Archive for the ‘France’ Category

Twenty seven per cent! For those under 25, the unemployment rate is 57 per cent. These are staggering numbers. Spain’s government debt is out of control, not because it is wasting money, but because so few of its workforce have jobs.

Yesterday saw data on Spanish and French labour markets. The data on France was awful when measured by any normal yard stick, but in comparison to Spain it was positively brimming with optimism.

French unemployment is, in fact, now 3.2 million, compared with 6.2 million in Spain. In the UK unemployment is 7.9 per cent, or 2.56 million.

We keep hearing about how the Eurozone is slowly recovering, not that this is showing up in the data on GDP; that we just need to give the region time; that green shoots are everywhere. But look at the job stats.

Don’t compare the adjustment occurring in Spain with the UK experience under Mrs Thatcher. The Spanish experience is worse by a substantial order of magnitude.

There are structural problems with the Spanish economy – that is for sure. But what Spain, along with Greece, Portugal and the rest of the motley crew needs is massive investment.

By all means impose austerity on sectors of the respective economies. But other sectors must be recipients of a latter day Marshall Plan, or the consequences for democracy and peace in Europe will be dire.

The IMF and the French government disagree. The IMF has downgraded its previously estimated forecast for the French economy to grow by 0.3 per cent in 2013, to a 0.1 per cent contraction. The French government predicts a growth rate of 0.1 per cent in 2013. The difference between the two sets of projections is not great, but psychologically speaking there is a huge gulf between modest growth and a slight contraction. Alas, the IMF may be understating the reality.

It really boils down to culture. There is the Anglo Saxon way and the French way. In the UK, the favourite pastime of many Brits is called “let’s knock our country.” Let’s find reasons why we are… how can one put it nicely?… crap. So that’s our cars, our factories, our, well… our everything. The French have one thing in common with the Brits, and that is that they too find it easy to think of things wrong with Britain. Rarely, however, do you hear the French talking down France.

This is not meant to be a criticism of either set of cultural attitudes. It is just the way it is.

When it comes to economics, however, it is not like that. Anglo Saxon economists look at the restrictive labour laws in France, the wall of protectionism it erects – it is a kind of latter-day Maginot line of business – at its inefficient and highly protected auto makers, at French taxes, at the low retirement age at a time of an ageing population, and scratch their heads. It is a miracle, say these economists, that France didn’t fall into recession years ago, and then stay there.

French economists, on the other hand, look at the UK, at its nonsensically low minimum wage at a time when wages are falling, at the lack of maximum working hours and the high level of our retirement age at a time when unemployment is high, at the way in which Brits sit back and allow foreign companies to buy out our famous brands and businesses, at our lack of manufacturing, and scratch their heads. They say the only reason why the UK didn’t fall into recession years ago, and stay there, was because of that hugely damaging and destructive place we call the City of London.

Last year the US Conference Board put out forecasts for the 58 most important countries across the global economy for the next ten years and predicted that the French economy would be the worst performer. It forecast an average growth rate of 0.2 per cent for France over the next five years, and 0.3 per cent over the next ten years. If these forecasts are right, that may support the Anglo Saxon view. On the other hand, its forecasts for the UK weren’t much better.

Last year the ‘Economist’ ran a controversial article claiming that France was the time-bomb at the heart of Europe.

It went down in France about as well as the idea of New Zealand wine.

But looking forward, well actually, we might as look backward. The difference in French and Anglo Saxon ideology goes back centuries. And neither side has yet won the argument.

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