It's a recovery, Jim, but not as we know it

We all know what happens when a country runs a catastrophic current account deficit. The currency comes under intense pressure, the central bank desperately intervenes to prop it up, only to be routed by the market and forced into a humiliating devaluation. It is the history of British economic policy of the 1960s and 70s. But as history repeats itself Britain once again has by far the worst current account of any major trading nation the story has turned to farce. Instead a fight to prevent sterling collapsing, the battle is to stop it climbing.

It is worth recording just how dismal Britain's trading position really is. Between March and May, we exported £7.7bn worth of goods to Germany, but at the same time we imported £14.2bn, with the gap growing once again. We flogged £4.4bn worth of stuff to France and bought £6bn worth back. The French economy, the supposed sick man of Europe, managed to increase exports to us, while our exports to them dropped by a tenth.