Both the UK and France have massive welfare programmes largely financed by increasing debt. Both government are finding it almost impossible to reduce this spending.
The collapse of the French government over its inability to bring austerity measures through parliament is raising fears that the debt of the EU’s second-largest economy is spinning out of control.
Here in the UK the government found it couldn’t put through Parliament a rather modest £5 billion cut in benefits:
Prime Minister Sir Keir Starmer is facing a growing rebellion by Labour MPs over planned welfare cuts some have warned are “impossible to support” without a “change of direction”.
In both countries the electorate just say “tax the rich”. Problem is that the rich aren’t hanging around to be fleeced:
Reports say wealthy elite are leaving over tax changes – prompting a possible rethink by Rachel Reeves – but hard data is tricky to find
The IMF isn’t big enough to bail out either country. I recently read that if the UK had the maximum that it could get from the IMF it would just be enough to pay state pensions for six months!
Macron has failed once attempted to rise the retirement age.
And he successfully cut taxes on the rich & cut the wealthy tax.
France’s pricey social welfare plus increased defense spending is reeking havoc with France’s budget and national debt.
The French citizenry is up in arms. But not about the national debt. They are mad at unkept promises.
upheaval as President Emmanuel appointed new Prime Minister Sébastien Lecornu to lead a deadlocked parliament. Follow our liveblog for the latest updates.
Protesters joined demonstrations across France “many different reasons,” Anna, a 23-year-old-protester, told FRANCE 24’s Aurélia Abdelbost in Paris.
She said the government had “closed its eyes” to issues including climate change, the war in Gaza, and the situation in France. “
France is burning in terms of an economic crisis, political demands and promises that have been made to us that haven’t been kept,” she added.
The French are very aware of the French Revolution when wealthy were guillotined. That makes them cautious about offending the less advantaged. The French are famous for their big strikes when voters are unhappy. Blocking highways. Picketing the Eiffle Tower. One strike was co-ordinated by minitel, their early network to replace printed phone books.
I recently heard someone say, London is rich, outside of London UK is a poor country, how poor, they consider washing machine, and dishwasher as luxury poor
Correct. More and more people are now relying on welfare outside areas like London where wealth is concentrated:
Removing London’s output and headcount would shave 14% off British living standards, precisely enough to slip behind the last of the US states. Britain in the aggregate may not be as poor as Mississippi, but absent its outlier capital it would be.
The welfare bill is getting out of control and UK government borrowing are rising at an alarming rate. There may be trouble ahead!
The GDP per capita including London may very well be lower than that of Mississippi. And don’t forget West Virginia…
The poorest US state’s Gross Domestic Product (GDP) per capita is higher than that of Europe’s top five economies, except for Germany. However, Mississippi competes closely with Germany, with a difference of just €1,500…
We derived the 2024 country figures from the IMF’s Global Outlook report, reflecting data as of October. We made the calculation for US states using seasonally adjusted datasets from the US Bureau of Economic Analysis (BEA) for Q3 2024, and population estimates from the US Census Bureau as of July.
More old people, fewer young people = economic issues
Europe’s downward spiral is locked in. It is irreversible. People don’t want to have kids. They have tried all kinds of incentives over many years. Immigration is helping a bit but it has its own set of problems.
It varies quite a bit. I live a long way from London but I am living in quite a well off rural enclave. I now live about two miles from where I was born which was, at the time, a mining area full of slum housing. Now the mines and slums have gone and it is quite a desirable rural setting.
On average the standard of living outside London is quite low, but this is just an average, there are some very rich and desirable areas. There are many houses within a few miles of me that would easily sell for over £1 million.
The problem as I see it is wealth inequality which is getting wider all the time:
Escalating wealth inequality is causing social and environmental harm. Although it is high and rising, public concern isn’t keeping pace. Changing how wealth inequality is talked about could help to raise public concern and build political pressure to act.
Not too sure about the UK. It would help but the problem has got out of control with government spending. Welfare is so out of control that work is now optional:
The latest Office for National Statistics figures show NEET rates in the UK remain high at 12.2%, with 872,000 16 to 24-year-olds now out of work, education or training. This is nearly a quarter of a million more young people (228,000) than three years ago when NEET rates were at their lowest at 9.5%.
