Whose economy is in a worse state? France or Britain?
The numbers are inconclusive. The national debt of the two countries is roughly equal, with France's sovereign borrowing pile coming in at around 81 per cent of GDP, compared with 80 per cent in Britain. The UK does have a larger deficit, at 10 per cent of GDP in 2010 versus 7 per cent in France. But Britain is cutting the deficit more quickly. Both nations have growth problems, with France eking out just 0.4 per cent in the third quarter of this year versus 0.5 per cent in Britain.
Both countries have banking systems that are painfully exposed to the debt of peripheral eurozone nations.
The really big difference between the two – and the likely reason investors charge France a premium to borrow on the international capital markets – is the fact that France is in the single currency and the UK is not. The Bank of England has bought up almost 20 per cent of the stock of UK debt. But the European Central Bank has bought up less than 5 per cent of the sovereign debt of eurozone countries – and no French debt whatsoever. Investors know that they will get their money back when they buy British bonds because they have confidence the UK central bank will, in extremis, ensure they are paid back.
They don't have the same confidence over the safety of French bonds. France has handed control of its monetary policy to a dogmatic central bank that refuses to act as a stabilising lender of last resort to governments. Ironically, that is something on which British and French ministers – who have both called on the ECB to stop sitting on its hands – should be able to agree.