Opinion from Lord Digby Jones

Oh to be a London Estate Agent …

Published Tuesday 8 May, 2012

… Now that Socialism's back in France!

Monsieur Hollande's election is at least good for one thing; property prices in London! I guess moderately comfortable French people will be "running the numbers" on whether to build a life in Europe's most cosmopolitan capital where Government takes 45% of what you earn or whether to stay put and watch three-quarters of your earnings wasted by politicians with their fingers well and truly in the dyke.

But the Socialist call of "no to austerity and yes to growth" has not, from Birmingham to Bordeaux, from Athens to Amiens, said quite how that is to be done. Let me offer some observations:

1. Make it easier for businesses (especially small ones) to employ people (so less employment regulation please) and to let people go (so they'll take the plunge of employing someone without the fear of being stuck without flexibility and the ability to react to changing markets). Reduce taxes on employing people.  Concentrate on getting those out of work into work, not on keeping those in jobs in the same jobs. Sound sensible? Just try getting that little lot past the trades union mates of Socialist politicians across Europe! (It'd be interesting to hear Ed Milliband and trade unionist Mark Sewotka on the subject).

2. There was never enough money to pay the pensions at current levels for a getting-older population. It's just that no one ever lived long enough to find out! Well now they do live long enough and Monsieur Hollande will deal with it by changing the French State retirement age from the far-too-low 62 to. … err … 60!! That's right. Faced with a diminishing resource (wealth creators) having to pay for an increasing number of non-contributors (the pensioners) the Socialist solution is to pour petrol on the fire! Yes, in Socialist Europe, everyone can have prizes! Making people work longer for less from the State is the answer; but Turkeys don't vote for Christmas!

3. In France, 56% of GDP derives from the State (far more than in Shanghai in … err … communist China) and over 20% of the workforce is employed by the Government. Who pays for all that? The private sector that will now be taxed more heavily. In a globalised economy, business has choice where to create wealth. So quite how will Monsieur Hollande stop the flight of capital and talent from France? Border controls? Protectionism? France has already made yoghurt a matter of National Security. What next? Foie gras?!

4. In July, a large number of Government Bonds have to be redeemed (and presumably reissued) by the Elysee. New money will be expensive (to accommodate enhanced risk) and will come with conditions. New creditors will want to see a plan (with assurances that it will be stuck to) to reduce the deficit, (bringing down pension costs and lowering the number employed by the taxpayer) and grow the private sector (stopping the demonisation of the wealth-creators and make it easy to employ people). Precisely how will all that fit with Socialist rhetoric? Investing in infrastructure and creating employment is admirable; but will there be the businesses around to create the wealth to pay the tax to pay for it?

Or, mes amis; Or, Eds Milliband and Balls; Or, those singers of The Red Flag from Newcastle to Nantes, we could do (again) what (from California to Cologne, from Stockholm to Sicily, from Dallas to Dusseldorf, from Manchester to Madrid) we’ve done for decades. We can promise our electorates they can have it all; we'll raise x, we'll spend 5x … and we'll borrow the difference!

Plus ça change … as they say in Iceland!