UK and France: more in common than they dare admit

The British and French have a remarkable ability to irritate each other. That skill was demonstrated again recently when Jean-Marc Ayrault, the French prime minister, was asked on television why he was not prepared to take a leaf out of the British book and adopt the UK coalition government’s policies on cutting public sector pay and jobs. His response was firm, not to say aggressive. The Cameron government’s policies have, he asserted, created “mass poverty” and social inequality on a huge scale, of a kind which the French would never find acceptable. And he reminded the viewers that unlike France the UK had still not yet recovered output lost in the great recession.
This latest outburst is in a long line of criticisms elaborated by President François Hollande, and indeed Nicolas Sarkozy before him, both of whom believe that “Anglo-Saxon” governments, economists and credit rating agencies exaggerate French economic weakness. David Cameron’s promise to roll out the red carpet to welcome French entrepreneurs escaping punitive tax rates added fuel to the flames. And it is true that certain elements of the British press are assiduous in peddling a negative view of France as a latter-day Soviet Union, clinging to an outdated economic model.
If we look below the rhetoric, which side has the better of the argument?
Mr Ayrault is right that UK output is still below its pre-crisis peak. The output loss north of the English Channel was greater, largely because of the UK’s heavy exposure to financial services. But if the consensus forecasts are correct, that differential will disappear over the next two years, leaving both countries roughly where they were before the financial crisis.
Poverty and inequality statistics are slippery creatures, and there are many competing analyses. On one conventional measure – the proportion of the population living on incomes below 60 per cent of the national median – France looks more equal than the UK. The EU average is 16.4 per cent, and the UK is slightly above at 17.1 per cent, while France is appreciably below at 13.4 per cent. But poverty among the under-25s is higher in France, and its lower overall score is largely attributable fewer poor pensioners, where the difference is stark: 9.7 per cent live in poverty in France against 21.4 per cent in the UK. Looking ahead, the big question is whether, with an ageing population, France can afford the generous pay-as-you-go pension schemes it has, combined with a retirement age of 62. Few people think so.
Another measure of inequality is the Gini co-efficient. The UN data show France at just below .33 and the UK at just over .34 (a higher number means more inequality). In both countries income inequality has been growing in the last few years, slightly faster in France than in the UK. The striking things are just how similar the two countries are (Germany, by contrast, is at .28, for example) and how little difference government policy seems to make.
So while Mr Ayrault is not exactly wrong, he overstates the case, just as do those who maintain that France is conducting an extreme socialist experiment.
There are, however, some intriguing differences between the two countries, which might cause Mr Hollande to sleep a little less easier in his king-size Elysee bed than do Mr Cameron and Nick Clegg in their twin bunks in Downing Street, as the new year approaches. Unemployment rose again in France in November – not by a great deal, but Mr Hollande has staked his dwindling reputation on achieving a change in trend by the end of the year. France’s own statistics agency expects the rate to hit 11 per cent in early 2014, against 7.4 per cent in the UK.
That is no doubt the main reason why the French are gloomy about their economic prospects. According to this month’s Eurobarometer survey, 38 per cent of Britons think the economic situation is good, compared to only 7 per cent of the French (and 82 per cent of the Germans). And a modest positive balance in the UK think things will get better for them next year, while the French expect things to deteriorate further.
Some say the French are never happier than when really gloomy, and there is certainly a sense of revelling in pessimism and “morosite”. But it is poor territory on which to fight the coming European elections. Messrs Cameron and Clegg must be losing some beauty sleep over the UK Independence party, but Marine le Pen’s National Front is a more fearsome long-term foe. She and Ukip’s Nigel Farage can both play on euroscepticism, and oddly the latest Eurobarometer survey shows the French to be even less positive about the EU than the British are – though the percentages are close.
The leaders also both tap into fears on immigration. In Britain people worry about an invasion of Bulgarians and Romanians. The Roma are no more popular in France. But there is an interesting difference to be found in the detail of the poverty statistics. In the UK there are more poor people in immigrant communities than in the indigenous population. The poverty rate is 7 percentage points higher. In France it is fully 12 percentage points higher, which means the rate is almost double the national average. The argument that immigrants are a cost to the state is therefore easier to mount.
But in spite of these differences one is forced to conclude that Britain and France have more in common than either dare admit. They are both struggling with the challenge of developing a modern, postindustrial economy which can compete effectively on the world stage. Seen from outside Europe, the idea that they should spend time savaging each other’s performance looks like two bald men fighting over a comb.

Howard Davies

Fonte: FT