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Latest update: 17/12/2011
- debt - France - François Fillon - Nick Clegg - UK
'Political ploy' behind France's war of words on Britain
Relations between Paris and London hit a new low Friday after the French government joined the Bank of France in attacking Britain over the state of its economy. FRANCE 24 take a closer looks at the reasons behind the latest cross channel dispute.
When French Finance Minister Francois Baroin stated he would rather be French than British from an economic point of view, his words were obviously going to cause a stir on the other side the channel.
And when Baroin’s view was then echoed by none other than the French Prime Minister Francois Fillon, minor shockwaves were registered in government offices and banks in London.
On a trip to Brazil Fillon lambasted the credit rating agencies, who are threatening to downgrade France’s triple-A rating.
He said Britain’s economic situation was ‘worrying’ and argued that US credit rating agency Standard & Poors should be demoting Britain’s rating before France’s.
Fillon and Baroin were simply wading into a row kicked off on Thursday by France’s central bank chief Christian Noyer. He too advised the rating agencies to look first at Britain because it had ‘more deficits, as much debt, more inflation and less growth than us.’
Even the UK’s Europhile Deputy PM Nick Clegg had had enough of the Brit baiting on Friday. He promptly hit back, slamming the comments as ‘simply unacceptable’. His response came after he received a groveling phone call from Prime Minister Fillon.
The war of words was naturally jumped on by the British press, with the right-wing Daily Mail newspaper labeling the French stance, ‘The gall of Gaul’.
The ripples from the row spread far and wide with World Bank President Robert Zoellick saying he was “deeply troubled” by the exchanges on Friday.
This week’s rupture in Anglo French relations comes just a week after British Prime Minister David Cameron angered Nicolas Sarkozy by refusing to sign an EU treaty on the eurozone debt crisis.
Calculated plan of attack
But economists and political scientists on both sides of the channel agreed that France’s comments were motivated by more than just the fallout from the EU summit.
“It is clearly a political ploy,” Tomasz Michalski, a professor in Economics at HEC business school in Paris, told FRANCE 24. “It has to be looked at within the context of internal politics in France.
“The current leadership is concerned about next year’s elections. If only France is downgraded, then the socialist party will certainly make the most of it,” he added.
“If France is going to lose its triple-A- credit rating then they don’t want to be the only country,” he said.
Dr Philippe Marliere, a political scientist from University College London agreed.
“It’s definitely a smoke screen,” Dr Marliere told FRANCE 24. “If it’s not a strategy then it is certainly a diversion because the public are expecting France to be downgraded.”
Both countries in crisis
Unfortunately for the French ministers, their attempts to highlight the plight of the British economy rather than their own appeared poorly timed.
On Friday France's official INSEE statistics agency warned that the country will enter a "mild recession", and that next years government growth target of 1 per cent will be hard to achieve.
But Britain’s economy is also struggling with its public services creaking after stringent cuts to their budgets.
In the third quarter of this year France’s economy grew 0.4 percent, whereas Britain’s grew 0.5 per cent.
Economics professor Iain Begg from the London School of Economics said neither country was in a position to boast.
“You could make a case for either country having the worst economic situation,” Beggtold FRANCE 24. “French debt is slightly higher than the UK and the French banking system is more vulnerable, but in Britain there is high unemployment and high inflation.”
Professor Michalski from HEC says in reality neither country are worthy of their Triple 'A' status, but he explained Britain had an advantage when it comes to dealing with the problem of spiraling public debt.
“Both countries are in a bad situation. They are not that much different. The difference is the Bank of England can print more money which makes it easier to pay off debt whereas the European Central Bank does not want to do that.”
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Comments (12)
Get real!
The French have managed and to fall out with everyone. The Brits now the Turks. Offensive and mocking remarks towards Italy's President and the Israeli pm. I am afraid diplomacy is not a strong point. I think France needs to stop punching outside its true influence. And when it digs its own hole to stop dragging Europe into its mess.
Next generation politics will be violence free.
