Looking over a digest of recent news, a comment from last week’s Sunday Telegraph caught my eye. The government, they argued,”must begin a root and branch overhaul of public spending to cut billions. It cannot keep assuming that grands projets and government direction will propel Britain upwards: if it were that simple, France would have enjoyed a multi-decade economic boom.”
There are two parts to that. First, there is the proposal to cut billions off public spending during a major slump. There’s not much to say about this, beyond the obvious comment that it’s economically illiterate. Taking demand out of a depressed economy is a recipe for a major slump. The second part, which is rather more interesting, is the idea that the French approach doesn’t deliver. France did, of course, have a ‘multi-decade economic boom’ after 1944, which they call the trente glorieuses. Then they were hit, as we were, by the oil crisis. The graph below, which I hope will show up on your screens, compares GDP per capita in Britain and France since 1980. There’s not much to distinguish them: Britain did gain a marginal advantage in income per capita from 1997 to 2008, but that apart, the two economies are a lot like each other. The French approach doesn’t have a clear advantage over the British, but it doesn’t have a clear disadvantage either. And at least France has had the benefits of major infrastructure projects, which Britain could have done with.