It feels as if France will eventually emerge as the euro’s biggest threat. With France failing to grow at all in either the first or second quarter and Germany suffering a nasty 0.2pc contraction, Britain is booming by comparison

It is hard to exaggerate the trouble that Francois Hollande, France’s president, now finds himself in. It is not just that his popularity has collapsed and that his misguided stewardship of the French economy has crippled his country, helping to deliver a second consecutive quarter of zero growth.

The real problem is that France is slowly but surely emerging as the eurozone’s weakest link, together of course with Italy, and, if that were not bad enough, there is no meaningful prospect of either of the two countries extricating themselves from their appalling predicament.

There was a time when economists thought that Greece, Spain or even Portugal would trigger the real, final eurozone crisis that would threaten the single currency and potentially lead to the unravelling of the entire bloc. Increasingly, it feels as if it will be France that will eventually emerge as the euro’s biggest threat, though of course the whole rotten structure is likely to stumble on for years to come.

What is certain is that the eurozone crisis has entered a second phase. The symptoms are tamer this time around but no less lethal. Zero or negative growth, combined with very low or negative inflation, means that debt burdens will start to shoot up as a share of GDP and that bank balance sheets will begin to take losses again. The European Central Bank is failing to perform the impossible task that it has been set: it is meant to set the right monetary policy for an extraordinarily heterogeneous set of economies.

Compare and contrast: Britain is now expected to grow by 3.4pc this year and by 3pc next year, according to the Bank of England; our economy expanded by 0.8pc in the second quarter. Germany suffered a nasty 0.2pc contraction in economic output in the second quarter, even before the full impact of the US sanctions on Russia began to take effect.

France failed to grow at all in either the first or second quarter; the French authorities have been forced to slash their growth predictions from 1pc to 0.5pc for this year. Even that looks optimistic as it would imply that France would expand by 0.3-0.4pc over the next two quarters. Next year’s prediction has been downgraded to 1pc. As for Italy, the economy shrank by 0.2pc in the second quarter, following a 0.1pc drop in the previous three months, which means that it is technically in a double-dip recession.

In truth, as Stephen Lewis of ADM, one of the City’s economic doyens points out, Italy never really emerged from the recession that began in 2011. Shrinking quarterly GDP numbers were interrupted by just one quarter of growth – in the final quarter of last year, when Italy expanded by a trivial 0.1pc. For that matter, France has not enjoyed two successive quarters of positive GDP growth since the start of 2012. Lewis argues persuasively that, on a loose definition, the French economy is really in its third year of recession.

The absence of growth has derailed Mr Hollande’s fiscal plans. He hoped to cut the budget deficit to 3.8pc this year; he has now been forced to admit that the shortfall will be at least 4pc of GDP.

There are several reasons for the renewed crisis; the first two originate in Brussels and Frankfurt but the remainder are primarily due to growth-destroying tax and regulatory policies by national governments.

First, the European Central Bank: its policy is too tight for many countries. Monetary policy is too loose in the UK and US, where rates need to rise; not so in the eurozone.

Second, a tightening in bank lending: the cleansing of the eurozone financial industry’s balance sheets is proceeding apace, with the next generation of stress tests looming but, while the policy is desirable in the long-run, it is undoubtedly leading to a tightening of credit in the short-run, and that is hurting some companies.

Last but not least, the eurozone’s most troubled economies have all been pursuing policies that seem almost designed to discourage companies from investing and hiring. Mr Hollande’s tax, spend and regulatory policies have been the worst of any French administration since the early 1980s, when Francois Mitterrand’s socialist-communist coalition almost bankrupted the country. The wealth tax has gone up, chasing away ever-greater numbers of successful French entrepreneurs, executives and investors, with many moving to London. Even in the diluted way in which it was eventually implemented, Mr Hollande’s punitive 75pc top rate of income tax was an act of economic suicide. It reminded successful folk that they were neither liked nor appreciated. As to global investors, they were left in no doubt that France is now virulently anti-capitalist and anti-business. The result: a negative supply-side shock, with companies refusing to hire and spend, and unemployment surging ever higher, especially among young people.

Mr Hollande eventually realised the errors of his ways and desperately sought to mend bridges with the private sector but he went about it in a typically corporatist way, unveiling a deal whereby “business” would create a set number of jobs in return for a tax cut. Needless to say, that is not the way economies work: private firms only ever hire people if they think it will be profitable for them to do so and if they are confident that they can safely reverse the decision if anything goes wrong. They don’t respond to centrally planned job-creation targets.

My criticism of the eurozone and France is not intended to be jingoistic. The UK has made lots of mistakes, too; we took far too long to come out of recession, partly because of silly policies such as the 2010 hike in VAT. Our budget deficit remains horrendously high and is significantly larger than that of the eurozone, partly because the Chancellor didn’t cut back on public spending quickly enough (our saving grace is that the UK Government borrows in sterling, a currency it controls). We too could do with the sort of supply-side medicine that France, Italy and the rest of the eurozone so desperately need.

But it remains the case that, for all the criticism of the Coalition from left-wing economists and the Labour party, the UK is now rebounding exceptionally quickly and creating far more jobs than anybody had predicted. There is light at the end of the tunnel.

The eurozone’s recovery, by contrast, was a false dawn and its fate now looks singularly hopeless. This is a major moment for the global economy and a tragedy for tens of millions of Europeans.