government had indeed exploited the opening for the direct involvement of state governments at the E.U. level, even other wealthy states may find it in their interests to weaken the veto in the European Council and strengthen the European Parliament such that it could be a check on the state governments acting through the Council.
For example, after German Finance Minister Wolfgang Schaeuble openly wondered whether a state economy based on banks could still be viable after the crisis in Cyprus, Luxembourg's Foreign Minister Jean Asselborn snapped back, "Germany does not have the right to define the business models for other" E.U. states. If Luxembourg's state officials perceived Germany as having too much power in the European Council, those officials would have a motive to further restrict the usage of the veto in the Council and the Council itself relative to the European Parliament in legislating. Put another way, it is possible that enough states have an incentive to reduce the power of the state governments at the E.U. level.
Zhang Danhung, “Eurozone: Putting a Halt to Spending Cuts?” Deutsche Welle, May 4, 2013.
Juergen Baetz, "Luxembourg, European Union's Wealthiest Country Eyed as Next Ticking Bomb After Cyprus," The Huffington Post, April 7, 2013.