John Redwood

For 21 weeks now the Gilets Jaunes have taken to the streets of French cities to protest. It began as a demonstration against high and rising fuel taxes. These tax increases hit families getting children to school and the adults to work, and cut the earnings of the self-employed working from their vans and cars. The higher fuel taxes and slower speed limits were part of President Macron’s policy to curb carbon dioxide emissions. For his trouble the protesters put out of action a majority of the speed cameras, showing him what they thought of his wish to control their lives. The street actions have been stoked by some angry students and by committed protesters of the extreme left and right, but many of those protesting are doing so for the first time.

This week NATO meets. Mr Trump will want more progress with increasing spending by European allies. Many of them are still well below the 2% of GDP minimum spend they are asked to achieve to contribute to collective security. NATO will argue that members together have been increasing their spending in real terms since 2015, and have in place plans to raise it further. Markets will watch to see how far Mr Trump pushes his case, and whether he follows up on a suggestion that if a country does not meet the target it cannot rely on the NATO guarantee of protection and support. This would be seen in Europe as an unfriendly attack on the European allies and seen by many in the USA as a logical way to ensure fairer burden sharing of the costs of defence.

Some say that Mr Trump’s behaviour at the G7 meeting last week-end showed contempt for the international rules-based system that many people in financial markets and the media admire. It is true that Mr Trump complained Russia was not present, inserted special prose about his energy and tariff policies and decided he did not agree with the communique after it had been issued. He showed he thought going off to his bilateral meeting with the North Korean dictator was more important than the very general conclusions of the G7 summit. The G7 official statement ranged widely over world economies and affairs but lacks clout if the USA does not agree with it.

I find it difficult to believe some in the media are taking these latest economic forecasts for 15 years outside the EU seriously. They have all the hallmarks of the approach that the Treasury used to get the short-term forecast for the aftermath of a Brexit vote so hopelessly wrong. The first thing to stress is the forecasts which state the UK as a whole will lose 2 percent of GDP if we stay in the single market, 5 percent if we leave with a trade deal, and 8 percent if we leave without a trade deal are not saying we will be between 2 to 8 percent worse off in 15 years time. This is an estimate of slower growth, not an absolute decline. If we carry on growing on average at 2 percent per annum over the 15 years, we will be 34.