Is Britain’s economy doing as well as they say?

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Grande-Nouvelle nous paraissant à la floraison estivale, notre voisin d’outre Manche est venu avec un bouquet plein de belles perspectives économiques. En effet le FMI table sur 2,4% de croissance pour 2014. A quel prix la Grande-Bretagne a-t-elle obtenu de tels résultats aussi rapidement ? Le bouquet ne risque-t-il pas de se vite faner ?

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Cameron and Osborne pride themselves on Britain’s good economic situation. In fact, after being criticized for 3 years, Cameron’s policies seem to finally be efficient. What are the pillars of his agenda? Cameron was elected in 2010 to find a cure to the British economic situation. In fact the previous Labour government had invested a lot in every sector, digging deficits and debt.  So, logically, Cameron implemented an austerity policy, which in concrete terms consisted in 700, 000 lay-offs among the civil service. Cameron cut about 30% of every budget, excepted education and health. That represented a public spending cut of 4.3 point of GDP, the third biggest spending cut after Greece and Portugal.

Nobody believed in it but the UK did. After a 3-dip-recession, the great island has found its way back to growth. Beyond expectations (a mere 0.9% GDP-growth was expected) the GDP reached 1.4% in 2013. Moreover the country is as confident as ever, as shown by other economic indicators: unemployment is decreasing faster than previously anticipated (7.5%) and the government extols the merit of consumption which is holding its head high. To top it all, 1,000,000 jobs have been created since 2007.

One could conclude that austerity policies are more efficient than what the French government is doing, but there is more than meet the eye. In fact the quarterly GDP level is 1% above the 2007 level in France while it is 1% below it in the UK. The public deficit is also higher in the UK than in France whereas they were equal in 2007 in proportion to the GDP.

Even if economic figures seem positive -for instance the UK has produced more cars in 2013 than France did- steady growth is far from granted. In fact Britons’ standard of living is not as flourishing as the British economy. Moreover the fast-growing real-estate market could remind one of some bad nightmares, back in 2007.

Clément MOREAU & Julien VIELCANET

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