Leading article: New Paris-Bonn axis spoils Blair's European dream

IT TURNS out that Gerhard Schroder, who will be installed as German chancellor next week, is more of a New Jospin than a New Blair. The most telling portent of the true nature of the social-democratic consensus that is settling over western Europe was the resignation this week of Jost Stollmann, the millionaire entrepreneur and friend of Mr Schroder, just hours before he was to be confirmed as a powerful economics minister. Mr Stollmann, who is not a member of any political party, was a symbol of the Blairite "new centre" approach - technocratic, business-friendly, unideological. And he jumped ship before it had even started down the slipway, leaving Oskar Lafontaine if not alone on the bridge, with at least one hand on the wheel. Mr Lafontaine, the incoming finance minister, is thus in a central position both in determining the new government's economic policy and in controlling patronage as the Social Democratic Party as chairman. There is little doubt that his policies and style are markedly un-Blairite: his language is all about the fight against unemployment - one of the reasons for the SPD's victory - and his instincts will be to respond to economic slowdown with Keynesian reflation and to shore up rather than dismantle the welfare state.

It may be that lower interest rates, at least, are just what Germany, Europe and the world economy needs. And the plans for "green taxes" on pollution point up one of the biggest missed opportunities of Mr Blair's new politics. But other implications of Mr Lafontaine's emergence as the strong man of the new government are more disturbing. The increased taxes on business are likely to make the problem of unemployment worse, while the shying away from radicalism - even if it was, like Mr Blair's, a radicalism of rhetoric rather than policy - bodes ill for the reform of the European Union, which is the most important collective political venture on the Continent after the launch of the euro.

This has implications for the British attempt to gatecrash the heart of Europe. More than Mr Schroder, Mr Lafontaine is close to Lionel Jospin, the French Prime Minister. That means that the Paris-Bonn axis remains as strong as ever, with the new government in Italy a like-minded partner, as it replaces the more Blair-like administration of Romano Prodi. And the influence of Greens in both the German and the Italian governments adds to their anti-Nato, often anti-British sentiment. What developments in all these countries emphasise is the significance to the British left of the experience of Thatcherism. Privatisation is now accepted everywhere: Mr Jospin's government has sold off more state assets than all previous French governments put together, while the British Labour Government has more or less run out of things to sell. But that is the exception; in every other aspect, Continental social democracy remains very different from New Labour.

That is disappointing because, as Mr Blair soberly acknowledges, Margaret Thatcher made some much-needed changes to our policy assumptions. It is a pity that the new German administration will not tackle the country's bloated social benefits - something which probably required a grand coalition of social and Christian democrats.

At the Vienna summit this weekend, therefore, the gap between Britain and the Continent is likely to grow wider, despite Mr Blair's efforts to throw a rope bridge over the chasm with his plans for a European defence force. Above all, Britain's self-denying exclusion from the single currency guarantees our exclusion from the engine-room of EU decision-making. Put those dreams of the Third Way sweeping Europe on hold, Mr Prime Minister. The European Way owes more to the past.