France is on the cusp of an economic 'golden age'. The country will overtake Germany in the 2020s, emerging as the driving force of a Gallic-led eurozone and the engine of a revived Franco-German axis.

That is the bold prediction of the German bank Berenberg. It is not as far-fetched as it sounds.

The theme running through the work of Nobel Economist Robert Shiller is that cultural narratives are a powerful catalyst for financial cycles. They stir the animal spirits of a nation. Societies talk themselves into malaise, and talk themselves out again.

As narratives go, the Napoleonic ascent of a 39-year-old counter-populist on the ruins of a shattered party system is as close to a 'positive shock' as you are ever likely to see in the realm of political economy.

This child of the digital age - yet steeped in Nietzsche - is surrounded by a cabinet of youth. His prime minister is barely older. Berlin looks stale, almost fossilized.

The eternal Wolfgang Schauble still growls at the finance ministry with his budget and trades surpluses, captive of the pre-Keynesian 'household fallacy' in economics. Chancellor Angela Merkel is more flexible. It is not her fault that she rose from the East German Communist youth league, yet her Weltanschauung seems other-worldly as she marches towards a fourth term.

Germany's Achilles Heel is a 'hive collapse' and the corrosive psychology of ageing. The demographic dividend is turning overnight into deficit as baby boomers retire. The European Commission's Ageing Report (2015) says the working-age cohort will contract by 200,000 a year for the rest of this decade, and by 400,000 annually in the early 2020s.

The old age dependency ratio will jump from 34pc today, to 39pc in 2020, 52pc in 2030, and 65pc in 2060. By then those deemed 'very elderly' (80 plus) will be 41.5pc of the German people. The population will shrink below 71m.

David Fuller's view

I would not underestimate Macron, as I have said previously, but Robert Shiller’s report needs to be taken with a grain of salt, in my opinion.  I wish France well but let’s see how Macron’s regime is able to function over the remainder of this year. 

Meanwhile, there is a naiveté among liberal, establishment Americans regarding the EU’s prospects, possibly due to wishful thinking, which has not been supported by results with the exception of Germany.

Macron could hardly do worse than his establishment predecessors.  Nevertheless, a key test of his potential will be revealed by the number of entrepreneurial French families that he can attract back from London.  They favoured François Fillon in the recent election.

Meanwhile, Germany remains the EU’s biggest success but also its difficult problem without the federal system which most Europeans continue to resist. 

Here is a PDF of AEP's column.