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Evening Standard comment: Tale of two futures — the UK and the eurozone

Today is the fifth anniversary of European Central Bank President Mario Draghi’s promise, made here on the eve of the Olympics, to do “whatever it takes” to save the euro. It’s been a long slog, and the action needed was far too slow, but the eurozone economy is finally looking up.

Forecasts are being upgraded and there is a new-found confidence that the problems of unsustainable debts, undercapitalised banks and weak political leadership are at last being overcome. Much depends on whether the Macron presidency in France lives up to its promise of reform and Germany finds the political will to fix the remaining structural problems of the single currency, but there is at least a sense of sunlit uplands ahead.

Sadly, the future looks less bright for Britain. This morning we learned that our economy has had the weakest first six months of the year since Mr Draghi spoke out in the depths of that eurozone crisis half a decade ago.

The estimate for GDP growth in the second quarter is just 0.3 per cent, and what growth we see has been largely powered by consumers borrowing to spend. How long that can continue is uncertain.

The devaluation in the pound after Brexit means prices are rising faster than wages, and the population is getting poorer — but today’s numbers show the cheaper pound has not given the boost to manufacturing optimists had hoped for.

Meanwhile, surveys suggest investment has come to a virtual standstill as companies wait for details on everything from the country’s new customs arrangements to its nuclear safety regime and its future immigration system.

Plan needed

What Britain needs is — to coin a phrase — a long-term economic plan. Instead of drifting with the winds of the political rows over public spending, the Government needs the anchor of a credible fiscal policy that continues to bear down on the deficit.

Pressure from Corbynistas to raise business taxes, increase union power and — in their leader’s extraordinary words — “abolish the gig economy” needs to be contested with an alternative vision of a innovative, competitive free-market future. The announcement that Britain wants to be a world leader in the move towards electric cars is welcome.

Let’s now see the policy that will make sure those electric engines and batteries are manufactured here. The newly elected mayors in our cities need to come forward with their vision for local growth, and work with the government on concrete funding plans for big infrastructure — such as Crossrail 2 here in the capital, and its equivalent, Crossrail for the North, linking Liverpool through to Hull with a high-speed line across the Pennines.

Above all we need, as an urgent first step in the painful process of Brexit, the Cabinet to agree on the transition for leaving the EU.

It was reassuring to see Business Secretary Greg Clark joining forces with the Chancellor yesterday by observing that nobody voted for Brexit in order to “trade less”. We will trade less if we leave the Single Market and customs union in 2019, which is why we must remain in both unless and until we conclude an equally comprehensive bilateral arrangement for selling our goods and (crucially) services into the EU.

Working on trade deals with the rest of the world can take place meantime — though the fact Germany does much more trade with China than we do shows it isn’t EU membership that is holding us back. The spat between ministers over American chlorinated chicken shows how difficult it will be turning enthusiasm for the principle of free trade into political agreement on the practicalities.

Not so long ago, the eurozone was seen as a basket case while Britain’s economic growth led advanced nations. How quickly times change.

We have a lot of work to do to reassure a sceptical world that things here aren’t going to go from bad to worse.