Airport security type too expensive machines are health hazzard and no good but keep them for show and inactive, there to scare criminal minded guys and only activate when someone from a suspicious background e.g. Lebanon, Palestinian, Srilankan, Turbaned Punjabi, Paradise going traveler: Mullahs of Arabs with head-coverings etc. shows up at the airport. By the globally developed electronic signatures in a simple passport of any of the global citizens we can track down each traveler and new honestly explained laws made for public safety will not require everyone to pass through the scanners. Also private guns from the global streets will be taken away and the process of changing laws can be started with guys like Mr. Barack Obama and his less greedy advisers -who are not connected with Oil and Weapon businesses.
European economic crisis
I believe we are just watching an age old struggle for political influence between Britain and it's continental neighbours. The interesting player in this story is Ireland, it's biggest trading partner is Britain and it's largest foreign investor is The USA. Therefore, the Anglo-Saxon financial powers will have impressed on the Irish government the need to show some understanding toward the importance of keeping up cordial relations and encouraging a more lasting settlement rather than agreeing to the dismantling of the financial power of the City of London.
The Irish agree in principal to the regulations needed to curtail the banks and indeed the requirement to tax money in transit as you would with any product or service. Unfortunately, Sarkozy in particular is hellbent on removing sovereign states' rights to set their own tax and the Irish will not concede this, territorial rights or resources.
War of words
This is all about politics. When Mr Sarkozy does not get his own way he always turns nasty and throws his toys out of his pram!
It is more or less 100% certain that Mr Cameron will still be Prime Minister of the U.K. next May. On present information however Mr Sarkozy will be extremely lucky to still be in power in France!
The U.K. is in no better or worse a financial than France but the U.K`s destiny is in it`s own hands because it is not tied to the Euro - France is and this could be it`s downfall.
France vs UK
Iain Begg: "French debt is slightly higher than the UK and the French banking system is more vulnerable"
This is just not right. We have many debts, so if Begg think about external debt, than British debt is much higher, almost double, if Begg thing about government debt, yes, but difference is about 2%. If we talk about banks, no French banks is in difficult position like Royal Bank of Scotland and Lloyd's, and RBS is that much big, that they are able to bring down UK economy. Export France export about 110 billion more than UK, France import less than UK, inflation in UK is double size of the French, Bank of England print pounds, and ECB don't print Euro.
The Key
Maybe "But Britain’s economy is also struggling with its public services creaking after stringent cuts to their budgets." is the key to the situation. Cutting back on public services is the right thing to do in a downturn. It aids recovery by easing the burden on the private sector.
French Attack? Justified
The French have never liked the British and this outburst just proves it! Britain is taking a leaf out of the French book and looking after its own interests for a change, the French, well jump into bed with whom they believe will protect them, and not for the first time. My Grandfather ( who is buried in France ) will be turning in his grave now, thinking was it worth saving this land I fallen on? I think you know the answer.
Soverign Currency Control
The EU should change the rules so only countries that have adopted the euro can be members. England could afford to vote no on the EU reform package because it has other ways of trying to handle its debt. It makes no sense none Euro countries to be in the bunch.
money supply?
I believe the ECB is right not to print phoney money, we had a sample of what that did in the 80's when inflation took a rise up to around twenty odd percent.
Great for mortgage holders as they saw their mortgages take anose dive, but earnings could not keep pace, resulting in many foreclosures repossessions and or negative equity.
World Economic sitution
Quote "On a trip to Brazil Fillon lambasted the credit rating agencies, who are threatening to downgrade France’s triple-A rating."
Why do we need Credit Reference Agencies (CRA) when they caused the whole economic crisis? If you go to a bank for a loan they do a CRA check. Does it forecast the future? It is as much use as an itinerent fortune teller - they might just as well read the tea-leaves. Even the FSA , the financial watchdog, makes every company quote on any investment document:
1. The value of your investment may go up or down,
2. Past performance is no indication of future performance.
The CRAs caused the global problem for clearing unwise lending creating the toxic debt and now they have gone the opposite way and are stifling the recovery by over-restricting the money supply.
The solution to the global problem is to ban the CRAs and only use the data for fraud detection. The banks must return to the old pre-computer days and "Know Your Customer".
Magic ratings
Funny how the AAA rating came back after 48 hours. Could it be the fear of France telling the world England is really broke.
French attack?
To see all picture, what you need to do is to check British press in this year, so you will see constant trashing of the France and French.
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