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Cutting across the Channel
While it may be a little dangerous to speak so soon, a remarkable gulf is growing between the responses of the British and the French public to their governments’ attempts to balance the books. In Britain, there has been a calm reaction to the cuts so far announced, with a clear majority supporting the government’s bungled announcement that it is to restrict child benefit payments. In France, the only austerity measure to speak of is raising the minimum retirement age from 60 to 62 — and it has brought protesters to the streets. Three million are on strike, with two thirds of the public supporting them. It is that common French scene: bedlam.
Nicolas Sarkozy was, of course, always expected to confront the trade unions over economic reform. He was billed as a would-be French Thatcher, a free marketeer determined to reverse generations of dead-end protectionism. In the end he has seen all the protests, but none of the reform.The state continues to account for over half the French economy — as it does, now, in Britain.
But while we seek to reverse this, Sarkozy is compounding the problem by setting up a fund to increase governmentowned stakes in large companies. His resolve, of which we heard so much on his election in 2007, seems to be evaporating.
Even Sarkozy’s controversial pension reforms are no more than a token gesture in cutting government spending. He has ruled out tax rises, saying, rightly, that his country already imposes the highest levies in the world. So there must be cuts.While France is notionally committed to halving its deficit within three years, the President has offered no strategy to achieve this. The most likely scenario is that he does have proposals but dare not share them with his citizens, in case they start bringing the guillotine out of the museum.
Sarkozy is up against a public which is itself in denial on an almost Greek scale over the extent of the reforms that are required to keep a competitive economy. Chirac caved in to protesters over pensions in 1995, and the expectation is that Sarkozy —who faces re-election in 18 months — will do likewise. A banner hanging in Paris this week sums up the sense of entitlement felt by too many
Sarkozy is up against a public which is in denial on an almost Greek scale
French to a life of ease. It reads, ‘We don’t want to lose our lives by earning a living.’ The world is left to wonder what it is about the constitutions of the French that makes it perilous to their health to work to 62, when all around them are countries where people work to 65 and beyond.
France’s problem is that, for too long, the economy has been run as a kind of job club for French workers.They are virtually impossible to sack, which makes membership of this club an unattainable dream for those outside it — many of them young Muslims, languishing in the banlieues. It has long been a popular belief among French politicians that jobs are a finite resource that can be shared around more fairly through the application of short working weeks and early retirement. That theory does not sit easily with France’s scandalously high structural unemployment rate, which was around 10 per cent even during the boom years.
Britain and France believe in liberty, but have different definitions of it. Ours involves liberty from government, the idea behind
David Cameron’s dismally expressed ‘big society’ agenda. In France, they still like the big state and squeal at the prospect of being removed from its teat.
Even the introduction of a 35-hour working week caused consternation among civil servants who previously had worked only 32 hours a week. Technically, employers now have the ability to ask staff to work longer. In practice, no one dares.There is still a delusional belief that France can hide behind a protectionist wall, have the EU slap tariffs on Chinese imports and pretend globalisation isn’t happening.
It ought to be clear to everyone in the West that our relative wealth is, in large part, an illusion created by debt and artificially low exchange rates with Far Eastern economies. To respond to a debt crisis with more debt is to enter a form of denial — a form that we can see on the streets of Athens and Paris. Germany and Sweden have chosen the hard path to fiscal credibility, and have seen economic momentum restored. As Barack Obama waits in vain for his $800 billion ‘stimulus’ to work, it is clear that governments cannot borrow their way to recovery.
The British have always understood this. As this magazine revealed almost two years ago, the public wanted cuts before any main party accepted the need for them.George Osborne duly produced a plan to eliminate the structural deficit over five years. A government which has, if anything, exaggerated the scale of the coming cuts still has positive approval ratings. Britain’s anger is directed at the scale of government waste. Here, there is an increasing realisation that, if the economy is to recover, cuts are needed. In France, the euro cent has yet to drop.
the spectator | 16 October 2010 | www.spectator.co.uk