The Tour de France is back to touring France after its stages in England, having brought us a touch of a culture that is so similar to our own… and yet so different.
And there lies a paradox. France is so good at so many things, and yet is struggling to find jobs for its young people. So good at luxury goods – it is the haute couture week in Paris – and yet losing ground in textiles and much of the wine trade. So good at high technology – yet the head of Airbus is warning that France needs a 10 per cent fall in the euro to remain competitive.
So attractive to the rest of the world, for France gets more foreign tourists than any other place on earth, yet apparently at some level unattractive to the French themselves, given the numbers of young people who leave for jobs in the UK.
It is as though the French economy is not performing as well as the sum of its parts, just as you might argue that the UK economy is doing rather better than it “ought” to, given our belated and uneven recovery.
The contrast is pretty stark. French growth this year looks like being, at best, around 0.7 per cent, and unemployment is 10.1 per cent and rising, having been above 9 per cent for 18 years. UK growth will be around 3 per cent, and over the past year is estimated by the National Institute of Economic and Social Research to have grown by 3.2 per cent. Our unemployment is down to 6.6 per cent, the lowest for five years, and falling fast.
There are, I think, two elements to this tale of two economies, which taken together carry a message for Europe as a whole. The first is French excellence; the second, French economic policy.
We are vaguely aware of just how good France is at some things, but maybe not aware enough. The luxury goods area we appreciate, with LVMH the largest luxury brand group in the world, and according to consultants Bain & Co, France having about 25 per cent of the global market in luxury goods. You may have noticed the clips of Emma Watson in the front row at the Dior show this week; you may not have known that Dior is a flagship brand of LVMH.
We also know about Airbus, which vies, with Boeing, to lead the civil aircraft market (and is hugely important to Rolls-Royce aircraft engines). But French defence industry exports only come up on our radar when they look like winning a big Indian order for Dassault fighters, or there is a row about selling an aircraft carrier to Russia. Actually France exports more defence kit than we do. Nor are we fully aware of the extent to which France owns chunks of Britain.
We may know that when we want to build a nuclear power station we have to go to the French and the Japanese, but how many people know that EDF Energy stands for Électricité de France, or that a lot of London buses have the letters RATP on them, which stands for Régie Autonome des Transports Parisiens.
You see the point. So how is it that we seem to be doing better than they are? There is no pat answer, except to note that in some areas we are not. Our road infrastructure is worse; our health service, on balance, worse; our productivity per hour-worked a lot worse; and so on. What we are good at is creating jobs, and that has to do with having painfully and over a long period moved to flexible labour markets, and encouraging a business-friendly regulatory climate. We have the further advantage of a flexible exchange rate, with the pound rising now but having fallen sharply when recession struck, and the ability to set an independent monetary policy.
It would be unreasonable to blame all France’s economic woes on the present government, though its tax and labour market policies have not helped. The inherent weaknesses, particularly unemployment, were evident long before it took office. Indeed, even during the boom years France was not performing as well as it should have done. Moral: in economic policy flexibility trumps rigidity.
That leads to the wider message for Europe. Over the next few years the non-eurozone parts of Europe, including the UK, will grow faster than the eurozone, maybe much faster. Even Germany is expected to grow quite slowly and it looks as though France in particular will struggle. Yet France has these huge inherent strengths. A paradox indeed.