Europe back on the brink

Now, the bad news. The small boost that prompted Chancellor George Osborne to assert that “we are laying the foundations for the future success of the country” will be wiped out if the Greek government, now totally bereft of decisiveness as protests mount, holds a farcical and time-delaying referendum on the precise terms of crippled country’s financial bailout.

The only thing that can be taken for granted in these tumultuous times is that the uncertainty will persist because of Greece’s apparent willingness to self-destruct and threaten to bring down Europe’s teetering finances – it is inconceivable that voters will back austerity measures, despite a significant chunk of the country’s debts being written off, when it will mean even higher unemployment. Yet, as Europe’s elite plan emergency talks with under-fire Greek Prime Minister George Papandreou, the repercussions extend far beyond Athens. It immediately triggered higher borrowing costs for Italy, another country on the financial brink and whose difficulties dwarf those being encountered in Greece.

However these difficulties do highlight the one element that was missing from last week’s rescue package – and that is the need for sustained growth throughout Britain and Europe’s inter-locking economies.

While Mr Osborne drew some comfort from yesterday’s economic data in this country as he visited the site of the Thameslink project in London, it masked the fact that manufacturing output is significantly down and his critics contend that this week’s Regional Growth Fund announcement simply will not go far enough to assist recession-hit regions like Yorkshire.

As such, it is imperative that growth underpins the EU summit and crisis talks later this week.