The UK, like Germany and France, has some great brands which it can sell worldwide. It needs more of them, with more marketing success, to drive growth and eliminate the balance of payments deficit.

People tend to think of the traditional manufactured products. Rolls Royce engines represent a successful brand, based on pioneering technology and reminding people that the UK did so much of the early work on the jet engine. Land Rover is currently in a sweet spot, with ballooning sales of its cars across the catalogue, from the basic rough terrain Land Rover to the luxurious large Range Rovers.

The UK now exports lot of cars. They are mainly made by foreign companies who bring their capital here because they like the workforce, access to the UK market, and the UK engineering and design traditions. They often design here. In the case of BMW they have produced an updated and enlarged version of the iconic 1960s Mini. Bentley and Rolls Royce cars are also UK based with continental inputs, drawing on great UK engineering traditions and brands.

Less well known are the many pharmaceutical products which UK scientists have brought to fruition. UK defence contractors have a good export record.

The UK’s greatest success lies in its export of services. The UK has a strong balance of payments surplus in services, driven by substantial earnings from banking, insurance, investment management, legal services, and management consultancy. These are the areas the UK loves to hate, with frequent attacks on those engaged in such work. Some still believe these earnings are not “real”, or cannot create wealth. Some object to the fees, charges and incomes they generate.

It is one of paradoxes of the modern world. Germany earns a good living by exporting cars. She does not get herself into a moral knot by arguing that cars are anti greeen, damaging the planet and should be stopped. Nor does she worry that most of the cars she sells can only be bought by rich people because they are expensive. The UK earns a good living by exporting services, only to spend her time condemning some of the leading companies and people involved.

Over the bank holiday week-end I took a couple of days off and went to France.
France has always to me been a paradox. Some of its most glorious years were under absolute Kings. The best architecture and culture of the past is Catholic and autocratic. The language and behaviour of more recent times is revolutionary, but a revolution which led at the turn of the nineteenth century to a tyranny and an unsuccessful attempt to dominate Europe by force of arms, rather than to a democracy on American lines. They nurtured Napoleon, where the US revolution created the Declaration of Independence, and a succession of great early elected Presidents. As a result there is always a kind of schizophrenia at the heart of French cities and in their approach to their varied and erratic past. There is no single story with the power of the UK’s gradual and occasionally turbulent road to universal suffrage, democratic rights and doughty independence (prior to 1972). There is no matching moral strength by the French revolution to compare to the American.

I was surprised at how much was on show of a more recent sad chapter in French history. The country which until Mr Hollande has done so much to cosy up to Germany and seek a joint control of the EU with them is still very conscious in Reims where I stayed of the two dreadful wars of the last century. Reims has a main road studded with posts to commemorate the progress of the advancing armies of liberation in 1945. The room where the German surrender was signed is understandably kept as a time capsule. The Resistance has their own museum. The blank plain glass of many of the upper nave windows of the cathedral is a reminder of the dangerous shelling of the First World War. It is not possible to be in Reims and to forget. The champagne makers tell visitors of how they blocked up parts of their fine cellars to prevent the German army pillaging all their best stock.

On the continent I understand the deep wish not to experience another western European war. This is a sentiment many of us share, though without that same immediate horror that comes from a past occupation still evident in the popular memory. It is still difficult to grasp why they think their new German friends might one day have any further warlike plans, or why being in the same currency as them helps in some way. The great news after 1945 is Germany did change profoundly for the better. With or without EU integration, Germany is not going to invade France again.

The other pleasant surprise was to see how friendly and understanding the French restauranteurs and shopkeepers are to their English guests, readily supplying any lack in British school french with their own well meant heavily accented English. In Reims they value the trade with the Brits, and have that special link thanks to the heroic efforts of our parents and grandparents in 1939-45.

The danger now for France is the damage the Euro project is doing to the economies of its members. Far from being a unifying project, bringing prosperity and harmony, it is becoming the opposite. It is fuelling disputes about to proceed from here. It is producing very different answers to its common troubles, with two Euros in circulation so far, the Cyprus Euro and the normal Euro, and worries over who else might face the Cyprus or the Greek treatment.

