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The sudden switch in the political and economic fortunes of Britain and France are astonishing.

Only a year ago, France was the sick old European power, beaten down by unemployment and low growth. More important, it seemed to have no way out, given former president François Hollande's unwillingness to undertake economic reforms. Britain seemed the dynamic alternative: adventurous, entrepreneurial and ready to risk all in a free-trading venture outside of the EU, which was often portrayed as a sclerotic, stifling bureaucracy that was incapable of reform.

Everything seems to have changed. Theresa May has taken on the guise of Mr. Hollande, fearful, incapable and stumbling. Beset by enemies on the left and right, with a minority government, the British Prime Minister appears to be hanging by a thread. She has been forced to tear up her election manifesto that was exposed as backward-looking and uninspiring and she is being forced to seek an electoral compact with the most reactionary political party in Britain.

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Sometimes, extraneous events set the tone – the succession of murderous attacks by extremists have not harmed the Prime Minister. It's worth remembering that Mr. Hollande gained public approval by appearing both firm and calm following the attacks in Paris. Instead, Ms. May's and Britain's political and economic weakness have been exposed by an accidental fire in a poorly renovated social-housing block that became a catastrophe in one of the wealthiest neighbourhoods on the planet. The fire was emblematic of government cynicism and incompetence. Britain's apparent prosperity was shown to be paper-thin.

Even more interesting, Ms. May's Brexit strategy, which was at the heart of her election manifesto, has been shown to be bogus. Her promise to play hard ball with Brussels by threatening to walk out if a good deal was not on offer has been thrown back in her face. France and Germany have turned the tables. Instead of the U.K. playing rough, the European Commission has decided to push Britain to the edge, demanding huge concessions on money and the rights of EU citizens.

The most astonishing development, however, has been the strengthened alliance between Berlin and Paris. Few imagined that Emmanuel Macron's strategic plan of reforming the euro zone with a common budget and finance minister was anything more than the blue-sky thinking of a fringe political candidate. This week, German Chancellor Angela Merkel, the political leader of the country that posed the biggest obstacle to Mr. Macron's plan, suggested that she was open to the idea of a common budget and finance chief.

Of course, we are a long way from agreement, but only a year ago such notions would be dismissed as fancy. Now, they are euro zone economic policy in transition. Meanwhile, Ms. May finds herself at the head of a minority government that is steering Britain into an economic storm of rising inflation, falling GDP growth and a potential trade and investment implosion. In such a crisis, you might think the PM would seek shelter in a familiar haven where growth and employment is rising and the political establishment is preparing to embark on positive reform. Small wonder that Chancellor of the Exchequer Philip Hammond is contradicting his Prime Minister at every opportunity, promising the weakest and softest exit from the EU and a transition period of unspecified duration.

Yet, Britain is committed to leaving the EU and by leaving it will give up not just economic advantage but all the soft political power it derived from the postwar political settlement in which Britain seemed to be central to the defence of liberal values. It can only watch as NATO's security role in Europe is gradually replaced by a common EU security machine led by France and Germany. Instead of being part of one of the greatest economic blocs on Earth, it will become a sideshow to a strengthened EU. It's not so much that France and Germany have won the game but that Britain has chosen to run away.

Carl Mortished is a Canadian financial journalist based in London.

British Prime Minister Theresa May has sent a letter to the President of the EU Council which sets in motion what could be a two-year long journey when Brexit could be considered final
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