The equivalent price in the UK is €256 MWh, so the UK is sending 2.06 gigawatts to France via IFA 1&2 interconnections at the moment, earning a huge arbitrage spread and improving our monthly trade deficit, which needs a lot of improvement .
Well, yes, French inflation is lower, but to suggest – as the Brussels Group is apt to do – that France has got this energy crisis right while the UK has got it horribly wrong, is a stretch.
The latest PMI data for manufacturing and services refutes a second false narrative, that the UK economy is in worse economic shape than the eurozone this year and is in a particularly severe recession.
The S&P Global composite index for the euro zone fell below the boom-bust line in July and signals a full-blown recession, even though fiscal policy was much looser in France, Italy and Spain.
The UK is still above water at 52.1 in manufacturing and 52.6 in services. Performance is soggy but not as bad as many predicted or feared. It caps several months of relative outperformance.
In my view, the UK will slip into recession later this year as the global economy turns upside down. The recession could be severe if the Treasury continues to push a contractionary, pro-cyclical fiscal consolidation policy in the teeth of the recession.
However, the eurozone is also in trouble. The underlying contraction in the real money supply is flashing a red alert and the end of the European Central Bank’s QE bond purchases has removed the Club Med debt shield. The long-standing pathologies of a half-baked monetary union are coming to the fore again.
Is there a lender of last resort for troubled eurozone sovereigns under the legal constraints of the Maastricht Treaty, or is there not? We do not know.
The ECB has tried to prevent this confusion with a new “anti-fragmentation” tool, but it is so paralyzed by political differences on the board and so afraid of the German constitutional court that no one is sure if it can be used. systemic crisis. So a systemic crisis is what the markets will cause.
Britain is indeed in a horrible mess, but for reasons that mostly have little to do with Brexit. The eurozone is in an equally appalling mess, and arguably suffering from an even worse confluence of headaches for reasons that have a lot to do with the building of EMU.
In particular, Germany is reeling in an economic and political crisis of Zeitwende proportions by outsourcing everything: its energy supply to Putin’s Russia, aggregate demand to Xi Jinping’s China, its military defense to America and its monetary policy to the ECB. funny words from Deutsche Bank board member Paul Achleitner.
It is not Schadenfreude to point this out. The raw truth is a necessary corrective to those in the internal political debate between Brits and UK Brits who compulsively exaggerate the EU’s relative economic performance without the foggiest idea of what is actually happening across the Channel.