It’s relatively easy to get on benefits for a number of reasons (stress for example) and people are now making not working a lifestyle choice.
“We don’t wanna work all day, We just want to sing and play!!!”
from the song of two of the three little pigs, posing an eternal conundrum to human societies that animals seem to avoid.
From my 5th birthday on Dad referred to me and my sibs as “Slaves needing work!” When I took offence at about age 7 or so (brother was 10 and sister was 5), Dad told us we could chose between
continued slavery (which of course only meant helping around the house a little upon orders from parents)
rebellion, in which case we would have no more desserts except on birthdays, Christmas, and family vacations
emancipation, by figuring out what needed doing around the house on our own(!)
It was a very very effective piece of positive manipulation. I started cleaning the two toilets and bathrooms as it was quick work that neither of my sibs had picked.
But how does a society initiate that level of training and attached social knowledge.
Our youngest son once told us when he was young that he wasn’t our slave. I looked at him and said no you aren’t, but your mother and I aren’t your slaves either. We don’t go to work and earn money so you can have a place to live and eat. I said what you are is a working member of this family, and thus you have chores to do. He pondered that for a moment and then asked what it would take not to be a working member. I told him money. We could negotiate a price for each of his chores, and I would be glad to do them for the right price. All work has value. You either do it yourself or pay to have it done.
Paradoxically it is probably harder for a child from a poorer background to get on these days in the UK. I had no university fees and, as we were classified as ‘poor’ and living in social housing, I received a generous government grant. I left university with no debts and a choice of jobs. There is no financial assistance today whatever the background, quite the opposite in fact.
Many degrees are not very vocational and don’t lead to good paying jobs. A younger member of my family has an arts degree, £60,000 of student debt and a job in a restaurant.
I think that many youngsters now just decide to drop out and play the system as It’s so easy to do.
It will end one way or another as the UK is slowly going bankrupt.
Very sadly, it sure looks that way to me. From the Brexit vote fiasco on I have been dispairing of UK regaining its footing and refusing to reward demogoguery with anything other than scorn and ridicule.
It might take an entire lost generation or two learning the hardest way before hope of recovery.
Since investment income and inherited wealth is taxed at a much lower rate than wage & salary income (especially after Reagan was elected in 1980), you don’t have to save much at a young age to ensure you’re retirement by age 45 or so. Pick a career like engineering, sub MD healthcare, (or plumbing, electrician or HVAC tech), where it’s possible to earn $100k/yr by your mid 20’s and it’s easily doable. Definitely doable if you’re Double Income No Kids (DINKs)
We are wasting four years over here. You might be right about the UK going bankrupt. You can’t count on us. We are keeping corporate taxes low. We have dropping reinvestment.
OFW
You can get to be right. It will cost you more than raising the taxes.
Welfare is not the issue. Where did you get that idea? From a guy around the block crying in his beer somewhere?
Not necessarily. I could go on the tangential rant that education isn’t ONLY about finding a job. But I think I’ll pick a different tangent.
AI.
More and more jobs are being automated. Machines long ago made workers more productive. Now they are flat-out replacing workers. Some things will be safe for a very long time, like the skilled trades (plumbers, carpenters, crane operators, etc). But repetitive manufacturing is going the way of automation.
A few years ago there was a story about companies moving back to the US because foreign labor was too expensive. They were on-shoring those jobs and giving them to robots.
Before I retired, I saw some of that creeping into white collar engineering jobs. Used to be you had to have someone draw a layout for a design (semiconductors). It has moved to “auto place and route”, where a machine takes a design input and produces a drawing**. There are some automatic design tools now, also.
At some point, a significant portion of the population will not be employable. AI and machines will be doing those jobs. We better have a welfare system (funded!) in place to meet that eventuality, because it will happen. And the people won’t take to being told “let them eat cake”.
**Which was a nightmare to analyze, because the machine didn’t put components of circuits together…its algorithm placed it wherever satisfied the algorithm.
