The Spectator

The technocrats are coming

issue 21 April 2012

 

There was a time when the British could look upon the French, and their monstrously big government, with a sense of superiority: not any more. There is now a horrible similarity to our political predicaments. We both have political leaders who have failed to kick-start an economic recovery, in spite of repeated promises. We both have old-school socialists as opposition leaders, riding worryingly high in the polls while touting high-taxing policies that would not have sounded out of place in the 1970s. Meanwhile, national debt is rising on both sides of the Channel, albeit twice as fast in Britain as in France.

But Britain does have the pound sterling. A country with its own currency can print money and keep debt artificially cheap. Sir Mervyn King’s magic money machine, Quantitative Easing, has dulled the pain of the downturn — for borrowers, at least. Pain is transferred to savers, via low interest rates,  and consumers, via higher inflation. Banks and shopkeepers are blamed for what is, in effect, government policy. This suits ministers perfectly. Politically, it’s far preferable to making the kind of spending cuts that Labour did in the 1970s.

France’s politicians would kill to be able to fiddle the system so. But under the euro, only the European Central Bank can print money and it is based in Germany, a country with cause to remember what can happen when desperate politicians play with the printing press. France is past caring. ‘If the central bank does not support growth, there will not be enough growth,’ growls Nicolas Sarkozy. Had the ECB ‘intervened massively to buy sovereign debt,’ says François Hollande, then France wouldn’t be in such a mess. The truth is that the ECB has been up to all manner of tricks, buying debt and bailing out banks, but it’s still not enough.

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