The same problems, and it would seem, a depressingly similar approach to solutions.
Leaving the European Union appears to have made no difference to Britain’s path; in attempting to revive economic growth, the Government is preparing to adopt many of the same strategies and policies as our near neighbours.
Having acted to divorce itself from Europe, the UK is drawn remorselessly back into its low growth, gravitational orbit.
Rachel Reeves, the Chancellor, is even planning to start attending meetings of European finance ministers. In some respects, it will be as if we never left.
In any event, her focus on a combination of industrial activism and investment in public works is virtually the same as that prescribed for the rest of Europe.
The tax burden too, already at a 70-year high, looks to be heading towards the levels that preside in much of continental Europe.
If you believe 40pc of national income is too high, think something like the 45pc that rules in Germany. That’s where the new Government is threatening to take us.
What’s required to galvanise growth is bottom-up incentives and freedoms, not the top-down instruction and control that European policymakers seem to have in mind.
Like Britain, Europe has been worrying about its slowing growth rate for as long as I care to remember. In his recent report on European competitiveness, Mario Draghi dates the concern to the turn of the century, which also happens to be when Europe’s monetary union came into being.
But I would go further back in time to trace the origins of Europe’s decline. Commentators were lamenting the increasingly sclerotic state of the European economy long before the advent of the single currency.
Indeed, monetary union was at the time quite widely thought of as a possible solution to Europe’s lack of growth. In the event it proved to be precisely the reverse, helping to embed the economic paralysis that has continued more or less ever since.
As a former president of the European Central Bank, Draghi obviously doesn’t see it that way; he’d prefer to delude himself in thinking of the single currency as an important stepping stone to US levels of productivity growth. Sadly, the evidence for this from 24 years of monetary union is virtually non-existent.
Sustaining Europe’s still deeply flawed single currency through its various crises has, to the contrary, become an all-consuming distraction, depriving Europe’s core economies of the oxygen needed for virtually anything else.
Even in the core industry of automobiles, Europe has been caught napping by Chinese upstarts. In the digital economy, it languishes far behind the US and many parts of Asia, having spawned none of the industry’s global standard bearers.
Europe’s deficiencies have been known and talked about for decades, but nothing is done about them beyond more of the same. You would think that by now the penny would have dropped, but there is no sign of it.
In corporate finance, the idea that two and two equals five underpins all industrial merger proposals.
With the EU, it has been the other way around. The whole has come to be worth rather less than the sum of its parts. If the EU was a company, it would break itself up, but there’s no such prospect.
It’s not just about a dysfunctional single currency. Give or take, Britain has fared little better outside monetary union than those in it. Nor has Brexit made any difference.
It’s not been as bad for the UK economy as some had feared, but you’d also struggle to see anything in the way of upside.
The mistake is increasingly obvious. In broad terms, the UK has followed the same economic trajectory as Europe’s other major economies. The disease may not be quite as acute in the UK, but the ailment is essentially the same.
On a per capita basis, real disposable income has grown almost twice as much in the US as in the EU since 2000.
America and Asia have become richer, but Europe relatively poorer. It’s been much the same story for Britain.
Reading Draghi’s report on Europe’s competitive failings, he might have been writing not about the EU, but the UK. Draghi’s list of economic weaknesses is as familiar to Britain as to Europe’s other major economies.
The foundations on which post-war prosperity were built are being shaken to breaking point, he writes in almost apocalyptic terms, and the threat to prosperity and way of life is existential.
“The previous global paradigm is fading. The era of rapid world trade growth looks to have passed, with EU companies facing both greater competition from abroad and lower access to overseas markets.
“Europe has abruptly lost its most important supplier of energy, Russia. All the while, geopolitical stability is waning, and our dependencies have turned out to be vulnerabilities”.
But although Draghi is spot on in his diagnosis, many of his solutions are, I fear, likely to make a bad situation even worse.
Even where he is right in his recommendations, such as the urgent need to reign back on Europe’s penchant for safety first, over regulation, he’s very unlikely to make headway against Europe’s still jealously guarded sovereignties and the intractable bureaucracy of the Brussels machine.
Lack of a common legal system, the absence of a capital markets union and a still woefully inadequate single market in services, make meaningful progress all but impossible.
But it’s worse than that. Despite the evidence of his eyes, more Europe, not less, is Draghi’s solution. His report is the very definition of doing the same thing but delusionally expecting different outcomes.
Like Reeves, Draghi vests his hopes for a more dynamic economy in a great wave of modernising investment spending, both public and private.
“To digitalise and decarbonise the economy and increase our defence capacity, the investment share in Europe will have to rise by around 5 percentage points of GDP to levels last seen in the 1960s and 70s”, Draghi says. Like Prometheus Unbound, a mass of entrepreneurial endeavour would follow naturally in its wake, Draghi seems to think.
The chances of this happening in economies that international capital already regards as the past rather than the future are almost zero.
Again, Draghi has it the wrong way around. An entrepreneurially driven economy is galvanised not by spending hundreds of billions of taxpayer euros pursuing political flights of fancy, but by reducing government interference and wealth sequestration to a bare minimum.
Europe is in a terrible hole, and further relative decline against the US and China looks inevitable. Draghi sees this clearly, but he has no solutions for a continent committed to improvement through welfare rather than work and wealth creation.
Yet it is the European path that Reeves seems determined to follow.
This article is an extract from The Telegraph’s Economic Intelligence newsletter. Sign up here to get exclusive insight from two of the UK’s leading economic commentators – Ambrose Evans-Pritchard and Jeremy Warner – delivered direct to your inbox every Tuesday
Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