I am an optimist about Germany. I do not think the new Germany that arose from the ashes of 1945 has military ambitions. I do not think the countries of Europe need fear armed invasion. It is not just NATO and the overarching power of the USA that keeps the peace in western Europe. It is the fact that Germany is one of the many nations that is both democratic and peace loving. Germany has nothing to gain from war, nor do any of the other western states.

Nor is modern France an heir to the tradition of the Grand armee and Napoleon. The French may still be proud of their time as Europe’s most powerful and dangerous nation, but they have no wish nor intention to recreate those days. Their present armed forces are for expeditionary work for the UN and NATO, not a European land force for conquest.

So when people tell me we must hang tight to the EU to prevent future wars, I tell them they have misread the current situation. It is not the EU that gives us our current peace, but the change of approach by Europe’s most powerful and once most dangerous nations. The UK dropped her claims to France more than four hundred years ago.

Whenever I have negotiated in the EU for the UK, or more recently been at meetings seeking to hammer out agreements and understandings with MPs, Ministers and others from other European countries, I have been struck by how so many are secretly afraid of Germany, or reluctant to stand up to her. The UK should not be afraid of Germany, though there are times when the UK establishment seems a little cowed by Germany’s relative economic power. The UK, after all, will overtake Germany as the largest European economy in due course, if present population trends continue. Being Germany’s largest trading partner where they sell us so much more than we sell them should put us in the driving seat, as we are the customer more than the supplier.

The EU will be a better place if more negotiators relax about Germany and just regard her as one country amongst many. I am on Germany’s side when they say they should not be paying more of the EU bills. The quid pro quo for that, is Germany should not have a disproportionate say in how the EU evolves. It is high time the UK stood up for its view of what it wants – which is a relationship based on trade, not one shackled to the troubled currency and political union.

It was always agreed in the EU that welfare systems should be under national control.Even Labour, when giving away 138 vetoes over important policy areas, kept a red line around welfare. Decisions about how much to pay, and to whom, were to be made by national Parliaments and governments. The UK signed up to the free movement of workers, not to the free movement of benefit seekers.

I have been urging the UK government for some time to head off this threat. One way would be to make all benefits in the UK contribution based. If you either had to enjoy an education here, or have worked for five years paying UK taxes, before you qualified for any benefit, the EU would find it more difficult to intervene.

As the governemnt has chosen not to go that route, but to assert that the EU has no right to demand we pay benefits to more people than currently qualify, it might help to buttress its case.

The EU is foolish to choose to challenge the Uk over such a sensitive matter at this juncture, when many UK citizens are keen on a new relationship with the EU or want to leave the EU tomorrow without even negotiating a new deal.This bureaucratic interference sums up what so many of us dislike about the EU. They say they need to control our benefits systems to have a fair single market. Curious that. China and the USA trade with us quite happily, but we do not try to control their benefit systems, nor do they instruct us on how big our welfare bill should be.

I suggest the government might like to underwrite its strong view that welfare is none of the EU’s business by a simple short Bill. This Bill could be an amendment to the 1972 European Communities Act, stating categorically that welfare is a UK issue and instructing the UK courts that the UK government will neither appear in the ECJ nor accept its judgement on welfare matters. Welfare payments should be decided here.

The revised first quarter figures for the USA show GDP growing by 2.4% whilst public spending was reduced by 4.9%. It seems the US has an economic policy which works better than the EU’s.

I thought the UK’s interventions in the Middle East were to uphold democracy and the rule of law. Aren’t we keen that Libya, Afghanistan and the rest enjoy the freedoms and the rights that we take for granted in a western democracy?

I want our troops in Afghanistan to stop patrolling and remain within the base, to offer any remaining training and assistance, coupled with early withdrawal of as many as possible. By now Afghans should be able to police their own country, and our troops should be taken out of harm’s way.

One of the crucial rights that every freeborn English person enjoys is the right to a fair trial if accused, or the right to be at liberty if not accused. Habeas corpus was long established in the UK, and is a fundamental pillar of US democratic values as well.

Surely, if we are to assist Middle Eastern countries establish the rule of law and democratic rights, we should advise the host country to treat people under that system. If we hold prisoners we think have committed serious crimes, they should be handed over to the national authorities and charged. If there is no proof they should be let go, with a full report to the local authorities so they can keep an eye on anyone still under suspicion where there is insufficient evidence to prosecute.If their law allows the released people could be kept under surveillance.

