An important aspect of France’s leap back into economic nationalism has not yet attracted sufficient attention. I would expect serious political tensions to emerge inside the eurozone – especially between France and Germany. One should remember that the euro would not exist today if during the 1990s these two countries had not papered over their philosophical differences over the right conduct of monetary and fiscal policy. These old disagreements may be about to flare up again.

Just look at what has been happening in Berlin and Paris. This week, the German cabinet will pass the 2008 budget and present a new medium-term financial plan. News reports suggest it plans to cut the federal government’s 2008 borrowing requirement to about €12.5bn ($17bn) thanks to massive tax windfalls – almost half as much as previously planned. Germany is as serious about deficit reduction as the Clinton administration was in 1993.