Matthew Lynn

A new interior minister. A new agriculture and culture minister. There wasn’t, despite some speculation, a new prime minister, but there will be lots of new fresh faces around the cabinet table. France’s dynamic young president Emmanuel Macron has finally re-launched his government after a wave of resignations in a bid to kick-start phase two of his term of office, restore some order to an increasingly chaotic administration, and, probably not co-incidentally, to rescue his tumbling poll ratings. The trouble is, his real problem is not the team around him. Nor is it his style, or resistance to his reforms, although both might cause controversy. In fact, it is becoming painfully obvious that France’s real problem is the euro.

Free university for students. Free shares in your company. And now plenty of free time, with one day less in the office or the factory every week. The shadow chancellor John McDonnell hasn’t quite gotten around to promising free Krispy Kreme doughnuts in every shopping mall, abolishing fees for Sky Sports, or handing out Uber vouchers for everyone. But heck, there are still at least three years to go until the next election. It may only be a matter of time. McDonnell’s latest wheeze for buying more votes is a half-promise to reduce the.standard working week from five days to four. Apparently, with the rise of artificial intelligence, and the onwards march of robotics, we won’t need to spend so much time at work.

Schools will finally get a bit more money. Nurses and policemen may at last get a proper pay rise. Local councils can stop scratching around to see if there are any services left they can still cut and the Chancellor may even be able to lighten up budget day with a minor tax cut or two. As Theresa May used her speech at the Conservative party conference to announce the ‘end of austerity’, departments all over Whitehall were no doubt busy thinking of new ways they could spend the money that is about to be released. The politics of that decision might well be fine. A decade after the financial crash, and the huge deficits that came with it, the process of relentlessly cutting public spending has become exhausting. The economics are okay as well.

A couple of years ago, I was driving from Athens airport to the Peloponnese along the sparkling new highway that connects the two. I had never driven in Greece before, and was slightly nervous of how the Greeks might be on the road. As it turned out, there was nothing to worry about. Not only are they courteous behind the wheel, and far more so than most of their Mediterranean neighbours, but more importantly the road was completely empty. The reason? There is a toll. It is only about six euros to drive the length of the country, but hardly anyone, even the truckers, can afford that. They take the old roads instead. There are lots of different ways of illustrating the scale of the economic catastrophe that has unfolded in Greece over the last decade.

The Gherkin would be re-zoned as social housing. The Walkie Talkie would be turned into a massive TK Maxx with a couple of fried chicken shacks at ground level. Canary Wharf would be paved over and turned into a giant trampoline park, while houses in the better parts of Chelsea and Notting Hill would fall in price so much that just about anyone could buy them again. When the UK voted to leave the EU, it was confidently predicted that the City of London would be wiped out, with the loss of tens of thousands of jobs and billions in tax revenues. And what happened? According a report by the City of London Corporation, due to be released in September, the number of jobs lost might be as low as 5,000, and will probably be no higher than 10,000. Five thousand.

Both the Brexit and and Foreign Secretaries have resigned. The Chequers agreement, if that is the right word, looks about as enduring as the latest relationship on Love Island. The Prime Minister is staggering so uncertainly from one option to another that even Donald Trump’s advice over the weekend seemed almost sane. The UK’s strategy for leaving the European Union, insofar as we ever really had one, is in tatters. Big Business will no doubt respond to that with calls for a softer and softer Brexit simply in the hope of getting something in place before March next year. We will hear a lot about cliff edges, and the dangers of a collapse in the economy.

Airbus will abandon the UK. The car factories will all be closed down. Trade will grind to a halt, we will run out of food and medicines, and Harry Kane will be sold to Real Madrid and made captain of Spain instead of England. Okay, I made that last one up, but all the others are among the dire warnings that big business have issued over Brexit in the last few weeks. Project Fear III, or IV, or possibly XXVII by now, keeps coming back. Right now, it seems to have as many sequels as Jurassic World, and with plot-lines that are about as original. That, however, is a mistake, and potentially a serious one. Sure, industry has plenty of legitimate concerns about our departure from the EU. But it should be trying to shape Brexit, not just re-run a failed referendum strategy.

Whole industries will be devastated. There will be thirty mile queues of lorries stretching back from Dover. The price of food will rocket, our farmers will be wiped out, and the IRA will be letting off bombs all over the UK as the Troubles return to Northern Ireland. With every day that passes, the scare stories about leaving the customs union are getting more and more hysterical – and the pressure is growing to stay inside. In fact, most of it is nonsense. The fifth largest economy in the world is perfectly capable of managing its own trade arrangements. But leaving needs a big sell. Why? Because there is a powerful alliance of industrial lobbyists and ultra remainers behind staying inside, and that means the case for getting out may easily be lost.

The Dow drops by eleven hundred points, its largest one-day fall ever. Equities around the world crash in sympathy. The bond markets are rattled, picture editors start looking for their stock photos of traders gazing despairingly at their Bloomberg terminals, and anxious-looking analysts turn up on TV warning that a recession might be just around the corner. True, more than one thousand points off the Dow, and two hundred off the FTSE in the space of a few hours might look scary. To anyone trying to trade it minute by minute it can certainly be nerve-jangling. And yet, in truth there is far less to it than first appears. Over the next couple of years we should probably get used to these kind of violent swings in sentiment. Why?

The headlines just about write themselves. A hard-left Labour shadow chancellor flies off to Davos to preach revolution and socialism to the world's most elite gathering of business leaders. Surely that is a sign that Jeremy’s Corbyn's Labour party is being taken seriously by the big wheels of global business. And a sign as well that the firebrands are readying themselves to reach an accommodation with the bankers and speculators of big capital once they are in power – or at the very least picking up a few business cards so they know who to call at Goldman Sachs when they need an emergency bail-out.

A top rate of 50 percent? A wider range of tax bands? Lower allowances? Or some combination of all three? When it unveils its Budget on Thursday, the Scottish National Party is just about certain to use its power to increase income taxes. The only real debate is about who will take the hit. On the day, Nicola Sturgeon will no doubt wheel out the usual lines about the need to ‘invest’ in public services, reverse ‘Tory cuts’, and perhaps add in a sound-bite or two about the damage done by a ‘hard Brexit’. And yet, in fact higher taxes will only damage the Scottish economy, and by extension the whole of the UK. We will all end paying a price for the SNP’s recklessness.