French economy

Revolution not (quite) necessary

  • The Guardian,
  • Jump to comments ()
A German word best describes how the British feel about the French economy: schadenfreude. In the run-up to this month's presidential election, economists have sermonised about how the French need to be more Anglo-Saxon. The country has a brain drain, the detractors cry: just look at the 300,000 French who live in the UK. Never mind that there are over 260,000 Brits resident in France - and not all of them are sun-seeking retirees. France's dirigisme has squeezed out the private sector, runs the allegation. Public spending is larger across the Channel, yet the French private sector punches its weight too. The British may have the HSBC bank and WPP media group, but the French have BNP Paribas and Publicis. In the broad Dow Jones index of European stocks, UK companies make up a third of the market, while their French counterparts constitute 15%. Not bad for a country that never fell in love with privatisation. Magazines like the Spectator still accuse the French of having an economy that is "officially the second most socialist of the wealthy nations after Sweden". But there is nothing wrong with high state spending, if it is popular and can be paid for. France's trouble is that it has the former, but not the latter.

What detractors usually prescribe for France is another Thatcher. But with none of the leading candidates being sufficiently rightwing, they plump instead for the nearest equivalent, Nicolas Sarkozy. Sarko has capitalised on such talk by promising la rupture tranquille: a break with the French economic model. All the talk of déclinisme ignores notable French successes. Investment in skills and equipment mean that French workers are far more productive than their British counterparts, getting nearly a third more done per hour of work.

Yet the welfare state too is much more generous. That generosity lies behind the two major problems of the French economy: unemployment and government debt. While the French worker's rights are well protected, getting into a job is in itself hard work. Over 8% of the French labour force is out of work. Youth unemployment is particularly high and, along with race, helped contribute to the riots across France a couple of years ago.

This campaign has been fought in the shadow of the Pébereau report from the end of 2005, which showed that the state's general debt, including pension liabilities, was almost as large as the annual national income. All the main candidates agree this needs to be tackled. But if the economy needs reform, it does not require rebuilding. The challenge for the next French president will be fixing those bits of the economy that do not work, while not junking those parts that do.

Latest posts

Today's best video

Today in pictures