Europe’s grand alliance of France and Germany is crumbling like a fresh chèvre. The leaked memo from Angela Merkel’s coalition partners this week only confirmed what everyone else suspects about the French economy under the stewardship of François Hollande.
“French industry is increasingly losing its competitiveness,” it said. “The relocation of companies abroad continues. Profitability is meagre.”
After her close bond with Nicolas Sarkozy, Ms Merkel’s relationship with Mr Hollande was always going to be strained. But what price the eurozone if its two biggest proponents can’t get on over key issues such as austerity and how to tackle falling growth?
Mr Hollande’s plan to cut capital gains taxes smacks of desperation. I doubt he will win back the entrepreneurs and wealthy workers who have already booked their Eurostar tickets to London. Business leaders reckon France’s economy is in for a torrid decade.
It also begs the question what role Britain could play if the old order is changing. Fresh from the incursions made into Tory territory by the UK Independence Party, how David Cameron frames his in-out referendum on Britain’s future in Europe will be focusing the mind.
But what about a new Europe built around a UK-German axis, where the single currency is optional but measures to foster economic growth are not?
In lieu of all those trade missions to China and Brazil stirring export orders, better to be inside the tent with our existing major trading partners. That way the Government might not have to resort to rearguard actions as it is by attempting to fight off the financial transactions tax that those inside the eurozone are gradually realising is bad for business.