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Why it's Better to be in France Right Now

Wednesday 01 February 2012

A posting on a partner website that provoked a lively debate about the best place to live right now, which we thought you might find interesting.

Nick Aurelius-Haddock writes:

Debate is always good, and I have read enough pessimistic pieces on the board about the dire state of the European economy, to post a repost on the UK economy, which some seem to regard in far too glowing terms.

Let’s start with some facts:

i. The UK Economy now has the largest unemployment figures in its modern history, 2.7 million, with the more worrying figures of youth and out of work for over two years growing rapidly. So not the place for a youngster looking for work.

ii. The BoE is printing money with gay abandon - Quantitative Easing is what Mervyn King calls it. When the current horribly anaemic economy eventually shows signs of real growth - 2015/16 - again thanks to Mr King - this will probably lead to horrendous inflation.

iii. Growth in the UK next year , if it happens at all will be pathetic, and I will predict will more likely be in a recession, as all current indicators point in that direction. So another wasted year of people’s lives, with no work and no prospects. The light at the end of the tunnel has just been turned off for the foreseeable future in the UK.

iv. Manufacturing sector has been decimated over the last several decades, to the point now it may never recover. With a strengthening pound, exactly what they don't want in this part of the economic cycle, hundreds of thousands more jobs will go to Asia and Eastern Europe. This is terrible structural news.

v. UK is on paper bankrupt, and has been since the crisis hit. Its total leverage - borrowings - is now around 70% of GDP. The so called reduction in spending has not happened, and in fact borrowing is going up, and according to George Osborne will continue to do so until 2016 at the earliest. In fact in some measurements, the UK economy is in a worse state than Greece. Government bond yields are all that keep the AAA rating, and this is by their fingernails. France is right to question S&P's lack of consistency in this matter, which may be more political than anything else. What do credit rating agencies actually know anyway, they missed the world financial crisis by a barn door. I would trust them as much as a UK MP's expenses claim form.

vi. The banking sector now has far too much of a share of the GDP of the UK economy - around 38% - and the newly created plutocrats have a disproportional effect on government policy. These people have zero allegiance to the UK, or anything outside of making a quick buck. If they feel Frankfurt is a better bet long term than London they will move in an instant. The UK's AAA will go up in smoke, along with its future.

vii.) The coalition decided to land the middle classes with a massive new bill, paying for their children's higher education. This will add tens of thousands to parents borrowings over the course of an under graduate degree. Not so in France, it's still completely free.

Now, as I sit in my house in France, with a nice glass of wine and plenty of wood for the fire, I don't think I have it so bad. I really like the Euro and all that it gives me, and I want it to remain at the centre of a healthy and vibrant European union. I think it will, perhaps will a few less members, but it will.

I don't think France is perfect - I'm not that blinkered - and I know they have their own issues, but there are always two sides to a debate.

So now little islanders, do your worst, I'm ready and waiting, so let the debate begin ;-)

The posting has been supplied courtesy of where you can follow how this debate went, and contribute to it at Why I think it's far better to be in France than the UK during these economic times.

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