The government should not use terrorist incidents to support the idea of more surveillance and restriction on freedom of expression. The authorities have powers to eavesdrop and snoop on those under suspicion, where they have obtained a warrant to do so. There should be no more general powers.

Retail sales in the Uk fell by 1.3% in April. Yesterday figures imply a further deterioration in May. Retailers reported a worse balance between those experiencing rising sales and those with falling turnover.

The squeeze on incomes has curbed some of our spending in the shops. We also now as a nation buy more on the web and less in the stores. Love of hi tec gadgets on broadband and a love of holidays takes money away from High Street clothes shops and from homewares and other domestic goods. We are changing our spending priorities in ways which hit traditional shops, and changing the way we buy which diverts from the High Street.

Speciality shopping now for many is a less frequent outing, probably including a coffee or a some fast food as part of the half day out. The daily or weekly grocery shop may still involve driving to the local supermarket, or placing an order of the web. It does not usually mean finding a High Street with a butcher, a baker and a greengrocer.

Trying to learn more about the state of the UK economy from the retail figures requires adjustment for changing fashions, tastes and technologies. It seems that the Uk economy is growing again, but the shops on many High Streets are having to compete with other ways of spending it and other uses for our money.

It was interesting to see the EU Commission at last recognise that the continuing deep recession in parts of Euroland is unacceptable. What a pity they do not have policies to tackle the mass unemployment of young people they have helped create.

The first response to the Japanese money burst was positive. The markets liked it, drove down the yen and celebrated by pushing up Japanese share prices. The commentators liked it, because it was bold and exciting. The real economy responded, with more growth. Some prematurely celebrated a break through for the new policy.

Then came the big sell off last week. Share prices plunged 7.6% in a day. Markets recoiled in horror, as bond prices fell and government bond interest rates rose, despite the very large buying programme the governemnt had announced. The commentators started complaining that the government was contradictory. It said it intended to keep bond interest rates very low by massive buying of the bonds, but it also said it would trigger faster inflation which they thought meant higher interest rates.

The government hopes for higher inflation before it loses control of very low bond yields. It can keep on buying trying to keep the yields down. As so much of this depends on gaining or retaining market confidence, the Japanese authorities have to work on improving their forecasts and making their script easier on the ears of the investors.

Meanwhile what really matters is how quickly they develop the third arrow of their economic archery – radical supply side reform. Only if they introduce more competition to Japanese commercial life, challenge restrictive practises and cartels, is the extra money released likely to do more good and trigger faster growth backed by rising productivity. In the end you need more and better products which people want to buy if you are to achieve sustainable growth. No amount of monetary tinkering can replace the need for innovation, higher productivity and good design. Competitve markets usuallly help secure those.

The Chancellor yesterday announced that seven departments have now agreed reductions in their spending levels for 2015-16.

Much of this spending will take place after the next General Election, widely expected to be in May 2015. It is normal for the outgoing government to leave in place a spending and tax plan or budget for the incoming government, even where as in 2010 it was highly likely they would lose. In 2015 the current government is not standing again as a Coalition government, so the new incoming government is free to change things if they wish.

Clearly there are good management reasons why this needs to be done. The country needs to have a budget for the first three months of 2015-16, the period of the old government, of the election and first weeks of the new government. As this remains an area of largely national competence for the UK,the new government in May 2015 is at liberty to change both the tax and the spending plans on taking up office.

Once the government has set its 2015-16 budget it is likely Conservative Ministers will say they would keep to that budget should they form a majority government. The pressure will then be on the two Eds for Labour to say what changes if any they would want to make to such a budget, as they will know the exact numbers broken down by department. Once the budget is agreed, there will be a standard to judge other budgets by, a centre for the debate over how much to spend and how much to tax.

It looks as if the government plans to keep the ring fence protection of the NHS in place. I think this is a sensible call, given the huge pressures on the NHS budget. Taking the NHS and the pension pledges together, that places more downward pressure on the remaining budgets, as over one third of public spending is protected. The protection afforded to Overseas Aid will become more contentious, local authority budgets will be under more pressure, and the government will need to consider for how much longer public sector pay can rise faster than private sector pay.