The indignation of some of France's leaders that France rather than the UK should be singled out for possible downgrading by the ratings agencies has some justification, as figures published in last Saturday's Guardian (17th December, 2011) show. According to these figures France's current budget deficit for 2012 is predicted to be a "mere" 4.63% compared with the UK's 7.01%, and her total Debt/GDP ratio at 83.5%, is very comparable to the UK's 76.9%. France's inflation rate is predicted at 1.4% compared with the UK's 2.4%. (As a holder of savings I hope they're right and that the UK's inflation rate will come down, though I'd clearly be better off holding my modest wealth in France rather than the UK.)
Other figures, taken from the CIA's World Fact Book which I'm assured is reliable on these matters, throw up further interesting comparisons.
The level of investment, so very important for future growth and productivity, is 19.3% of GDP in France, compared with only 14.7% in the UK.
In spite of the fact that the UK has experienced a massive devaluation of the £ in the past few years, which the much-vaunted non-membership of the euro permits, our current balance of payments deficit is still slightly higher, at a dollar equivalent of $56.19bn, than that of France ($54.4bn), where the membership of the euro prevents such tactics.
Curiously, given France's boasted devotion to equality along with liberty and fraternity,their Gini co-efficient (a measurement of equality) of 32.7 is not much better than the UK's (34). However, only 6.2% of France's population live below the poverty line, compared with 14% in the UK. (I'm not quite sure how these two figures can be reconciled.)
So there's not all that much to chose between the performances of the French and British economies, although socially the French seem to do rather better. However, for me the "killer statistic" is that the French government takes 48.8% of GDP in taxation, (compared to 40.4% in the UK),with which it finances among other things, a health service with excess capacity, working fountains and beautiful municipal gardens in almost all towns and villages, and generous welfare payments to cushion the trauma experienced by unemployed people and others on benefits. Our monetarist mantra preaches that such a high tax take would be ruinous to innovation, growth and competitiveness, would drive all entrepreneurs out of the country and bring the economy to a virtual standstill. That little theory, like so much else of monetarist dogma, just doesn't seem to hold water.
I am genuinely puzzled as to why, given their gaffes on the credit-worthiness of Icelandic banks and the US sub-prime market, so much notice is taken of the assessments of these agencies. It has to be remembered that they are financed by the very organisations, primarily financial instructions, which they rate. These make their money by speculation. If markets are stable the opportunities for speculation are very limited. Hence it pays the agencies and their paymasters to throw as many spanners in the works as possible.
Surely the answer is to ignore these commercial agencies and replace them with an independent agency without a financial axe to grind, funded internationally through the UN.