We have huge public expenditures. We have punitive taxes. The state micromanages the economy by offering generous levels of welfare while constantly accumulating more debt.
True, we don’t have a boulangerie on every corner and we don’t have riots every weekend – or at least not yet. But as Indermit Gill, the World Bank’s chief economist, pointed out this week, in almost every respect the British economy has slowly turned into a French tributary movement.
There’s just one catch. While France is at least getting results from its expanding state, England seems to be getting almost nothing. We face a much worse fate than our neighbor across the channel: France’s tax and debt levels are compounded by investment and public services at practically third-world levels.
It is one of the ironies of the last five years that, rather than becoming Singapore on the Thames or emulating American dynamism after leaving the European Union, Britain has become France.
As Gill puts it, “The country most similar to the United States in all of Europe was England. And you decided to go and be more like continental Europe. “You look like France, not the USA.”
It’s hard to disagree with this. Public spending in the UK rose from 39 per cent of GDP in 2019 to 50 per cent during the pandemic and is now settled at 44 per cent.
In France, government spending is a whopping 58 percent of GDP, while in the U.S. it is still only 36 percent, despite President Biden’s massive increases in welfare payments and industrial subsidies. A country that is usually closer to Washington than Paris is now starting to drift the other way.
This is happening throughout the economy. As Tuesday’s shocking figures on public borrowing show, despite punishing tax increases, the government is nowhere near balancing the books; While the budget deficit is 5.5 percent in our neighbor, it is 4.4 percent of GDP. And of course growth sucks.
According to IMF forecasts, France is expected to grow by only 0.7 percent this year, while the UK is expected to grow by only 0.5 percent. The USA is expected to take the lead with 2.7 percent.
The problem is that, as we increasingly emulate the French public spending strategy, we fail to achieve anything resembling the same results. If you’re going to have a huge, interventionist state – and of course at least a few of us would prefer we didn’t – then you might as well at least have the French version.
For all his faults, he certainly seems to have a redeeming quality. It is effective. In almost every aspect you look at the French government’s machine, it easily outperforms the British government.
For example? France has a much better healthcare system, combining social insurance with state provision, and while the French were furious that the average waiting time to see a GP has increased from four days before the pandemic to 10 days, this is much better than this country, where waiting times are much longer. If you can see a doctor, the routine appointment period is 19 days.
Although you have to pay to drive on French motorways, at least they are well maintained. Paris has also just started a new TGV line, extending the route from Paris to Bordeaux and on to Toulouse, at a cost of just €14bn, a fraction of the cost of HS-2.
France added 320,000 homes to its supply in 2022, and only once in the last 20 years – when the pandemic disrupted projects – has net income fallen below 300,000 per year. In the UK, we added 234,000 people in 2022; this number is still below the pre-pandemic peak. Even though the two countries have similar populations, this means approximately 100,000 fewer units.
If you’ve ever wondered why that stunning holiday home in Provence looks so cheap, this is part of the reason why.
Elsewhere, France has a total of 56 nuclear power plants in operation, the result of many years of forward-thinking, intelligent industrial planning, and is now Europe’s largest net exporter of electricity, with the UK of course being one of its biggest customers.
In contrast, we have only nine ideas of when a new one will come online, and we are dangerously dependent on imported energy to keep the lights on. The list goes on and on.
Of course, France’s constant intervention in the economy is often a disaster. President Macron’s determination to bring Air France-KLM back under de facto state control with a 28 percent stake looks set to end in tears.
Earlier this month BT had to bail out “national champion” Atos with a €50 million loan and could be on the hook for more. Then again, every now and then a truth comes out.
Macron has championed artificial intelligence as part of his effort to create a “startup” nation, and it looks like open-source chatbot company Mistral AI is expected to soar to a valuation of $5 billion less than two years after it was founded.
In the UK, we backed failed battery maker Britishvolt, and despite being bailed out by the government and touted by Boris Johnson as a potential rival to Elon Musk’s Starlink, satellite company OneWeb eventually merged with France’s Eutelsat.
It’s generally a bad idea for the government to pick winners, but at least the French are better at it than most.
Of course, France’s debt-to-GDP ratio is higher than ours, but we are heading in that direction.
A huge, overextended state with broad welfare rights and crushing levels of taxation is terrible for growth. It is pushing debt to dangerous levels, shrinking the size of the workforce and deterring both domestic and foreign investment.
Still, if voters insist on a state of this size, it could be at least as effective and well-governed as the French version. Right now the UK is heading towards the worst of all possible worlds.
We will have French-level taxes and spending, coupled with government delivery at a practically third-world level, and unless we can figure out how to change that, we will face permanent stagnation.